Ira Sohn Investment Idea Contest

***Update: Be sure to check out our notes from the Ira Sohn Conference for 2011 where we're providing updates on the presentations from top hedge fund managers.


The legendary Ira Sohn Investment Conference in New York has a new twist this year. They are having an investment idea contest before the event to be judged by Seth Klarman, Michael Price, David Einhorn, Bill Ackman, and Joel Greenblatt. The winner gets to present their investment idea at the conference to 2,000 attendees later this month.

The judges are looking for the best investment idea with a one-year timeframe. You can learn more about the contest and submit your ideas here. Deadline for submissions is May 20th.

Here's the details of the conference:

Wednesday, May 25th, 2011
12:15 - 6pm
Rose Theater, 5th Floor, Frederick P. Rose Hall
Broadway at 60th Street, New York City

For more information on the contest and to submit your idea, visit http://www.irasohnconference.com/contest

Market Folly Contest Too

We're having a simultaneous contest for our readers too. Entry is free so simply email your submission to us: marketfolly@gmail.com.

We'll handpick our own winner (totally separate from the Ira Sohn). The winner of our independent contest will receive a free 1-year subscription to our Hedge Fund Wisdom newsletter (a $199 value). The runner-up of our contest will receive a copy of Bethany McLean & Joe Nocera's book, All The Devils Are Here. Good luck and get writing!

Harbor Investment Conference: Ideas From Ackman, Berkowitz & More

Want to hear some investment ideas from top hedge fund managers? The Harbor Investment Conference will take place February 3rd, 2011 in New York City and provides the perfect opportunity. All proceeds from the event goes to the Boys and Girls Harbor, so it's a wonderful cause. At last year's event, the 8 stocks that were recommended were up an average of 39% at the end of 2010. There are only 331 seats available so act quickly!

Here are the speakers at the event:

Bill Ackman – Pershing Square Capital Management
Bruce Berkowitz – Fairholme Capital Management
David Darst – Chief Investment Strategist, Morgan Stanley Smith Barney
Alex Klabin – Senator Investment Group LP
Mick McGuire – Marcato Capital Management, LLC
Craig Nerenberg – Brenner West Capital Advisors, LLC
Todd Sullivan – Rand Strategic Partners

Everyone of course knows Bill Ackman and Bruce Berkowitz. However, some of the other speakers should offer great insight as Mick McGuire previously worked at Pershing Square and Craig Nerenberg runs a similar strategy to Pershing Square with a concentrated portfolio. Also, our good friend Todd Sullivan from ValuePlays.net will be speaking as well.

Embedded below is an information and registration sheet for the conference:



You can download a registration .pdf here.

The event is coming up soon and there are only 331 seats available, so sign-up to hear some hedgie investment ideas and support a great cause at the same time.

Whitney Tilson Buys BP & Explains Why

Whitney Tilson of hedge fund T2 Partners recently appeared on CNBC and revealed he is now long BP (BP). This company of course has dominated headlines for the drastic oil spill in the Gulf of Mexico. More than anything, this investment is the definition of being greedy when others are fearful.

Currently, it's very apparent that the majority of investors are being fearful due to BP's potential liability associated with the oil spill. Not Tilson, though. He is zigging while the crowd zags and argues that this stock is simply "too cheap." While some are speculating about potential bankruptcy surrounding BP, he notes that this company earns north of $20 billion a year in profits and will be able to pay-off spill cleanup and any other potential liabilities.

BP is currently trading around 5.5x earnings and paying a 9% dividend yield. Being a value investor, Tilson obviously is not trying to make a quick trade here given the headline risk and instead is in it for the long haul. He fully acknowledges that headlines can (and probably will) continue to be negative, but he thinks it's just starting to get ridiculous. Tilson mentions that it is around a 4% position in their portfolio (rather than say 10%) because there always is the potential for an armageddon scenario where there are just years and years of problems.

In addition to Tilson's new stake in BP, we also previously learned that he is long Anheuser-Busch InBev (BUD). T2 revealed this investment idea at the Value Investing Congress and we posted up their BUD presentation for those interested. Tilson's investment in BP is an example of a stock presenting potentially extreme value through extenuating circumstances while his investment in BUD is more-so buying an attractively priced high quality business. This showcases the dynamic in value investing and stockpicking as no two investments are really ever identical.

Embedded below is Tilson's video interview where he outlines why he bought BP (Email readers will need to come to the site to view it):



For other activity from hedge fund T2 Partners, we also recently saw that Whitney Tilson and Glenn Tongue are still cautious on the markets and we received a portfolio update with their May letter to investors. Additionally, we note that they are still bearish on the housing market as well.

It definitely seems as if hedge fund managers are willing to share their new investment ideas as of late. Maybe it has something to do with the fact that hedge funds had a horrible May performance wise, but some would argue hedgies are always talking their book. Either way, no complaints as it's always refreshing to see new positions and hear a thesis. For more on hedge fund T2 Partners, be sure to check out some of their short positions as well.

Why Bill Ackman Bought Citigroup (C)

Last week we detailed a summary of investment ideas from various hedge fund managers at the Ira Sohn Conference. Pershing Square's Bill Ackman was one of the many speakers and though he ran out of time in his presentation, he did briefly mention he had purchased 150 million shares of Citigroup (C). Ackman was then recently interviewed by Yahoo TechTicker to talk about Christine Richard's new book which he is the subject of, Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff. However, TechTicker also had the chance to ask him about his new purchase.

Ackman was actually surprised when he took this stake because back in the throngs of the crisis he could never see himself owning a financial company only twelve months later. Keep in mind that the US government recently announced the sale of 1.5 billion shares of Citigroup (C) and they have plenty more to sell. This fact has acted as somewhat of an overhang on the stock. But Ackman certainly isn't bashful and dove right in.

While Ackman fully admits that Citigroup is still working through their problems, he sees them as one of the "best capitalized banks" out there currently due to the conversion of the government's preferred stake. Elaborating on this thesis, Ackman thinks the zero rate interest policy is benefiting the bank as they are earning very attractive spreads. Lastly, he loves their solid balance sheet backed by a huge deposit base. So, it definitely sounds as though he believes he's buying a proven franchise in recovery mode. For the rest of Ackman's investments, we've detailed Pershing Square's portfolio.

Ackman isn't the only prominent hedgie who recently bought shares either. Phil Falcone's Harbinger Capital Partners recently disclosed a new massive stake in Citigroup. Not to mention, John Paulson's hedge fund owns a large position as well. At the same time though, we also saw Dan Loeb's Third Point exit C in the first quarter, Lee Ainslie's Maverick Capital dump their position and Andreas Halvorsen's Viking Global also sold out, so not everyone out there is bullish on Citi. David Tepper's Appaloosa Management trimmed over half of their stake in C, but it is still one of their largest equity positions. Overall though, Citigroup is still one of the most important stocks to hedge funds as determined by Goldman Sachs' VIP list.

Shifting back to Ackman's thoughts on the market overall he said, "Look at large-cap, very high quality businesses today [and] they seem pretty cheap to me." Embedded below is Ackman's video interview from TechTicker:

His overall sentiment that mega cap stocks are undervalued is a common belief held by numerous investment managers. At the Ira Sohn, Jeremy Grantham also said to buy high quality stocks as well because the massively momentous market rally of 2009 largely left higher quality names behind as managers re-risked and favored stocks of lower quality. Ackman thinks Citigroup is one of those high quality names and is bullish on shares, despite the impending sale of the government's stake. We'll definitely keep an eye on this one to see how it turns out. For more of the latest moves from prominent investment managers, head to notes from the Ira Sohn Conference as well as our daily hedge fund tracking series.

David Einhorn's Ira Sohn Presentation: "Good News for the Grandchildren"

Earlier, we posted a compilation of notes from the Ira Sohn Conference and we also detailed Steve Eisman's presentation, Subprime Goes to College. Next, we're detailing the speech from Greenlight Capital's David Einhorn. The hedge fund manager's speech entitled, "Good News for the Grandchildren" focuses on how our grandchildren won't have to pay for the consequences of our actions; we will. He thinks a crisis has already unfolded and that our generation will be the ones paying for it. Instead of watching the situation spiral into a debt crisis, Einhorn urges us to address the situation right now. As you can imagine, Einhorn likes gold and gold stocks. In particular, he mentioned African Barrick Gold (ABG) traded in London.

Additionally, Einhorn attacked the ratings agencies and again mentioned he was still short Moody's (MCO) and McGraw Hill (MHP). Some of you will remember that Einhorn originally laid out his short thesis on these names at last year's Ira Sohn Conference when he presented The Curse of the Triple-A. To see what else Einhorn has been investing in, we highlighted his new position in NCR and we've also covered Greenlight's portfolio for those interested. To learn more about Einhorn and his investment process, we recommend checking out his book, Fooling Some of the People All of the Time.

Embedded below is David Einhorn's presentation from yesterday's Ira Sohn Investment Conference entitled, "Good News for the Grandchildren":



You can also download a .pdf copy here.

For more coverage of this event, be sure to head to notes from the Ira Sohn Conference as well as Steve Eisman's presentation, Subprime Goes to College. And if you want to see the latest portfolio moves from top investment managers, head to our ongoing hedge fund portfolio tracking series.

Steve Eisman & FrontPoint Partners Ira Sohn Presentation: Subprime Goes to College

Earlier we aggregated a compilation of notes from the Ira Sohn Investment Conference where some very prominent hedge fund managers detailed investment ideas. One of those managers was Steven Eisman of FrontPoint Partners (Morgan Stanley). You may be familiar with him as he was profiled as one of the successful subprime traders in Michael Lewis' book, The Big Short.

Eisman thinks he has identified the next 'subprime' so to speak and gave a presentation at the Ira Sohn Conference entitled, "Subprime Goes to College." This speech provided a negative thesis on the for-profit education plays. In particular, Eisman is bearish on Apollo Group (APOL), ITT Educational (ESI), Corinthian Colleges (COCO), and Education Management (EDMC). Lastly, he also dislikes Washington Post (WPO) due to their ownership of the Kaplan test preparation business. His general thesis focuses on two factors: Washington clamping down on the industry and a rise in employment (generating a decline in enrollment). He notes that a key to the problem here is the 'rating' these institutions receive from accreditation boards and he likens these boards to the ratings agencies who blessed subprime mortgages.

Embedded below is the Ira Sohn presentation from Steven Eisman & FrontPoint Partners entitled, 'Subprime Goes to College':



You can download a .pdf copy here.

As we've detailed numerous times, the for-profit education space is an investor battleground with a clear divergence of opinion. Stephen Mandel's hedge fund Lone Pine Capital has been bullish on education plays. In fact, at least year's Ira Sohn event, he gave a bullish presentation on Strayer Education (STRA). While he has since scaled back his position some, we saw he still owned it when we detailed Lone Pine's portfolio. We also recently saw Roberto Mignone's hedge fund Bridger Management buy shares of Princeton Review (REVU), another test preparation service.

That said, we've also noted that some of these managers have had a recent change of heart. David Stemerman's hedge fund Conatus Capital had been long and sold out of their education plays. Andreas Halvorsen's Viking Global also exited Apollo Group recently. Additionally, there are also numerous high profile detractors such as Jim Chanos who gave a negative presentation on for-profit education at last year's conference. And now, Eisman has joined the mix with his negative view too. We'll watch with great interest to see how this one plays out. For more great ideas from hedge fund managers, head to our aggregation of notes from the Ira Sohn Investment Conference and be sure to also check out our hedge fund portfolio tracking series.

Ira Sohn Conference Notes: Investment Ideas From Hedge Fund Managers

This year's Ira Sohn Conference was packed with investment presentations from heavy hitting hedge fund managers including Seth Klarman, David Einhorn, Bill Ackman, David Tepper, Larry Robbins and more. Like the Value Investing Congress (in-depth notes from that recent event here), you get a plethora of ideas from top talent. Presentations at Ira Sohn in years past include Greenlight Capital's David Einhorn blasting Lehman Brothers before it failed and Pershing Square's Bill Ackman detailing his bullish stance on shares of General Growth Properties when they were trading below $1 (as they now trade north of $13).

We covered many of last year's Ira Sohn presentations for those interested and the list goes on, but you get the picture. Without further ado, let's dive into some of the investment presentations we've aggregated from various sets of notes that were sent to us, as well as the live-tweeting of NY Times' Michael de la Merced and additional coverage from Barron's Tiernan Ray. We'll post up more in-depth presentations as they become available.


David Tepper of Appaloosa Management: Tepper was nonchalant in the outset of his presentation where he mentioned that his firm had lost $1 billion in AUM over the past month, yet he shrugged his shoulders and joked 'what are ya gonna do?' He then shifted to his current investment ideas such as his bet on AIG 8.175 junior subordinated debt. It trades somewhere around 70 cents on the dollar and he thinks this mispricing is due to a misunderstanding of AIG's capital structure. Additionally, Tepper likes Bank of America (BAC) and thinks it could see $27 in the next year. Sticking with banking, he also likes Spanish giant Banco Santander (STD). Lastly, Tepper also likes commercial mortgage backed securities (CMBS) here. Regarding the economy and a potential turnaround, he is hopeful and thinks we can handle it. His funds are typically invested in 70% debt and 30% equity. Currently, his debt exposure is 50% corporate and 20% asset backed. We recently detailed Appaloosa's portfolio for those interested in the rest of Tepper's investments.


David Einhorn of Greenlight Capital: Einhorn had all kinds of negative things to say about the creditworthiness of the US. His presentation was entitled, "Good News for the Grandchildren" implying that grandchildren won't have to pay off the government's spiraling debt. Einhorn actually thinks that a crisis has unfolded already and our generation will be the ones paying for it. He says it is very necessary to address the situation now rather than spiral into a debt crisis. Einhorn again lambasted the credit ratings agencies and thinks official ratings should be eliminated. He notes that Treasury Secretary Timothy Geithner is 'all-in' because he thinks that the US's credit rating will never be cut. To this though, Einhorn said, "I don't believe a US debt default is inevitable." In his presentation, Einhorn mentioned that he is still short Moody's (MCO) as well as McGraw Hill (MHP), the parent company of ratings agency Standard & Poors. Einhorn originally laid out a short thesis on these names at last year's Ira Sohn Conference in a presentation, The Curse of the Triple-A.

Einhorn then shifted the discussion to real-world costs and inflation. He went on to say that, "if your goal is to never see inflation, you will never see it until it is rampant." Einhorn was critical of the government's zero interest rate policy and warns it can create another bubble. He thinks that higher rates would actually lead to increased lending in the private sector because right now all you're seeing is banks playing the yield curve. Einhorn outlined all the past scenarios where the Federal Reserve didn't see a bubble until it was too late: from Long Term Capital Management to the dot-com bubble to the housing bubble and now to the sovereign debt crisis.

In terms of investment ideas, he likes African Barrick Gold (LON: ABG) traded in London. He thinks this name is cheap and could eventually be added to various indexes as well which would serve as a catalyst for institutional buying. Einhorn ended by saying, "We own some gold and some gold stocks for our investors and for ourselves. We will worry about our grandchildren later." If you'll remember a long while back, we first detailed when Greenlight Capital started storing physical gold. In recent activity, regulatory filings disclosed Einhorn's new position in NCR and we've also detailed Greenlight's portfolio. To learn more about Einhorn and his investment process, we recommend checking out his book, Fooling Some of the People All of the Time.


Bill Ackman of Pershing Square Capital Management: In typical Ackman fashion, he crammed an 80-slide presentation into 15 minutes. He proposed a "Wait to Rate" system to reform the rating agency business where it would be illegal for an agency to issue a rating within sixty days of the security's issuance. And if the agencies mess up, then they should lose their status. Turning to specific investment ideas, Ackman again focused on General Growth Properties (GGP). Some of you will remember that Ackman presented this same idea last year when shares were ridiculously cheap. Last year's premise with this name was an argument that the company's assets were worth more than their liabilities and that this bankruptcy was different than most.

This year, Ackman's GGP thesis continues on in that he sees very little mall construction over the next three to five years, an area GGP already has a dominant position in. He highlights that GGP is being split up into two entities: GGP & GGO. GGP would be the cash-flow generating side of the business and GGO would represent underperforming but valuable assets. Lastly, Ackman quickly remarked that his firm Pershing Square has been buying Citigroup (C) in recent weeks and has assembled a position of 150 million shares, but ran out of time to elaborate on the stake. For more on Ackman's investing style, he is the subject of Christine Richard's new book, Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff. Additionally, we've previously profiled Pershing Square and detailed Ackman's portfolio.


Seth Klarman of Baupost Group: Klarman continued his stern and gloomy comments from last week. He essentially gave a speech on what he would say if he were called in front of Congress to discuss Wall Street. He likened short sellers to policeman and reiterated the fact that they are not evil. He commented negatively on risk regulators, saying that they will inevitably make mistakes and that they won't be able to head off the next crisis at the pass. He feels the market should work itself out and that there should be no bailouts and that only the strong should survive. Klarman noted that many institutions have been bailed out and that the government's action related to AIG has 'raised moral hazards to new heights.' Klarman also joined in on the berating of the ratings agencies saying something should be done about them. Lastly, Klarman says that anyone in a transaction with a counterparty thinks the other investor is wrong, that's the beauty of a market. Just a few days ago we highlighted Seth Klarman's recommended reading list so definitely check that out. We also posted a summary of Klarman's speech at the CFA conference and have previously detailed Baupost Group's portfolio as well.


Steve Eisman of FrontPoint Financial Services Fund (Morgan Stanley): This name should be familiar to those of you who have read Michael Lewis' The Big Short, as he was one of the investors profiled in the story of the subprime trade. His presentation was entitled, "Subprime Goes to College" and as you can guess, he's negative on for-profit education companies. Those of you who followed the Ira Sohn Conference last year will remember that Jim Chanos gave a similar presentation berating these companies. Eisman sees Washington continuing to clamp down on the industry after these companies hired seemingly every lobbyist out there in previous years. He notes that a key to the problem here is the 'rating' these institutions receive from accreditation boards and he likens these boards to the ratings agencies who blessed subprime mortgages.

Eisman focused specifically on Apollo Group (APOL) and noted that if employment figures started to rise, APOL & others could see EPS declines of 40% annually. His presentation called out numerous other players in the space, including ITT Educational (ESI), Corinthian Colleges (COCO), and Education Management (EDMC). Eisman also painted Washington Post (WPO) in a negative light due to their ownership of the Kaplan test preparation business. That last one is intriguing because we recently saw Roberto Mignone's hedge fund Bridger Management buy shares of Princeton Review (REVU), a fellow test prep service.

The dichotomy of opinion continues as the for-profit education space has been an area ripe for debate. We've seen many prominent hedge fund managers own sizable stakes as Stephen Mandel's Lone Pine Capital has been bullish on education plays. That said, we've also noted that some of these managers have had a recent change of heart. David Stemerman's Conatus Capital had been long and sold out of their education plays. Andreas Halvorsen's Viking Global also exited Apollo Group recently. Additionally, there are also numerous high profile detractors such as Chanos and now Eisman.


Jamie Dinan of York Capital: Dinan's first idea was Coca Cola Enterprises (CCE) as they saw Coca Cola buy their bottling operations in the US earlier this year. He loves CCE's free cash flow. We've actually seen numerous other prominent hedge funds owning CCE shares as well, so they're definitely not alone in this pick. Dinan's second bet is on ING (ING). He values it at 1.2x book resulting in a value of 9.32 euros a share. He also noted that post bankruptcy equities are good places to be. This is a sweet spot for York Capital given their focus and he cited Lyondell (LALLF) as an example as he thinks it's worth $22 (it currently trades around $17). We just yesterday detailed some of York's recent portfolio activity for those interested.


Larry Robbins of Glenview Capital: Robbins highlighted that the market's P/E multiple is 12.3x and as the political presence in Washington grows, the P/E shrinks. He thinks now is a great time for stockpicking and not cash, 10 year treasuries or debt. He says to buy definitive growth and avoid high valuations. In particular, Robbins likes McKesson (MCK), Express Scripts (ESRX), Life Technologies (LIFE) and Fidelity National Information (FIS). Regarding FIS specifically, he agrees with the board's decision to reject Blackstone's bid and is in favor of the leveraged recapitalization plan. Regarding Express Scripts, he sees stable earnings and points out they have cash on hand to buy back stock or make acquisitions. We've pointed out that Andreas Halvorsen's Viking Global is bullish on ESRX as well. On Life Technologies, Robbins highlights organic growth, a defensive business mix, and potential industry consolidation. He also likes McKesson because it has a ton of cash, great free cash flow, and is trading at 11x earnings. For more from Robbins, we've previously outlined his thoughts on the case for global equities in 2010 at a hedge fund panel.


Jon Jacobson of Highfields Capital: Jacobson, formerly of Harvard's endowment and now one of the founders of Highfields, listed Sallie Mae (SLM) as his favorite pick. The main thesis here is that it is moving into a fee-based business with a great management team. He noted that the street has had a hard time valuing shares due to the gross leverage. And while this play is risky, he thinks it's undervalued. In a run-off scenario, Jacobson thinks SLM is worth between $15 and $25. While Sallie Mae is term funded, he argues they are adequately capitalized. He mentioned its legacy "FFELP" business is worth $6-8 a share on its own. SLM trades at 2x earnings and many of their competitors are essentially gone. SLM enjoys economies of scale, the credit quality of their loans is getting much better, and Jacobson also mentioned insider buying. Shares were up in aftermarket trading following his presentation. Shifting to the general commentary, Jacobson also cited his concern for the climate in Washington as he claims there is no leadership and that many US states are the American equivalent of Greece, bankrupt or about to be. Overall, he feels that the government is simply delaying these problems for future generations. We've covered some of Jacobson's previous thoughts at a hedge fund panel where he addressed whether or not there is alpha in asset allocation.


Daniel Arbess of Perella Weinberg Partners/Xerion Capital: Arbess' presentation focused on China. He specifically likes Yum Brands (YUM), as the fast food chain has great exposure to that country. Additionally, he likes Ivanhoe (IVN) in the metallurgical coal space as he's bullish on gold and commodities as well. On gold specifically, he says "I doubt we're at a top" but at the same time he does not like it as a safe haven against inflation. In currency trades, he likes a trade of short the Japanese yen and long the Canadian dollar. Arbess also listed Celanese (CE) as one of his picks. Lastly, he sees more distressed credit opportunities coming up as maturities start to roll in. And like many other presenters, he had an unpleasant view of the current political administration and their actions. Turning lastly to the debt crisis, Arbess thinks there are no quick fixes and the outcome is unpredictable. In the past, we've previously covered some brief portfolio activity out of Perella Weinberg.


Jeremy Grantham of GMO: His favorite picks were commodities and in particular, timber. He highlights this because it's the only asset class that did not lose value in the 1970's or during the Great Depression. His second pick centered on emerging market equities and thirdly, Grantham also favors high quality US stocks. Armed with a chart displaying equity valuation of mega caps since 1955, he points out that mega cap valuation has declined since 1955 and they currently represent great value. Shifting to macro thoughts, he thinks the UK housing bubble has yet to burst and that prices could fall as much as 33% more and also warned of a possible bubble in Australia.


Niall Ferguson: He mentioned that now is not the time to short Treasuries. However, he also cautioned to avoid holding 10 year bonds to maturity. Scarily enough, Ferguson thinks the US will be like Greece by 2013 and that we won't be able to 'print' our way out of this mess.


That wraps up our aggregation of notes from the Ira Sohn Investment Conference. If you enjoyed our coverage, please consider receiving our free hedge fund updates via email or our free updates via RSS reader. Thank you to those that sent us notes and stay tuned as we'll post up in-depth presentations as we receive them.

Bruce Berkowitz's Fairholme Fund Boosts AIG Stake

Fund manager of the decade Bruce Berkowitz and his Fairholme Fund recently increased their stake in American International Group (AIG). We had previously revealed his new AIG stake and then posted up when SEC filings confirmed his position size. Fairholme recently filed an amended 13G with the SEC disclosing that they now have an 18.9% ownership stake in AIG representing 25,467,800 shares due to activity on April 30th, 2010. This is quite a sizable increase as Berkowitz previously had an 11.1% stake in the company. This means that over the past month and a half, Fairholme has added 10,429,700 more shares, a 69.4% increase in their position size.

Additionally, we see that Berkowitz has filed another regulatory disclosure with the SEC regarding his position in Americredit (ACF). In the filing (which was also made due to activity on April 30th), we see that Fairholme has reduced its ownership stake in ACF to 21.0%, down from 26.4%. We'll continue to track his latest investment activity.

It's clear that Berkowitz's portfolio theme revolves around betting on financials & turnarounds. Recent portfolio activity out of Fairholme Fund includes a brand new stake in Goldman Sachs (GS) that was revealed by Berkowitz last week as mentioned in a summary of the Value Investing Congress.

Taken from Google Finance, AIG is "a holding company, which through its subsidiaries, is engaged primarily in a range of insurance and insurance-related activities in the United States and abroad. AIG's four reportable segments include: General Insurance, Domestic Life Insurance & Retirement Services, Foreign Life Insurance & Retirement Services, and Financial Services."

Americredit is "an auto finance company operating in the automobile finance business. The Company purchases auto finance contracts for new and used vehicles purchased by consumers from franchised and select independent automobile dealerships in its dealership network."

You can view all of our past coverage of Berkowitz's Fairholme by scrolling through our posts via that link.

Jim Rogers Still Bullish on Commodities

Wait for it. Jim Rogers is... *gasp* bullish on commodities still! Now, who would have ever guessed that?! On a serious note, he still is adamant that 1999 was the start of the commodity bull market and he is bullish on the prospects. What's interesting is that he fully admits it will be a bubble at some point, but he's not worried about that right now as that's a 'way's off.' This interview comes after we saw Rogers recently start some short positions as he wagers the market is overdue for a correction.

Of course he also thinks gold is going up and he expects it to be at $2,000 at least by the end of this decade, if not higher. In the past we've posted up plenty of hedge fund research on gold, all of which we recommend checking out. He recently sat down with Bloomberg to discuss his most recent thoughts on April 7th. If you come to the site, below you'll find an embedded video of his quick interview:



So, he'll continue to ride the longer term trend that he feels is in-tact here. Rogers isn't a big believer in market timing and he'll gladly wait out the trend over the long-term. We check in on Rogers from time to time just to see what he's saying, but he appears in the media quite often, re-iterating a lot of his views anyways. Keep in mind that Rogers and George Soros previously managed the highly successful Quantum Fund and have since gone their separate ways. Head over to see Rogers' recent rationale for starting short positions as well as our coverage of George Soros' hedge fund portfolio.

David Einhorn's Vodafone (VOD) Thesis Coming to Fruition?

In the past we posted up David Einhorn and hedge fund Greenlight Capital's investor letter. In it, we learned that he was bullish on shares of Vodafone (VOD) as it represented one of the larger positions in their portfolio. Greenlight Capital of course has an impressive track record, returning 22% annualized. Einhorn's thesis on Vodafone argues that VOD's most valuable asset is its 45% ownership stake in Verizon Wireless. (Verizon Communications (VZ) owns the other 55%).

Previously, Vodafone had received a dividend from Verizon Wireless. However, they haven't received one in quite some time as Verizon Wireless' cashflow was being used to pay back debt to Verizon Communications. Verizon Wireless is expected to be debt-free by the end of next year and this is where the catalyst component of this investment comes in. Einhorn believes the restoration of this Verizon Wireless dividend or some other transaction is highly likely. And as you'll find out below, this may very well be the case.

Greenlight's average cost of their position was £138 per share. At the time of their purchase, they estimated that VOD was trading at "less than 3x estimated 2010 EBITDA, versus in excess of 5x for the peer group average in Europe." And while they wait for the catalyst to come to fruition, they still capture a nice 6% dividend. Einhorn purchased the regular VOD shares traded on the London Stock Exchange, but US investors can still purchase the ADR shares traded on the Nasdaq (ticker VOD as well).

Vitaliy Katsenelson of Investment Management Associates and ContrarianEdge also previously elaborated on reasons to own Vodafone. In the past he has labeled it a 5.5% inflation protected bond with a free non-expiring call option because of its solid dividend and large potential catalyst. If you pull out VOD's Verizon Wireless stake, he points out that the company is trading at an enterprise value to EBITDA (EV/EBITDA) of 5.5 and a price to free cashflow of 8.2, deeming it cheap on valuation.

Katsenelson also highlights some of Vodafone's other valuable ownership stakes. It owns 3.2% of China Mobile (CHL) and 44% of Societe Francaise du Radiotelephone (SFR), both of which it receives dividends on. Lastly, he points out that VOD's debt is not a problem as it can be paid off with cashflows. Below is Katsenelson's slide outlining the bullish case for Vodafone:

(click to enlarge)

Turning to the catalyst portion of the thesis, let's now focus on the recent article from the FT where we learned that Vodafone will be pressuring Verizon Communications to pay up. The article highlights that there's really three scenarios here that would please Vodafone (VOD) shareholders:

- Verizon Wireless resumes its dividend payments to Vodafone
- Vodafone and Verizon merge
- Vodafone sells its stake in Verizon Wireless

Many will argue that the resumption of dividend payments is the most likely, but event-driven stakeholders wouldn't mind any of the above. After all, we've heard that many hedgies have a long VOD, short VZ trade on.

A potential merger or sale though could prove problematic. As the FT article notes, "The UK group's willingness to countenance an all-share merger with Verizon Communications is partly based on legal advice that any sale of Vodafone's Verizon Wireless stake would attract a large tax liability. However, one person familiar with Vodafone said a merger was not attractive, partly because of a lack of synergies between the US and UK groups."

What's interesting though is that Verizon Communications' finance director John Killian did note that, "we are a long way away from when I really need to seriously think about that particular issue," referring to a potential scenario where they would restore Verizon Wireless' dividend in 2012. So, perhaps this catalyst is further off than people thought.

For now, nothing is decided. While these on and off discussions have seemingly been going on forever, it does appear as if VOD has gained some leverage at the negotiating table as Verizon Communications struggles to compensate for their declining fixed-line phone business. We'll have to see if the ball starts rolling now and if Einhorn's VOD thesis could eventually come to fruition. After all, the article's informant claims that VOD has the upper hand in negotiations. In the mean time, many investors seem content to wait and pocket the dividend.

For more on Greenlight Capital, head to our coverage of the rest of David Einhorn's portfolio as well as their prior investor letter.

Last Chance For The Value Investing Congress Discount

A friendly reminder that this is your last chance to receive the discount to the Value Investing Congress we've secured. Market Folly readers can receive the final discount with code P10MF8. Take advantage of it while you can because it expires on March 16th.

The conference takes place on May 4th & 5th 2010 in Pasadena, California at the Langham, Huntington Hotel & Spa. Notable speakers include Eric Sprott, Bruce Berkowitz, Mohnish Pabrai, Whitney Tilson, Paul Sonkin, Guy Spier and many more fund managers. At the event you'll receive actionable investment ideas that will more than pay for your cost of admission. And not to mention, it will be a great opportunity to network with many other great investors.

The Value Investing Congress is already 75% full and again please note that this final discount expires at midnight on March 16th. After that, you will be paying $1,300 more to attend the conference. Click here to receive your discount with code P10MF8 before it expires next week!

Value Investing Congress 33% Discount Expires Soon

The Value Investing Congress is quickly approaching and we wanted to remind everyone to take advantage of the 33% discount for our readers before it expires in 8 days. Simply put, it's the best investment conference out there as you'll hear insightful investment ideas and presentations from some of the top hedge fund and investment managers out there. Not to mention, it's a great networking opportunity. Market Folly readers can save 33% with discount code P10MF6.

Here's the list of prominent investors who will be presenting at the two-day event:

• Bruce Berkowitz, Fairholme Capital Management
• Eric Sprott, Sprott Asset Management
• John Burbank, Passport Capital
  
• Mohnish Pabrai, Pabrai Investment Funds
• Paul Sonkin, The Hummingbird Value Funds
• Thomas Russo, Gardner, Russo & Gardner
• David Nierenberg, The D3 Family Funds
• Lloyd Khaner, Khaner Capital
• J. Carlo Cannell, Cannell Capital
• Patrick Degorce, Thélème Partners
• Whitney Tilson & Glenn Tongue, T2 Partners
• Guy Spier, Aquamarine Fund
• Amitabh Singhi, Surefin Investments
• Richard Vogel, Alatus SA

And then here are the specifics for the Value Investing Congress event:

When: May 4th & 5th, 2010

Where: Pasadena, California at The Langham, Huntington Hotel & Spa

Discount: Market Folly readers click here to receive your $1,450 discount with code: P10MF6. Act quickly because the discount expires in 8 days.

Hendry, Taleb & Faber: How To Invest $100 Million In 2010

At the recent Russia 2010 conference, an interesting question was posed: how would you invest $100 million for 12 months? The panel included hedge fund manager Hugh Hendry, black swan-er Nassim Taleb, and Marc Faber, among others.

Taleb presented a few ideas that he would allocate to the 'risky' portion of the portfolio. He likes a short of the S&P 500 and a long of precious metals (gold, silver, platinum) in a fixed ratio of around 1.5 to 1. He also suggests to buy an out of the money option on hyperinflation through a basket of instruments on gold, treasuries, etc. He doesn't care about inflation, he wants to possibly game the slim chance of hyperinflation. He says you will probably lose money on the play, but if you're right and hyperinflation hits, you can win huge. Lastly, he also says that you should be shorting US treasuries, something we've seen numerous prominent hedge fund managers recommend.

Hendry then took the mic and was his usual entertaining self. He focused on how everyone at the conference had a different opinion and he was sick of opinions, saying "Who cares about that opinion? You pay people for what they do with that opinion." And he brings up a very good point. It's one thing to have a trade idea or research, but it is quite another thing to execute it. We've postulated that this could potentially be the problem over at Peter Thiel's global macro hedge fund Clarium Capital as they've had a rough past two years.

Hendry says that he doesn't even need to spend all the $100 million to invest, but rather just a tiny amount of it. He simply underwrites the risk that the Bank of England will cut rates further. He takes the proceeds from this and uses it to cheapen an option that bets against the English central bank raising interest rates over the next four months. If they raise rates, all he loses is his premium, which is not a lot. However, if nothing happns, he can make five times his money. It's all about the risk/reward skew. He also mentioned that he had a John Paulson-esque play where you could make 75 times your money and only risk a tiny amount, but he teased the audience and said he'd save that for another time. We've previously covered some of Hendry's hedge fund commentary on the site as he's been the resident deflationist.

Some of the answers from other panelists were also intriguing as they favored emerging market consumer plays. They also recommended avoiding: credit, real estate (especially commercial) in the western world, as well as western financial institutions.

We highly recommend watching the video of the hour-long panel here.

Value Investing Congress Speakers Announced & Discount

The Value Investing Congress is back on May 4th & 5th 2010 in Pasadena, California at The Langham Huntington Hotel & Spa. This event is a great place to network and to hear actionable investment ideas from prominent hedge fund managers. We've secured a discount for our readers and you can save $1,600 off the regular price if you register with code P10MF4 by January 21st.

They've announced the list of speakers at the Spring event and there are some great names lined up:

• John Burbank, Passport Capital
• Bruce Berkowitz, Fairholme Capital Management
• Paul Sonkin, The Hummingbird Value Funds
• Mohnish Pabrai, Pabrai Investment Funds
• Patrick Degorce, Thélème Partners
• Thomas Russo, Gardner, Russo & Gardner
• David Nierenberg, The D³ Family Funds
• Lloyd Khaner, Khaner Capital
• J. Carlo Cannell, Cannell Capital
• Whitney Tilson & Glenn Tongue, T2 Partners

Mohnish Pabrai's hedge funds were up over 118% for 2009 so it will be interesting to see what ideas he has this time around. And then of course here on the blog we've covered portfolio movements from John Burbank's Passport Capital, Whitney Tilson's T2 Partners and Bruce Berkowitz's Fairholme Fund, so we know they'll provide thought provoking ideas as always.

It truly is THE premier investing conference out there. Speaking about his experience at the last event, Joel Greenblatt of Gotham Capital says "it was a fabulous event and I give it my highest recommendation."

Click here to receive your discount to the Value Investing Congress and be sure to use discount code: P10MF4.