Frank Brosens Long Kaupthing Icelandic Bank: Invest For Kids Chicago 2016

We're posting up notes from the Invest For Kids 2016 investment conference.  Next up is Frank Brosens of Taconic Capital who pitched long Kaupthing, one of three Icelandic banks.


Frank Brosens' Presentation at Invest For Kids Chicago 2016

•    $6 billion AUM, event-driven and multi-strategy

•    Risks are high due to central banks

•    We seek very low correlation in our investments; we want no beta or duration; look for non-economic actors and forced sellers

•    Angst in the hedge fund industry as high as ever, but the opportunity is actually pretty good •    Returns likely to be muted versus historical levels



•    Long Kaupthing, one of three Icelandic banks

•    Iceland’s banking industry swelled in the prior decade to unsustainable levels – assets/GDP of ~10x

•    We are largest Kaupthing creditor, having acquired most of the stake in 2012 and 2013

•    In 2015 our partner in London got restricted and entered the negotiations with Icelandic task force

•    In December 2015 the liquidation process finally commenced; payouts began in January 2016 but only 1/3 of proceeds distributed so far

•    >200 assets in 12 countries; disclosure is very opaque – have to be a detective

o    Our partner went person by person within Kaupthing, often using LinkedIn, to piece together relationships and affiliations; then talked to local businessmen and brokers to triangulate asset values

o    Today, 16% cash, 33% operating assets and real estate, 25% stake in stable Icelandic bank, 25% other/misc.

o    We believe our notes are worth par, with some upside beyond that, against a price of 86

o    Most asset sales are coming in the next few quarters, so time horizon should be one year or less


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

Capitalize For Kids Sohn Canada Notes 2014: Ainslie, Dinan, Robbins & More

The inaugural Capitalize For Kids investors conference recently took place.  In partnership with the Sohn Conference Foundation, top investment professionals shared their latest insights in support of child health research and treatment.  Below are links to the speaker's presentations.


Capitalize For Kids Sohn Canada Conference Notes 2014

- Lee Ainslie (Maverick Capital): long Qihoo 360 

- Larry Robbins (Glenview Capital): 4 investment ideas

- Jamie Dinan (York Capital): a bunch of stock picks

- Frank Brosens (Taconic Capital): long Men's Wearhouse

- Jeff Smith (Starboard Value): long Yahoo & MeadWestvaco

- Brian Zied (Charter Bridge Capital): long Outerwall

- Steven Shapiro (GoldenTree): long Co-operative Bank

- Jacob Doft (Highline Capital): long Intercontinental Exchange

- Alex Roepers (Atlantic Investment Management): 3 long ideas

- Sahm Adrangi (Kerrisdale Capital): 2 longs

- Guy Gottfried (Rational Investment Group): long Tree Island Steel & TerraVest

- Jeff Hales (Alignvest Capital): long Corby Spirit & Wine

- Aaron Cowen (Suvretta Capital): long Burger King & Liberty Global

- Jody Lanasa (Serengeti Asset Management): 2 investment ideas

- Shawn Foley (Avenue Capital Group): 2 stock picks

- Michael Thompson (BHR Capital): long Golar LNG

- Evan Vanderveer (Vanshap Capital): long Keck Seng Investments

- Chuck Akre (Akre Capital): 4 case studies

Frank Brosens Long Men's Wearhouse: Capitalize For Kids Sohn Canada

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Frank Brosens of Taconic Capital who pitched a long of Men's Wearhouse (MW).


Frank Brosens' Sohn Canada Presentation

Runs a multi-strategy firm, with a focus on event driven ideas.

Pitched LONG The Men’s Wearhouse. Mentioned short term oriented traders flooded the stock during the merger battle with Jos. A. Bank Clothiers and has caused significant opportunities. The stock has sold off hard over last 2 weeks and they think it looks interesting again. The company can earn $5.50/share two years out with some catalysts to mention.

New CEO was appointed in 2011, but has just recently started implementing new plans and changes since chairman retired last year. Estimates the synergies of $100m by 2017. Men’s Wearhouse merger has a few unique opportunities; such as tuxedos, slimfit. Mentioned MW does $400M in tux rentals and Jos. A. Bank Clothiers only does $30M in tuxedo rentals.

Incremental margins are very strong, approximately 0.55 EPS accretion for every $50m incremental revenue gain for JOSB in tuxedos. Both JOSB and MW are well below peak margins due to heavy advertising spend. If MW can de-lever to ~2.5x Net Debt/EBITDA. They estimate MW can de-lever to 2.5x by 2018 and adjusting for 1x integration costs, FCF should exceed net income. Base case price target of $63 (~40% upside); upside and downside of +71% and -3%.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Frank Brosens: 3 Catalysts for Repricing of General Motors (Invest For Kids Chicago)

Next up in our notes from Invest For Kids Chicago is Frank Brosens of Taconic Capital.

Brosens' Thesis on the 'New' General Motors

•    There are 3 catalysts for the repricing of GM

•    (1) New management team 
o    Better capital allocation since going public in November 2010 with new CEO Dan Akerson (Private equity background)
o    Better capital allocation will lead to resurgence

•    (2) Administration willing to sell post election
o    Treasury stake (mid 40s cost basis) is goings to come to market
o    Overhang of would be gone.  Institutions would come back to the stock (including being added to indices)
o    32 billion cash until treasury sells stake (only need 20bn to run company) and have $10bn revolver.
o    Company could buy back half of treasury stake. (Boosts EPS 16%)

•    (3) Valuation is currently overly conservative assumptions (Brossens notes the stock could triple).
o    SAAR is improving and could hits 15 MM next year
o    30% of GM’s 2013 line-up is re-engineered and the refresh cycle is driver of profitability and market share
o    The 2013 GM lineup has many trucks (GM makes ~10K per truck sold).  This is significantly in excess of the last truck refresh cycle in which GM made $2 to 3K per truck. Overall, a $3.5 billion dollar incremental opportunity
o    Average car age on road is beyond 11 years
o    GM trades at a discounts on EBITDA basis to Ford, Toyota, and VW
o    By 2015 if the current EV to EBITDA multiple stays flat the equity price will be $67 and if the FCF multiple stays flat the stock could be worth $89

It's also worth pointing out that Greenlight Capital's David Einhorn pitched GM at the Value Investing Congress as well.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.