Ed Garden Long PPG Industries: Capitalize For Kids Conference 2018

We're posting up notes from the Capitalize For Kids 2018 investment conference.  Next up is Ed Garden of Trian Fund Management who pitched a long of PPG Industries (PPG).


Ed Garden's Capitalize For Kids Presentation: Long PPG Industries

PPG Industries

•    Paints and coatings business
•    Great business, 40% upside on SOTP
•    No tech disruption risk, AMZN risk, private label risk. Strong moat
•    We are facing an inflationary time, great time to buy as they pass on inflation, increasing gross margin
•    Terrible management, lost key customer (Lowe’s), Materially underperforming peers, market on all metrics, Profit warnings, shrinking earnings while peers are growing earnings
•    Accounting issues, May 2018 – says 10-K can’t be relied upon due to expense accrual issues
•    Did a stupid Hostile acquisition, massively flawed strategy

Trian's Solution

•    Bring back legendary CEO Chuck Bunch
•    Best CEO in coatings, never sold his stock, wants to return
•    Had 40 year career at PPG.  Large growth in North American Architectural. Needs Capital and Attention
•    Wants it to be spun off
•    Add leverage to business
•    Improve Governance
•    Chuck had outperformed peers by 4,700bps over tenure    


Be sure to check out the rest of the presentations from Capitalize For Kids 2018. 

Ed Garden Long Bank of New York Mellon: Invest For Kids Chicago 2016

We're posting up notes from the Invest For Kids 2016 investment conference.  Next up is Ed Garden of Trian Partners who pitched a long of Bank of New York Mellon (BK).


Ed Garden's Presentation at Invest For Kids Chicago 2016

•    Long Bank of New York Mellon (BK)

o    $1.3 billion invested; Garden on board since Dec. 2014

•    We invest in great companies when undermanaged, underperforming, underappreciated; we try to work with management to become best in class at everything; we usually take a board seat

o    Eliminate management’s information advantage over board

o    Find problems, identify opportunities to attack

•    No hedging, long only, dislike the activist label

o    Income statement focus, not balance sheet

•    BK fits our risk profile: provides critical infrastructure, has good capital, is fee-driven (not NIM driven), has huge scale, and has opportunity to improve operations with cyclical upside as a bonus

•    Progress so far: 9% reduction in real estate owned; leaner cost structure; five new board members; returning $2.75 per share to shareholders in 12 months ended 6/30/17; margins and EPS up

•    25% discount to the market valuation; hurts to have “bank” in our name; most earnings streams at cyclical trough


Be sure to check out the rest of the presentations from Invest For Kids 2016.