Mick McGuire's Presentation on United Rentals: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Mick McGuire of Marcato Capital Management and his presentation was entitled "Don't Buy This Recovery."  He pitched United Rentals (URI).

Mick McGuire's Value Investing Congress Presentation

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United Rentals (URI)

$5.9M market cap, $13B EV

5.6x EBITDA

12.2x P/E

Largest rental co in the world, built as a roll-up.

Fragmented market, they are biggest player but still only 15% of market.  400k unit fleet, original cost is $8B.  Just bought RSC that was 5% of the market, which added to their 10% share.

Pure play on North American Construction and Industrial markets.  NOT exposed to residential construction- that is only 4% of their revenue.  39% is Industrial, 47% is commercial construction.  Have yet to see a robust recovery in commercial construction.

Thesis: cyclical trends are positive, secular trends help, strategic merger creates the industry's only scale player.  Good capital structure, attractive valuation.  6.8% FCF yield, 12.2x P/E.  Says synergies, rides the cycle.  PT implies 72% appreciation.

Risks:  cycle.  How robust the recovery is.  Also, company could lose capital discipline and overspends on growth CAPEX.  They own 4.7% of the company and wield influence on CAPEX.  

MarketFolly note: URI was featured in the equity analysis section of our Hedge Fund Wisdom newsletter last year and is up 39% since then.

Q&A: 

On Sotheby's (BID):  How is the board reacting to their proposals?

"We've had a good dialogue so far."  

Be sure to check out the other presentations from the New York VIC here.

Jeff Ubben's Presentation on Willis Group at Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Jeff Ubben of ValueAct Capital and he presented "Attracted to Global Risk" and the case for Willis Group (WSH).

Jeff Ubben's Value Investing Congress Presentation

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Willis Group (WSH)

Reinsurance company (Comps with AON, MMC)

No advantage to float now, reinvesting at 1-2%.

Pricing firming, but not exploding.

International is 1/3 emerging markets, goes to 45% of business by 2017. 

Opportunity for cross-selling into retail client base as well.

Says FCF is "exploding."  Flat CAPEX and pension payments.

They are on the board of this company.  Lower P/E than peers.

Q&A:  On Apple: likes MSFT better than GOOG or AAPL or Samsung.  Says they deserve to trade at 6-8x P/E because every year they need to sell more "boxes." 

Be sure to check out the other presentations from the New York VIC here.

Carl Chen & Tom Lu's Presentation on China Wireless Technologies & MediaTek: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up are Carl Chen and Tom Lu of Temple Honor Asia (Taiwan).  Their presentation was entitled "The World According to GARP Taiwan: Growth at a Reasonable Price."  They pitched 2 ideas.

Carl Chen & Tom Lu's Value Investing Congress Presentation


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China Wireless Technologies (2369.HK)  

Market cap $850M USD.  Second largest vendor by sales of its own brand smartphones. "Coolpad"  90% of sales through China's three mobile carriers.  Dual SIM.  Sole listed pure-play smartphone maker in China. One third of share price is cash on balance sheet.  He says, "not too many people in China knows who Steve Jobs is."

 

MediaTek (2454.TW)  

Fabless IC design house that makes SoCs for mobile devices.  Enables the "white box" mobile device sector in China.  Main competitor for QCOM.  Lots of IP, major clients. 

Says strong corporate DNA.  Growing market in China.  Low debt.  Upside of 23-28%.

Risks are competition by QCOM and SPRD.  Also clients like Huawei develop in-house.  He says lowcost iPhone 5C is not a risk.

Be sure to check out the other presentations from the New York VIC here.

Daniel Miller's Presentation on Real D, Internap & Guidance Software: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Daniel Miller of the Gabelli Focus Five Fund.  His presentation was entitled "Investing With Conviction" and he pitched 3 ideas: Real D, Internap, and Guidance Software.

Daniel Miller's Value Investing Congress Presentation


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PMV: Private Market Value- value for the entire company.  Runs the Gabelli Focus Five Fund.

Real D (RLD)

363M EV.  49.5M shares.  3-D movie stock.  They are working on "glasses-free" 3-D.  Trades at 5.5x EBITDA.  IMAX trades at 12x.  (Not a good comp?)  Says Dolby (DLB) could buy RLD, save a ton of OPEX.  CEO founder owns 10% of RLD.  Think he'll cut OPEX 10-15% based on weak summer box offices.  Percentage of 3-D tickets dropped to only 40% of the big 3-D movies.  They are buying back a lot of stock.  

Internap (INAP)

$490M EV.  Colocation, managed hosting company.  65% data centers, 35% legacy IP services. Says they deserve 10x EBITDA multiple, gives you $10.50 per share stock price.  Has large NOL.  Says large cable companies would buy them.

Guidance Software (GUID)

$8.50/share, $200M EV.  Digital forensics, e-discovery software to analyze threats on networks and defend against lawsuits, incident response, sell to 65% of the Fortune 100.

Be sure to check out the other presentations from the New York VIC here.

Winklevoss Twins' Bitcoin Presentation at the Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up are Tyler and Cameron Winklevoss of Winklevoss Capital.  They gave a presentation entitled "Bitcoin: The Internet of Money."

The Winklevii Value Investing Congress Presentation

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Harvard undergrad, Oxford Masters.  Opened saying they were not here to talk about FB.

Bitcoin 

Basic explanation of it.  Creator: Satoshi Nakamoto: a 36 year old Japanese man, left 80k pages of post, 39k lines of code.  No trace of who he was as a person. Could be a group of people, British style or English.  Did not identify with any group, or political thought.  Engineer type frustrated with an economic system that crashes often.  Could be arrested for creating a currency in the US.

Current cap is $1.5B. 

"Root problem is all the trust that is required to make the system work."

Fixed supply of Bitcoins, mined until 2040.  21M coins, each about $140, can divide it.  It's never been counterfeited.  Bitcoin does not have widespread use.  Compares to Cyprus banking issues - bitcoin doesn't have this issue.  

You can save bitcoins in your brain with a multi-word password.  Countries with more inflation have higher bitcoin premium.  China is the most active on the Bitcoin network.

They are trying to do an exchange-traded fund.

Every transaction from the beginning of Bitcoin is traceable, on the public ledger.  Can't shut it down because it's decentralized.  Even in US regulates it, it's still a protocol. 

 

They say Bitcoin is volatile because it's a new currency, not due to the idea - over time the price will stabilize. 

Be sure to check out the other presentations from the New York VIC here.

Evan Vanderveer & David Shapiro's Pitch on EGI Financial & Eurobank Properties: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up are Evan Vanderveer and David Shapiro of Vanshap Capital.  Their presentation was entitled "Global Below Book Value Investing" and pitched EGI Financial Eurobank Properties.

Evan Vanderveer & David Shapiro's Value Investing Congress Presentation

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Run $37M, have 13% of their fund in two ideas.

EGI Financial 

(8% of their fund)  Based in Ontario, Canada.  Trades on TSX, stock is EFH, $145M market cap.  P&C company.  Lost 50% of income in diversified operations.  Kind of a mess, but they say value investors are working with them.

Eurobank Properties

(5% of their fund). Trades in Europe, symbol EURO. Largest Greek REIC, trading at 63% of book value, 12% implied rental yield.  

Catalyst is company can use excess balance sheet capacity to buy Greek real estate assets at a discount.  Reason for opportunity: Uncertainty surrounding Greek economy.

Mainly office buildings, fairly blue chip tenant base.  Eurobank is 37% of their tenant base, however.  Long leases, average is over 10 years, and linked to CPI.  Greek economy mirrors the US in the Great Depression. Hard on office market; vacancy rates have doubled, rents flat to down.  Good news is no new construction for 5 years.

Based on replacement value, stock could double.  Clean balance sheet, strong management, high quality properties with blue chip tenants, and trades at a discount. 

Be sure to check out the other presentations from the New York VIC here.

Chris Mayer's Presentation on Charter Financial & Pulse Seismic: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Chris Mayer of Capital & Crisis.  He presented "People Not Personnel - The Case For Owner Operators" and pitched .

Chris Mayer's Value Investing Congress Presentation

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Newsletter writer.  16.7% annual return since 2004.  12.3% annual on Special Situations (small cap names) since 2006. 

3000 public companies, ahead of the tax increase, only 225 paid special dividends.  They had an average of 25% insider ownership!

Likes small banks:

PEOP, FXCB, VPFG, RCKB, IROQ, MCBK, MLVF, HTBI, BNCL, NFBK, FCNCA.  (A lot of recent thrift conversions).  Typical process: Mutual company goes public, with lots of cash, buybacks, pays dividends, sell to acquirer at a premium.

Charter Financial (CHFN) 

Small, 22.7M shares out, $10.29 per share.  $12.05 TBV.  P/TBV is 85%, reasonable.  Based in Georgia - weak market.  They've bought 4 failed banks.  Similar plays: NFBK, BNCL.

Pulse Seismic (PSD)

Traded in Toronto. Based in Calgary, owns seismic data which is essential for oil and gas E&P companies.  Canadian maps.  

Says earnings understated because the amortize the survey costs.  Trades for 10x FCF, during low natural gas prices.  Shareholder friendly ownership.  Main downside is lumpy/unpredictable data sales.

Be sure to check out the other presentations from the New York VIC here.

Joe Altman & Chris Kyriopoulos' Pitch on Ascent Capital & Covanta: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up are Joe Altman & Chris Kyriopoulos of COMPOUND Capital.  They gave a presentation entitled "To Infinity and Beyond" and pitched Ascent Capital Group (ASCMA) and Covanta (CVA)

Joe Altman & Chris Kyriopoulos' Value Investing Congress Presentation

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Based in Nashville, $42M in assets.

Ascent Capital Group (ASCMA)

Horizontal acquisition machine of alarm contracts. John Malone owns a bunch. This was a spinoff of Liberty Media. 

$2.5B EV. Sounds like an ADT (ADT) comp. Could be a consolidator.  1/5 the size of ADT, cheaper, less followed.

PT $125: 60% upside in two years. Maybe a cable company will buy them.

Covanta Holdings (CVA)

Garbage incinerators mainly in the northeast. Long term contracts. Has NOLs. Maybe Waste Management buys them?  Cities want to outsource this always in demand business.

Be sure to check out the other presentations from the New York VIC here.

Donald Yacktman's Value Investing Congress Presentation: Viewing Stocks as Bonds

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Donald Yacktman of Yacktman Funds.  He gave a presentation entitled "Viewing Stocks as Bonds."


Donald Yacktman's Value Investing Congress Presentation

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His elements:  Good business, shareholder oriented management, low purchase price.

Says stocks with steady dividends are like bonds.

Used Coca Cola (KO) as case study. Stuck at $44 for 15 years.

His turnover is only 20% per year, he says less than an index fund.

Isn't this laziness? What about idea velocity? Why sit on KO for a decade while it did nothing?

Says Michael Dell was not going to give up control of his company. "His reputation is tarnished by this, to some degree"

Says Apple (AAPL) is not that cheap because margins are too high and leaves them open to competition like Samsung. Yet he holds Cisco (CSCO) and Microsoft (MSFT) which have higher margins. Says no big new products at Apple now.

Be sure to check out the other presentations from the New York VIC here.

Harvey Sawikin's Pitch on Gazprom Neft: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Harvey Sawikin of Firebird Management.  He presented "A Russian, State-Owned Energy Company, and It's a Buy!"  His pitch was on Gazprom Neft.

Harvey Sawikin's Value Investing Congress Presentation

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22% net annual returns over last 19 years.

Gazprom Neft

SIBN.RM only $1.5M ave daily shares traded.  Illiquid.   

Also risk of high oil taxes by govt. one of the most efficient of Russian oil and gas companies.

50% of CAPEX in Russia is lost or stolen. One pipeline they estimated could have been paved with caviar, it was so expensive.

Other Ideas

Tallink: Estonian ferry operator

Kazkommertsbank (KKB): Trades in London. Bank in Kazakhstan. 

Be sure to check out the other presentations from the New York VIC here.

Chris Mittleman's Presentation on Azteca & CMIC Holdings: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Chris Mittleman of Mittleman Brothers.  He presented "Severely Undervalued Stocks in an Unappealing Market" and pitched Azteca and CMIC Holdings.

Chris Mittleman's Value Investing Congress Presentation

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Private equity mentality.  Last year he pitched REV and CKEC, went up about 20%

Azteca

 

Trades only in Mexico.  Second largest TV channel in Mexico, 30% share.  High barriers to entry.

In 2009, Mexico GDP dropped 6.5%. Sales up 1.6%. CBS down 6.7% during same period.

Stock is cheap because of bad programming. So there is a cycle, not based on the economy, but rather on the programming cycle. Losing share. 

CAPEX burden near term on digital conversion.  CEO has a checkered past, including sec lawsuit.

40% up from here, 10 peso, 8x EBITDA.

Japanese Company: CMIC Holdings 

They are the first CRO in Japan (contract research organization). CEO owns 42% of stock.

2309.jp on Bloomberg. 

Negatives are western CROs are gaining share from them and the other smaller players. They also missed last quarter.

Says 86% upside. May need takeover to work.

Be sure to check out the other presentations from the New York VIC here.

Clifton Robbins' Presentation on Chico's: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Clifton Robbins of Blue Harbour Group.  He presented "Think Like An Owner - Finding Companies Poised To Unlock Value" and pitched Chico's FAS (CHS).

Clifton Robbins' Value Investing Congress Presentation

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KKR guy. Says leverage wasn't the key to PE, it was the good management.

Bullish on Chico's (CHS)

$2.3B EV. 5.8x EBITDA of $400m they filed a 13d, own 6% of stock.

1427 stores, they think they could have 2200 stores.

4 brands. Chico’s is 720 stores. White House is 465 stores. Soma 235 stores. Boston proper only 2 stores.

Soma lingerie business for older women, run by former Victoria Secret people.

"Growth stock trading as a value stock"

Claims Chico’s is gaining share.

Missy's space is loyal customers.

New CEO with strong retail experience.

Debt free. Could do a buy back with cash over time.

Be sure to check out the other presentations from the New York VIC here.

Alex Roepers' 5 New Ideas: Value Investing Congress Presentation

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Alex Roepers of Atlantic Investment Management and his presentation was called: "Insights from 25 Years of Constructive Shareholder Activism."  He also pitched 5 new ideas.

Alex Roepers' Value Investing Congress Presentation

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19.2% compounded net of fees return over last 25 years.

Tips:  Define your universe. Stay in your area of competence. Build conviction by doing your homework. Wait for opportunity to arise, stalk stock until then. Don't be greedy: scale out as you reach your valuation. Don't use leverage. Concentrate funds on your highest conviction ideas. (They do best 6 or 7 ideas). Be honest and transparent with your investors.

Last year’s ideas:

Energizer (ENR): Sold with 29% profit

Rockwood (ROC): Still own up 39%

Clariant (CLN.VX): Still own, sold some, up 42%

FL Smidth (FLS.DC): Sold. Lost 5%

Joy Global (JOY): Sold. Only up 8%

Roepers' Five New Ideas

Baker Hughes (BHI): 43% upside. Third largest energy services. BJ services acquisition with zero margins. Activist to improve margins. $71 PT on 12x 2014 EBIT. 

Faurecia (EO.FP): Auto parts. Trading at 20c on the dollar. Deleveraging story. 50% owned by troubled Fiat. 41% upside to pt.

Itochu Techno Solutions (4739.JP): IT services.  Domestic company benefiting from Japanese financial firms recovery. 

Lanxess (LXS.GY) German polymer company. Rubber used in tires. Benefits from replacement cycle that has been delayed. 

Harman (HAR): Speakers. Mainly in cars. Jbl. Professional segment is arenas, concerts, etc. Infotainment 9 of top 15 car companies in the world. 

Be sure to check out the other presentations from the New York VIC here.

John Mirshekari's Presentation on Aecom & URS: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is John Mirshekari of Fidelity Investments.  His presentation was entitled "Inflections in Incentives" and he also pitched Aecom (ACM) and URS (URS).


John Mirshekari's Value Investing Congress Presentation

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Key is CEOs need skin in the game. Beneficial interest as % of annual cash compensation. Pinnacle Air was 2x and Sky West was 39x. 

Insider ownership is one thing he looks at.  Capital allocation is one of the few inefficiencies left in the market.  Management incentives affect capital allocations. 

1. Watch the cannibals. (Share repurchases) Should pay more for a business in hands of a manager with pro shareholder leanings. 

2. Incentives drive decisions. Why don't managements buy back stock? Because their compensation schemes encourage size, not stock return. Revenue, EBITDA, income are the usual, not ROIC, three year relative stock return. 

Example: AutoZone (AZO). Perfectly aligned with shareholders. Share count down 75% over last ten years. AZO compounds at 21% vs. SPX 3%. Inflections in incentives. Huge opportunities to make money.

Bullish on Aecom (ACM)

Engineering company that has had this happen. Say on pay is pressuring CEOs compensation plans. They were hit by this in 2011. So they tried to change. They replaced EBITDA growth with EPS, CFO per share, FCF per share. Key is "per share" so no incentive to grow without actual performance. Include goodwill impairments in comp calculation. Focus on share count means better use of capital. 

They stopped M&A and shifted to share repurchases. They bought back 1/3 of the shares 18 months after the say on pay change in compensation. Stock still attractive and up 42% even in bear case. Bull case is 90%. 

URS (URS)

Comp with ACM. Civil engineering company. Bridges, roads on a cost plus basis. $7 EPS by 2015 could lead to 100% upside.

Could begin repurchasing stock over next two years.  FCF is $5.38 per share last four years. Adjusted for a non-recurring WC charge, we get $7.16 per year. In the past they have done 11 years, at $6B in cash, more than the value of the company today. 

Worst ROE in the industry. But could double it.

In the past compensation plan was only net income. This year they added relative total share return.  They had low say on pay this year. 

Amended proxy says they may use ROE, EPS, and including a future goodwill impairment charge.  Management says they will not do any acquisitions this year. 

 

Could actually do FCF of $16 on $7 EPS.  14x gets $98 stock price which is 100% upside.

 

Says there is no shortcut, you have to read proxies.

Be sure to check out the other presentations from the New York VIC here.

Michael Castor's Bearish Presentation on Genomma Labs: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Michael Castor of Sio Capital.  He gave a presentation called "The Accounting Game" and touched on a number of stocks and then recommended shares of Genomma Labs (LABB) traded in Mexico.

Michael Castor's Value Investing Congress Presentation

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11% CAGR net of fees over last 7 years.

Worst year down 6%

Doctor. Healthcare fund. 

Stretched valuations: MWI Veterinary Supply (MWIV), Stericycle (SRCL)

Attractive: Cardinal Health (CAH), Select Medical Holdings (SEM)

Unknown substance: Intrexon (XON)

Hidden gem:  Aratana Therapeutics (PETX) ~ "The income statement is an estimate...made by management."  Over the counter pharmaceutical.

Bearish on Genomma Labs (LABB)

Trades in Mexico (LABB) or OTC (GNMLF)

$2.3B USD market cap.

Cash flow less than reported income. $1.3B cash flow vs. $5.2B net income. Where is the money going?

If you believe their accounting on their nail fungus product, 1 in 15 adults would have to be buying a unit to believe it.

Very erratic sales by brand. When asked about it by investors, they quit disclosing sales by line.

AR and WC increasing. Cogs increasing. Cash decreasing. Questionable penetration of products. Erratic sales numbers.

Usually resolved through either acquisitions or restatements. They did try to do an acquisition. If you adjust the accounting, you get much lower EPS.

No cash generation. Limited disclosure.

Valuation? Use 70cents eps, with 10 P/E, $7 peso pt.

Q&A: Herbalife (HLF) opinion? Leans on Ackman view that MLM is not a great business model.

 

Be sure to check out the other presentations from the New York VIC here.

Guy Gottfried's Presentation on Glentel & Supremex: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Guy Gottfried of Rational Investment Group.  He gave a presentation called "Needles in a Haystack: More Small Cap Values" that focused on Glentel and Supremex.

Guy Gottfried's Value Investing Congress Presentation

His picks at this event on average are up 60% & he pitched 2 Canadian stocks:

Glentel (GLN)

3.4% yield. Wireless retailer. Canada, US, Australia. Second largest Verizon retailer in US.  Carriers pay them a bounty/commission.  Profits from commissions, not phone hardware.

7.5x FCF, Management aligned with shareholders. Good capital allocation record.  Dividend while you wait. 

 

Why cheap?  Made a big acquisition. Wireless Zone. Confusing accounting. Some divisions making no money.  Lots of non-recurring items.  Arcane accounting; put obligation recorded on balance sheets, marked to market.  To make it look cheap, you have to do a lot of adjustments.

Family owns 46% of company.  Good record of acquisitions.  Deals with Costco, kiosks inside.  Some divisions with no cash flow but still valuable.  So many adjustments to income to get the valuation.

He gets $1.66 per share FCF, 7.5x when he adjusts share price for the amt segment. Lots of accounting tricks needed to make it look cheap.

Supremex (SXP)

Illiquid stock.  Canada's largest envelope maker. Declining industry.  60% market share. FCF up due to cost cutting.

3.1x FCF. 7.5% dividend yield, 23% payout ratio.  Cheap because no coverage, conference calls. Cut dividend by 90% a few years ago.

 Activist owns 45%.  Cut debt with FCF by 69%. 1.5x debt.

Catalysts: Likely big dividend hike. Insiders won't waste cash on bad acquisitions.  Could double it to 15% and still be paying less than 50% of FCF.  In the past, this would lead to 30-50% stock move.

Even in FCF decline of double digits, can sustain 15% yield for 5 years. Still cuts debt.

Q&A: How do you know it doesn't decline faster than you expect? A: Believes his double digit decline assumptions are realistic. 


Embedded below is Gottfried's PDF slideshow presentation on Supremex & Glentel:

Be sure to check out the other presentations from the New York VIC here.

Tiger Global Increases BBA Aviation Stake

Chase Coleman and Feroz Dewan's investment firm Tiger Global Management has increased its stake in London listed BBA Aviation (LON: BBA). Due to trading on September 9th, Tiger Global now own 5.11% of BBA Aviation’s voting rights and this represents around a 21% increase in their position size. 

We previously highlighted that Tiger Global first disclosed an interest in BBA in July 2013. 

Per Google Finance – “BBA Aviation plc is a provider of aviation services and aftermarket support to   operators of business and general aviation, military and commercial aircraft. The Company delivers   its services at over 220 locations on five continents. The Company operates through two segments:   Flight Support segment and Aftermarket Services segment. The Company’s Flight Support segment   provides refuelling, ground handling and other services to the business, general and commercial   aviation markets. Its Aftermarket Services segment maintain, manufacture and support engines   and aerospace components, sub-systems and systems. The Flight Support segment consists of   Signature Flight Support and ASIG, and Aftermarket Services and Systems segment consists of Engine   Repair and Overhaul, Legacy Support and APPH. Its Flight Support has approximately 200 locations   worldwide, and its Aftermarket Services has approximately 23 locations worldwide.”

Sohn London Investment Conference: Registration Now Open (Sign Up Early For 25% Discount)

We wanted to let our readers across the pond know that the Sohn London Investment Conference is now open for registration and will take place on October 31st.  They're offering early registration tickets with a 25% discount until October 1st, so you've got 2 weeks to save. You can register for the Sohn London Conference here.

As many of you are already aware, the Sohn conferences are some of the best in the industry.  And most importantly, they benefit great causes by supporting pediatric cancer research and treatment.   

Also, the events are known for great presentations from well-known hedge fund managers.  Check out the speaker line-up below and you'll see why: 

Confirmed Speakers List  

John Armitage, Egerton Capital
Chris Hohn, Children's Investment Fund 
Rob Citrone, Discovery Capital  
Tony Chedraoui, Tyrus Capital 
Mala Gaonkar, Lone Pine Capital 
Eashwar Krishnan, Tybourne Capital (ex-Lone Pine)
Bruno Rocha, Dynamo Capital 
Julian Sinclair, Talisman Global Asset Management 
Masroor Siddiqui, Naya Management (ex-TCI)
Nicolai Tangen, AKO Capital 
Professor David Cunningham, Royal Marsden Hospital 
Peter Harf, Delete Blood Cancer UK 


Event Details  

When: Thursday, October 31st, 2013  
Time: 12:00 to 5:30 PM 
Where: London Marriott Hotel Grosvenor Square


Register Before October 1st For 25% Off

You can click here to take advantage of the discount.

FINforums Annual Hedge Fund Summit

FINforums Annual Hedge Fund Summit  

Thursday, September 19, 2013  |  New York City 

Now in its third year, the FINforums Annual Hedge Fund Summit is a must attend for anyone   involved in the hedge fund industry, including fund managers, high-net-worth investors, institutional investors, lawyers, accountants, technology providers, private bankers, advisors and consultants. 

Keynote Address: 

• Barbara Novick, Vice Chairman, BlackRock 

Topics Covered Include: 

• The Global Macro Outlook 
• The Business of Running a Hedge Fund 
• Tips on Marketing and Capital Raising 
• An Investment Consultants Roundtable 

Registration: 

Buy-Side / Fund Managers / Investors: $395.00 
Service Providers / Other: $695.00 

Friends of MarketFolly receive a 15% discount. Use code: MF15  

Register Today 

Visit www.finforums.com for a more information, including a detailed agenda

What We're Reading ~ Analytical Links 9/4/13

The Manual of Ideas: The Proven Framework for Finding the Best Value Investments [Amazon]

Risk is not a four-letter word [Herb Greenberg]

How the Verizon-Vodafone deal was sealed over gym talk & a breakfast [Globe & Mail]

Vodafone (VOD) spreadsheet post-deal [MicroFundy]

Is discounted cashflow the best way to value a company? [Google Plus]

Profile of billionaire Jorge Lemann [BusinessWeek]

MSFT: Ballmer out, ValueAct in - get ready for the next shoe to drop [All Things D]

Microsoft / Nokia: the deal that makes no sense [Stratechery]

Why is chicken more expensive? Ask McDonald's [BusinessWeek]

The biggest risk Zillow (Z) faces isn't what you think it is [LittleBear]

How 'Teslanaires' made fortunes on Tesla stock [Sun-Sentinel]

CNBC ratings hit 20-year nadir [NYPost]

Bruce Berkowitz Talks Fannie/Freddie Preferreds, AIG & Sears

Fairholme Capital's Bruce Berkowitz owns preferred shares of both Fannie Mae and Freddie Mac and joined David Faber of CNBC to talk about the securities in a rare interview.


Fannie/Freddie Preferreds

We've highlighted before that Berkowitz is seeking dividends on these securities.  The fund manager notes that you can buy the securities at such discounts with the potential for them to trade at par again if they start paying dividends.

Fairholme likes to buy stakes in systemically important institutions and Berkowitz says Fannie & Freddie are just that.


Berkowitz Talks AIG

He also touched on his stake in AIG (AIG).  He said: "Investing is all about comparing what you give versus what you get.  Now when you look at today's stock price with AIG, it still sells significantly below liquidation value.  So at some point the stock market price will meet the book value of AIG."  

He says book value is around $60 per share currently and he expects liquidation value will double in a few years. 

So when will he sell?  He said he'll have to consider the idea of selling in the event that shares eventually trade at book value & higher. 

He also addressed his large position size, noting that Benjamin Graham once distributed shares of GEICO rather than selling when the position size became too large for his fund.  So it sounds like Berkowitz is considering this option as well for the future.


Talks Sears (SHLD)

Berkowitz thinks Eddie Lampert has been doing a good job and he notes he's in the minority in that opinion.  He compares Sears to Simon Properties (SPG) and it's clear Berkowitz views as SHLD as a real estate play.


Embedded below is the video of Berkowitz's interview:



For more on this manager, you can check out Fairholme's latest portfolio in the new issue of our premium newsletter.

Glenview Capital Becomes Large J.C. Penney Shareholder

We know you'd love to stop hearing about J.C. Penney (JCP), but when this many major hedge funds are trading shares, it's worth highlighting over and over again.  This latest activity:  Larry Robbins' Glenview Capital has boosted its holdings in the retailer.

Per a 13G filed with the SEC, Glenview has disclosed a 9.10% ownership stake in JCP with 20,060,830 shares.  This marks almost a 138% increase in their position size since the end of the second quarter.  The filing was required due to activity on August 22nd.

To see the rest of Glenview's US equity portfolio, we recently released a brand new issue of our premium newsletter.


Other Hedge Funds Involved in JCP

As we've flagged earlier: Bill Ackman has sold entirely out of JCP.  Richard Perry's hedge fund bought some of those JCP shares.  And yesterday we saw that Kyle Bass has purchased JCP.  And now we see that Glenview Capital has added to their position.  Not to mention, other big names like Soros Fund also own shares.

We'll continue to monitor the SEC filings for further activity to see which funds are taking advantage of a large seller's exit or are wagering on a company turnaround, or at the very least, stability.

Market Strategist Jeff Saut: September Historically the Worst Month For Markets

It's been a while since we checked in with market strategist Jeff Saut, so below is his latest weekly commentary entitled, "Money and Savings?"  In it, he talks about the difficulty in timing the market and how he's tried to manage risk the past few months while expecting a decline.

While things haven't quite played out as he's thought recently, he still pulls some interesting data out:

"September is truly the worst month historically.  Indeed, September has seen the worst average returns for the D-J Industrials over the past 50 and 100 years."

Embedded below is Saut's latest commentary:




You can download a .pdf copy here.

We've previously posted how Saut has raised cash in anticipation of a decline in stocks.

Viking Global Boosts Triumph Group Stake

Andreas Halvorsen's hedge fund firm Viking Global has filed a 13G with the SEC regarding shares of Triumph Group (TGI).  Per the filing, Viking now owns 5.4% of the company with 2,834,161 shares.

This marks an increase of over 37% in the number of shares they own since the end of the second quarter.  The 13G was required due to portfolio activity on August 20th.

Per Google Finance, Triumph Group "designs, engineers, manufactures, repairs, overhauls and distributes a portfolio of aerostructures, aircraft components, accessories, subassemblies and systems. It offers a range of products and services to the aerospace industry through three groups of operating segments: Triumph Aerostructures Group, whose companies' revenues are derived from the design, manufacture, of metallic and composite aerostructures and structural components; Triumph Aerospace Systems Group, and Triumph Aftermarket Services Group, whose companies serve aircraft fleets. In March 2013, United Technologies Corp sold the former Goodrich Corporation pump and engine control systems business to the Company. In May 2013, the Company announced the acquisition of Primus Composites from Precision Castparts Corp."

For more on this hedge fund, we've also posted up excerpts from Viking's Q2 letter.