Aaron Cowen Long QSR & Adobe: Capitalize For Kids Conference

We're posting up notes from the Capitalize For Kids conference 2016.  Next up is Aaron Cowen of Suvretta Capital who pitched two long ideas: Restaurant Brands (QSR) and Adobe (ADBE)


Aaron Cowen's Presentation at Capitalize For Kids 2016

•    LONG Restaurant Brands (QSR). Franchiser of Burger King and Tim Hortons

•    Believes it can be a $75 stock (currently price of $44). Business model is a franchiser business model, it doesn’t own any stores.

•    3G is the management team behind this and has one of the best track records. Tim Hortons integration has been going very strong.

•    Believes it can do $3.00/sh in FCF going forward. Believes people are missing this because of all the merger accounting.

•    No real e-commerce threat at this point and believes e-commerce is a positive for the business.

•    Almost all of 3G’s platforms have compounded capital at very high rates.

•    They have dropped operating expenses by a significant amount at Tim Hortons (lowered costs by 60%).

•    Believes the company ramps up acquisition machine every 2-3 years and is likely due for one now. Targets could potentially be YUM, Dairy Queen, Popeyes, among others. Believes this is a free call option on management doing something smart.



•    LONG Adobe (ADBE). Largest SaaS business in the world. $50 billion market cap.

•    Adobe services two functions: Creative Cloud – used by 13 million users to create webpages and is growing 15-20% per year and essentially have a monopoly in this product. Second, Adobe does digital marketing. This helps companies place adds on website and measure ROI on marketing effects.

•    It went through a transformation to switch to SaaS from one-time sales in 2013 and believes the street still misunderstands this. Margins were impacted as all the upfront costs associated with SaaS business model. Believes margins will be mid-40s (base case assumption) in 2018 after the company completes its transition.

•    Assuming revenue grows at 20% plus margin expansion deserves a high multiple. Expecting EPS of $7/sh in 2018. Target price between $170-180 in base case scenario.


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

Aaron Cowen's Long Burger King & Liberty Global: Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Aaron Cowen of Suvretta Capital who pitched long Burger King Worldwide (BKW) and long Liberty Global (LBTYA / LBTYK).


Aaron Cowen's Sohn Canada Presentation

Pitched LONG Burger King Worldwide (BKW). Believes the stock has bond like features and can generate $2/share FCF. Mentioned Tim Horton’s deal was a huge “game changer”, especially considering the backers, 3G Capital. Can cut lots of costs within Tim Horton’s and turn it into a more profitability franchiser (similar to early days at BK following 3G deal). Thinks there is a possibility for another deal, a pizza chain perhaps.

Next, pitched LONG Liberty Global (LBTYA / LBTYK). An amazing compounder with legendary management team and board (John Malone). Experiencing topline growth and has the German asset upside. Should trade at a 7.5 yield, resulting in a price target of $60.

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