Tim Hurd Long Blackrock: Invest For Kids Chicago

We're posting up notes from Invest For Kids Chicago 2014.  Next up is the emerging manager panel featuring Tim Hurd of Blue Spruce Capital who pitched long Blackrock (BLK).


Tim Hurd's Invest For Kids Chicago Presentation


Idea: BlackRock (BLK)

•    They pursue a private equity approach to public markets.
•    Background is Madison Dearborn. Concentrated fashion, no more than 15 stocks with 3 year or more holding period.
•    Grinder – a company with high FCF that can do well over time.
•    Thesis – highly diversified company across clients, product, style and regions.
•    BlackRock wins regardless of what happens in the capital markets.
•    Mostly passive.
•    iShares franchise is the gem. Grown 20% - 30% range, thinks it can grow 11% or more. ETF business is an oligopoly. Return/scale business hard to break into.
•    BLK’s ETF franchise includes equity and fixed income ETFs.
•    Retail AUM growing.
•    Fee growth leads AUM growth. iShares and retail generate margin accretive growth.
•    FCF share has historically exceeded net income (excluding changes in trading investments).
•    Myths about BlackRock : too big to grow, ETF are low fee/low margin business, great rotation fears.
•    PIMCO is the gift that keeps on giving to BLK and other competitors. Pimco Total Return lost another $25B +, BLK and others benefiting.
•    ETFs gain incremental margins of 80% - 90%.  Some ETF products like HY carry 50 bps fee.


Be sure to check out the rest of the hedge fund presentations from Invest For Kids Chicago here.

Nancy Prial Long iCAD: Invest For Kids Chicago

We're posting up notes from Invest For Kids Chicago 2014.  Next up is the emerging manager panel featuring Nancy Prial of Essex Investment Management who pitched long iCAD (ICAD).


Nancy Prial's Invest For Kids Chicago Presentation

Small and Micro-cap growth investor.

Idea: iCAD (ICAD)

•    Down 50% since FY04. Believes there are catalysts in place to return to growth.
•    Innovative cancer detection and radiation therapy solutions.
•    Disruptive platform technology to enable early detection, faster treatment and better outcomes.
•    Catalysts for growth: shift from 2D to 3D for mammography.
•    Radiation business growing 50% + over the next few years.
•    Potential market opportunity of $1B. Favorable results from Hologics and GE. Got into the business through an acquisition.
•    Opportunities to expand outside of the USA.
•    Penetration of technology is 1% - 2%. Thinks they can grow from $30MM a year in business to 25% penetration, which equals a bllion dollar + opportunity
•    Operating income turned positive.
•    Trades for less than 3x revenue, below peers with high gross margin products selling into large under-penetrated markets.
•    beat 8 out of the last 8 quarters for revenue and 5 out of the last 8 EPS estimates. Note only one analyst covering the name on the sell-side.
•     $170MM market cap, thinks the SOTP value is $16. Trades for $11.


Be sure to check out the rest of the hedge fund presentations from Invest For Kids Chicago here.