Whitney Tilson's Presentation on Alphabet and Facebook

Whitney Tilson of Kase Capital Management gave a presentation at the 14th annual Value Investing Seminar in Italy on two stocks: Alphabet (GOOG) and Facebook (FB).

Tilson starts by doing a bit of a post-mortem on a call he made against Google some time ago. He points out that the company enjoys a flywheel of network effects and economies of scale: large user base > large advertiser base > better monetization > most R&D dollars > best product > high barriers to entry.


That's obviously not anything new, but he points out that valuation isn't crazy at 28x 2017 EPS and 13x EBITDA estimates given that the vast majority of incremental ad spending is ending up on GOOG or Facebook's platforms.  And if you back out GOOG's cash ($126 per share) and 'other bets' ($50 per share), you get a valuation much more in line with the S&P for a company that he says is "vastly superior" to the average corporation.

On Facebook (FB), Tilson points out the company has higher margins than GOOG, and revenue growth is higher as well.

Embedded below is Tilson's presentation on GOOG and FB:



You can download a .pdf copy here.

David Einhorn's Sohn Presentation: Short Core Labs

We've posted up notes from the Sohn Conference New York and today are also posting the slideshow presentation from David Einhorn of Greenlight Capital.  He pitched a short of Core Labs (CLB) with the thesis that it's a cyclical company disguised as a secular grower.

He thinks fair value is $62, or around 40% lower as the company has exposure to international oil field capex budgets that won't recover.

Embedded below is David Einhorn's Sohn conference presentation on Core Labs:



You can download a .pdf copy here.

For more from this conference, we've also posted up Bill Ackman's presentation on HHC.

Bill Ackman's Sohn Presentation on Howard Hughes: SimCities

We've posted up notes from the Sohn New York Investment Conference and at the event Pershing Square's Bill Ackman pitched a long of Howard Hughes (HHC).

He's actually the Chairman of the company and has been a longtime shareholder.  His pitch is included here in its entirety.

Embedded below is Bill Ackman's Sohn Conference presentation on Howard Hughes entitled 'SimCities':



You can download a .pdf copy here.

Be sure to also check out notes from the Sohn Conference New York as well as Next Wave Sohn.

Howard Marks: The Truth About Investing

Oaktree Capital's Chairman Howard Marks has put together a slideshow entitled The Truth About Investing which was posted by the CFA Society.  In it, he outlines the nuances of investing and also includes notable quotes from others.

Some highlights include:

"The price of a security  at a given point in time reflects  the consensus of investors  regarding its value.  The big gains arise when the consensus turns out to have  underestimated  reality.    To be able to take advantage of such divergences, you have  to think  in a way that departs from the consensus; you have to think  different and  better.   This goal can be described as “second - level thinking” or “variant perception.”

Also:

"Superior performance doesn’t come from being right, but from being more right  than the consensus.   You can be right about something and perform just average if  everyone else  is right, too.  Or you can be wrong and outperform if everyone else is  more wrong."

As well as:

"To be a successful investor, you have to have a philosophy  and process you believe  in and can stick  to, even under pressure.   Since no approach will allow you to profit  from all types of opportunities or in all environments, you have to be willing  to not  participate  in everything  that goes up, only the things that fit your approach. To be a  disciplined investor, you have to be able to stand by and watch as other people make  money in things you passed on."


Embedded below is Howard Marks' slideshow presentation: The Truth About Investing:



You can download a .pdf copy here.

For more from this investor, be sure to check out his book, The Most Important Thing, which is highly recommended if you found the above insightful.

We've also previously posted Howard Marks' latest memo: Expert Opinion.

Marcato Capital's Presentation on Bank of New York Mellon

Mick McGuire's hedge fund firm, Marcato Capital Management, has released a letter and presentation to shareholders of Bank of New York Mellon (BK) outlining their thoughts on the company and why they feel a leadership change is in order.

Embedded below is Marcato's letter to BK shareholders:



You can download a .pdf copy of the letter here.


And also embedded below is Marcato's presentation on Bank of New York Mellon:



You can download a .pdf copy of the presentation here.


McGuire is known for taking an activist approach in his investments and this case is no different.  Prior to founding Marcato, he worked at Bill Ackman's Pershing Square, another well known activist investment firm.

Starboard Value's Presentation on Transforming Darden Restaurants

Jeff Smith's activist firm Starboard Value is out with a presentation on their position in Darden Restaurants (DRI).  They're pushing for change here and has put together a massive 293 slide deck illustrating the company's margin improvement opportunity, the need for a turnaround in its Olive Garden brand, among other things.

Embedded below is Starboard Value's presentation "Transforming Darden Restaurants":



You can download a .pdf copy here.

For more on Starboard, check out Jeff Smith's presentation at the recent Value Investing Congress as well.

Marcato Capital's Presentation on Sotheby's & Dillard's

Mick McGuire of hedge fund Marcato Capital Management recently made a presentation on both Sotheby's (BID) and Dillard's (DDS) at the Active Passive Investor Summit.

They are activist investors in Sotheby's and their thesis is summed up by: significant levels of unproductive capital, inappropriate mix of debt & equity, and desire for more shareholder friendly capital allocation.  Daniel Loeb's Third Point is also a BID activist here.

Marcato also presented a passive investment example in Dillard's where activists got involved in the stock a few years ago, the stock continued to drop and the activists eventually bailed on their position. 

Dillard's went on to turn itself around and Marcato thinks it's an attractive passive investment opportunity today as it trades at a 12% free cash flow yield and is using FCF to buy back shares.  The hedge fund thinks DDS could head as high as $155 per share (currently trades around $95).

Embedded below is Marcato's slideshow presentation:




You can view other activity from Marcato here.

Kyle Bass on Global Outlook Pitfalls and Opportunities

Hayman Capital's Kyle Bass recently gave a talk at the Dallas Fort Worth CFA Society for the Texas Investor Summit entitled "Global Outlook Pitfalls and Opportunities For 2014."  In it, he walks through monetary policy and the various scenarios that could unfold and their effects.

In the presentation, he touches on three main topics: the US and tapering, Japan and quantitative easing, as well as emerging markets and slowing growth.

Embedded below is Hayman Capital's .pdf presentation:





You can watch the video of his presentation by clicking here.  You can view recent portfolio activity from Hayman here.


H/T to ValueWalk for finding the video.

Pershing Square's Presentation on Allergan/Valeant: The Outsider

Bill Ackman's hedge fund firm Pershing Square Capital has released a presentation called "The Outsider" that details perspectives from Allergan's largest shareholder and talks about a potential combination with Valeant Pharmaceuticals (background on Pershing's involvement via that link).

One of the main concepts detailed in the presentation is platform value.  Pershing notes that, "Considerations in valuating this asset include management's ability to (1) identify new acquisitions, (2) execute those acquisitions on reasonable terms, and (3) integrate them effectively."

Though Ackman is newer to the VRX story, other hedge funds are not.  ValueAct Capital has been invested in the name for many years and has seen Valeant do all three of the above time and time again.

This is due in large part to a fantastic management team with CEO Michael Pearson at the helm.  There's a great book on the best capital allocators of our time called The Outsiders, which made Warren Buffett's recommended reading list.  Ackman argues Pearson should be included in that group.

Embedded below is Pershing Square's slide deck on Allergan and Valeant, entitled "The Outsider":




You can download a copy here.

Greenood Investors' Thesis on Fiat (FIATY): Video Presentation

Steven Wood and Greenwood Investors have put together a video detailing their thesis on Fiat (FIATY).  Entitled "The Two Year Honeymoon," they outline why they think Fiat is still one of the best investments they've found.

Four reasons for their bullishness include: a bearish consensus (so they have a variant perception), the product cycle, exceptional management, and valuation at the cycle low.

Rather than type out all the details of their work, we'll let them walk you through their thoughts.  Embedded below is the video of GreenWood's Fiat thesis:



If you missed it, we previously posted Greenwood's thesis on Exor SpA & Fiat as well.

Barington Capital's Presentation on Darden: Perspectives on Value Creation

Below is Barington Capital Group's presentation on shares of Darden (DRI).  Their slideshow, entitled "Perspectives on Value Creation" highlights the company's underperformance and their thoughts on how DRI can create two focused restaurant companies, unlock their real estate asset value, and reduce operating expenses.

Embedded below is the .pdf of the presentation:

Baker Street Capital's Sears Presentation: The Real Estate Long Case

There has been a short-squeeze of sorts going on in shares of Sears Holdings (SHLD) over the past month as SHLD has rocketed from $38 to $62.  At least part of the reason?  The real estate long case making the rounds via a presentation by Baker Street Capital Management.

This stock has been a battleground between hedge fund shorts and value investor longs for quite some time.  Shorts point to a deteriorating retail business, while longs point to the value in Sears' real estate.

Hedge funds like Lone Pine Capital have disclosed put option positions in 13F filings as of Q2 indicating their bearish stance on the company.  On the other hand, Bruce Berkowitz has been long SHLD precisely under the real estate thesis.

Not to mention, you have a hedge fund manager at the top of the SHLD ownership chain via Eddie Lampert as well.

With a smaller float, SHLD shares have rocketed higher lately so let's take a look at what all the fuss is about.


Baker Street Capital's Presentation on Sears Holdings (SHLD):
Valuing the Real Estate

Embedded below is Baker Street Capital's presentation: "The Case For Sears Holdings (SHLD): With Our Proprietary Property-by-Property Real Estate Appraisal."

Investment Thesis on Exor SpA (EXO IM) & Fiat (F IM): The Italians Are Coming

Late last year, we noted that Children's Investment Fund was short Fiat and Jim Chanos' Kynikos Associates has been short as well.  Today, we present somewhat of an opposing view via a bull case on the holding company that owns Fiat and Fiat Industrial: Exor SpA (EXO IM).

The following is a guest post from Steven Wood, CFA of Greenwood Investors entitled "The Italians Are Coming" that was originally published on his site here.


Investment Thesis on Exor SpA / Fiat (F IM)

Simply put, Greenwood's case is based on undervaluation relative to peers, industry-leading growth trajectories, and numerous catalysts ahead.  They like that Exor has been buying back shares at a 33-44% discount to NAV.

Their favorite investment of Exor's is Fiat SpA (F IM).  They think Fiat is a double as cost savings are realized.  Fiat has the Fiat brand, as well as Maserati and Alfa Romeo.  They also own a 90% stake in Ferrari as well as a 58.5% stake in Chrysler.  Greenwood posted an update on Fiat individually back in May here.

Fiat Industrial is the other main asset of Exor SpA and is comprised of 3 major businesses: Case New Holland, Iveco Trucks, and Fiat Powertrain.

Greenwood likes the portfolio of Exor's assets that you can acquire at a discount with upside via improvements in operations at both key companies.  Read on for the full in-depth breakdown of their thesis.

Embedded below is Greenwood Investors' pitch on Exor SpA:




You can download a .pdf copy here.

Trian Partners' PepsiCo White Paper: Nelson Peltz's PEP Thesis

Nelson Peltz's hedge fund firm Trian Partners today released a white paper on PepsiCo (PEP).  The activist investor owns $1.3 billion worth of shares and presented their thesis on PEP in a slideshow.

Trian argues that PepsiCo (PEP) is at a strategic crossroads and they've outlined 2 strategic alternatives to enhance shareholder value at the company.


Option A:  Merge PepsiCo With Mondelez

Merge PEP with Mondelex (MDLZ), creating a global snacks company.  This tie-up could lead to $175 of implied value per PEP share and approximately $72 of implied value per MDLZ share by the end of 2015.  It's also worth pointing out that Trian Partners owns a stake in MDLZ as well.


Option B: Split-Up PepsiCo 

If PEP doesn't pursue MDLZ, they argue the company should separate the snacks and beverages segments.  Under this scenario, they see $136 to $144 of implied value per PEP share by the end of 2015.


Embedded below is the full .pdf of Trian Partners' white paper and Nelson Peltz's analysis of PepsiCo:




You can download a .pdf copy here.

For more on these companies, don't miss Nelson Peltz's thoughts on PEP/MDLZ from the Delivering Alpha Conference today.

Glenview Capital's Presentation Revitalize HMA - The Case For Change

Earlier today we posted up a rare interview with Glenview Capital's Larry Robbins.  Today his hedge fund released a letter to HMA shareholders as well as a presentation entitled "Revitalize HMA - The Case For Change" as he attempts to replace 8 board members at Health Management Associates (HMA).


Glenview's Letter To HMA Shareholders

Embedded below:





Glenview's Presentation: Revitalize HMA

Embedded below:





Be sure to also watch Robbins' interview as he rarely appears in the media.

Scout Capital's Letter to Tim Hortons' Board

Adam Weiss and James Crichton's hedge fund Scout Capital today filed an amended 13D with the SEC regarding Tim Hortons (THI).  Per the filing, their position size in THI remains unchanged (we originally flagged Scout's activist position in THI here).

Scout has sent a letter to the board of directors outlining their issues with the company and we've embedded it below:




For more on this hedge fund, check out some of Scout's other portfolio activity here.

Jeff Saut & Scott Brown: Characteristics of Market Breakouts From Big Bases

Raymond James' market strategist Jeff Saut and chief economist Scott Brown have just released their 'Gleanings' report highlighting various charts that pull together economics, fundamentals, and quantitative analysis regarding the market.

The biggest point they've highlighted is that the market has a history of making 'big bases' and then ramping higher.  Saut points out that there have been four big bases that have exceeded 12 years since 1900:

- 1906 to 1924, 18 years
- 1929 to 1955, 26 years
- 1966 to 1982, 16 years
- 2000 to 2013, 13 years

Saut notes that, "Investor behavior reflects an underlying distrust or disinterest and is characterized by underinvestment in equities.  This results in a rebound that is relentless, providing little opportunity to buy on pullbacks."

With these long built up bases and the breakouts that often follow them, Saut highlights some common fundamental characteristcis:

- Rebound from high unemployment
- High government interest payments on debt
- Low investor allocation to equities
- Extremely high/low interest rates (alternates)


Embedded below is the Raymond James slideshow presentation, 'Gleanings: June 2013':




You can download a .pdf copy here.

For more from these gentlemen, head to Jeff Saut on the odds of a new secular bull market.

Michael Price's Presentation From The London Value Investor Conference 2013 (Video)

Last month, we posted up notes from the London Value Investor Conference 2013.  The event was a big success raising money for the charity Place2Be.  The conference has released video of the presentation from MFP Investors' Michael Price and we've embedded the video below:



For more from the event, be sure to check out notes from the London Value Investor Conference.

Notes From the London Value Investor Conference 2013: Marks, Price, Montier & More

Today we're pleased to present notes from the 2013 London Value Investor Conference.  The event features well known investors presenting investment ideas and insight in order to benefit children's charities The SMA Trust and Place2Be.  Summaries of each presentation are linked below:


Notes From 2013 London Value Investor Conference

Howard Marks (Oaktree Capital): The sweet spot in corporate bonds

Michael Price (MFP Investors): On investment process & 2 long ideas

James Montier (GMO): Latest asset allocation model

Gary Harding (Winton Capital): Key value metrics to focus on

Anthony Bolton (Fidelity China Special Situations Fund): On investment process & China

Gary Channon (Phoenix Asset Management): Long Glaxosmithkline

Richard Oldfield (OldfieldPartners): Long Nokia & long Hitachi

Simon Denison-Smith (Metropolis Value Fund): Long Cisco Systems & J. Smart

Ian Lance & Nick Purves (RWC): Effectiveness of value investing today & 1 long idea

Jeremy Hosking: Long AIG & long US Airways

Richard Titherington (JP Morgan): Emerging market opportunities

Michael Price's Presentation at London Value Conference: Long Hospira & Hess

Continuing our notes from the London Value Investor Conference 2013, the next speaker is Michael Price of MFP Investors.  He talked about his investment process and presented two long ideas: Hospira (HSP) and Hess (HES).


Price's Background

Michael Price first came to London as an investor in 1984. At the time few people in Europe used  a balance sheet focused value approach. Many companies were not covered by an analyst at  all and this encouraged Price as the lack of coverage made him feel that he was discovering new  opportunities. Price said that this was the opposite situation that you find at recent Berkshire  Hathaway annual meetings where 40,000 people focus on one company. He said to find opportunity  you need to get off the beaten track.


Price's Investment Process

Price talked about his investment process. Two-thirds of his portfolio is made up of stocks that trade  below two-thirds of their intrinsic value. The other third are special situations e.g., firms involved  in proxy fights, liquidations or a fight for control. From his 40 years of experience, excluding 2008  - he said we all need to forget about 2008 - that type of value portfolio will weather the storms.

What’s important is to buy cheap and be well diversified with at least 30-70 holdings. When you are  convinced that what you already own is cheap compared to comparable businesses you add to it.  When you have done lots of work and you gain conviction about an idea you can take the stake up  to 3 to 5% of your portfolio. Your top five positions might each be 5% of your portfolio. If you have  conviction you should add to holdings as they get cheaper. He values businesses by asking what a  potential owner would pay for the whole company.

Be prepared to wait patiently. If there is nothing to do, sit with cash. Cash is ammunition. An  investor should spend all of his or her time working on calculating intrinsic values waiting for the  market to throw out an opportunity. The definition of luck is preparation meeting opportunity.

Bad news creates opportunity: wait for bankruptcies, the death of a control person who owns  a large part of the business, litigation, government intervention and accidents. Always look at  the companies whose share price is most down to find value. Price said he also likes investing in  companies where management has built up intrinsic value and made mistakes.

In terms of market valuation today, Price said the market was reasonably priced but there are still  some opportunities to find securities that trade at two-thirds of their asset value.


Long: Hospira (HSP)

Idea: Long Hospira (HSP:NYSE).  Hospira had been a growth story until the FDA shut down one of its largest plants. The share price  went from $45 to $28 overnight. The growth investors sold to the value investors. Price thinks that  the company will have completely recovered in two years.


Long: Hess (HES)

Idea: Long Hess (HES)  Hess is a case where the management have stumbled. Hess is involved in a proxy fight with Paul  Singer’s Elliott Associates. It trades at a 50% discount. Price thinks there is likely to be four or five  new directors. The company with be divided into two parts and share buybacks with be agreed.  Assets will be sold off. John Hess is likely to step down. The outcome of the vote is due on May 16.  It is also possible that Hess may get bought out.


Michael Price said he also likes US banks (not European banks, though). He thinks Berkshire  Hathaway is 20% overvalued.


Book Recommendation

Michael Price highly recommended a book about Peter Cundill’s  investment approach by Christopher Risso-Gill (2011) “There’s Always Something to Do: The Peter Cundill Investment Approach."


Be sure to check out other investor presentations: notes from the 2013 London Value Investor Conference.