Jim Grant Bearish on BlackRock: Invest For Kids Chicago 2016

We're posting up notes from the Invest For Kids 2016 investment conference.  Next up is Jim Grant of Grant's Interest Rate Observer who was bearish on BlackRock (BLK).


Jim Grant's Presentation at Invest For Kids Chicago 2016 

•    So much data – how do we know what is true?

•    Easy to be overwhelmed

•    Narratives as a belief system

•    Active investors accept or reject narratives; passible investors always accept the narrative by default

•    Markets are episodically efficient; they are no more coolly analytical than the people in them or the algorithms they write

•    Interest rates are certainly low – not good for my business model

•    Since 1997, the number of public companies in U.S. has been cut in half

•    Now we have the first nominally negative bond yields in 5,000 years

•    If Fed were late to raise rates it wouldn’t be the first time; likewise wouldn’t be the first time the bond market underestimated the fallibility of human beings



•    Bearish on Blackrock (BLK) 

•    Its motto should be “built for a time of falling rates, rising asset prices, massive inflows…”

•    Tailor-made for the financial moment

•    Hand-in-glove with the Fed – Blackrock is the Federal Reserve’s Wall Street doppelganger

•    BLK took in 18% of all mutual fund and ETF inflows in 2015

•    Assets may come, assets may go

•    Margins? There is a price war in passive. Fees are ~69 bps at BLK versus 15 at Vanguard. Further compression is likely.

•    BLK is at 18x EPS vs. 14x industry average

•    Massive amounts of insider selling at BLK without any buys


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

James Grant on Russia & Gazprom: Sohn Conference Presentation

We're posting up notes from the Sohn Investment Conference in New York, produced in partnership with Bloomberg LINK.  Next up is James Grant of Grant's Interest Rate Observer who said to go long Gazprom in Russia.


Jim Grant's Sohn Conference Presentation

In trademark bow tie as always. "No disclaimer, I'm just going with the First Amendment." "Successful investing is having people agree with you - later."

IDEA: Gazprom long.  Listed in London.  Owns 17% of the world's gas reserve, the economic instrument of Putin's foreign policy.  HLF without Carl Icahn.  Donald Stirling with a London ticker.  Opposite of TSLA. Well hated, very out of favor. 32% operating margins.  Endless list of reasons to be bearish. Russian government owns 50% of shares.   Then he compares FB's corporate governance, with dual class share structure to Gazprom.   Trades at 2.4x 2014 earnings.  That is after taxes, and "after stealing."

Be sure to check out the rest of the presentations from the 2014 Sohn Investment Conference.

James Grant Likes Gold & Metropolitan Life: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago is James Grant of Grant's Interest Rate Observer.

•    Grant founded his firm is 1983 and called Japanese bubble and housing bubbles
•    Tongue in cheek legal disclaimer is that “Congress shall make no law abridging the freedom of the press”


Grant's First Idea: Metropolitan Life

•    Metropolitan Life
o    Japanese life insurers died out in long run.
o    825 billion of assets - a great franchise
o    Long due to potential for dividend.


Grant's Second Idea: Gold

•    Gold: is a “legacy monetary asset”
•    1920 there was a depression (not Great Depression). 18 months after peak then industrial production jumped significantly
•    "I'm a professional interest rate observer.  There are none"
•    Grant notes interest rates move in generational cycles

Grant is obviously not alone in his fondness for the precious metal as numerous hedge funds own gold for a myriad of reasons.  Some own it as a hedge against inflation or currency debasement, while others view it as an uncertainty hedge.


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

Free: Grant's Interest Rate Observer

If you haven't heard already, Grant's Interest Rate Observer has gone partially free. You can get their Summer Break 2009 Issue for free via .pdf here. It is 24 pages chalk full of great information. Definitely check it out as Grant's has great commentary. And hell, it's free.