Columbia Business School's investment newsletter Graham & Doddsville is out with its latest edition. It features interviews with Whale Rock Capital's Alex Sacerdote, BeaconLight Capital's Ed Bosek, Jane Siebels of Siebels Asset Management, as well as the gentlemen from Global Endowment Management.
Sacerdote talks about his focus on the technology sector and the 'S curve' of inflection points that is so critical to his process of finding successful tech investments. He also lays out his thesis on Amazon (AMZN) and NetEase (NTES),
Bosek previously worked at Atticus Capital, a fund we highlighted on the site numerous times before it eventually closed. He talked about how deregulation and demutualization are big drivers of his idea generation and pitched China Resource Enterprises (SEHK:291) and Daqin Railway (SHSE:601006).
The issue also features two student pitches: a long of Tenneco (TEN) and a merger arbitrage/special situation pair of long RNF / short UAN.
Embedded below is the latest issue of Graham & Doddsville:
Be sure to also check out the previous issue of Graham & Doddsville.
Wednesday, October 14, 2015
New Graham & Doddsville Issue: Interviews With Alex Sacerdote & Ed Bosek
Viking Global Starts Laboratory Corp Stake
Andreas Halvorsen's hedge fund firm Viking Global has filed a 13G with the SEC regarding shares of Laboratory Corp (LH). Per the filing, Viking now owns 5.3% of LabCorp with over 5.39 million shares.
This is a newly disclosed stake for the firm and the filing was made due to activity on October 1st.
We also posted up other recent portfolio activity from Viking Global here.
Per Google Finance, LabCorp is "an independent clinical laboratory company in the United States. Through a national network of laboratories, the Company offers a range of clinical laboratory tests that are used by the medical profession in core testing, patient diagnosis, and in the monitoring and treatment of disease. The Company manages its operations through two segments: the Clinical diagnostics laboratory segment, which includes core testing, as well as genomic and esoteric testing; and the Other segment, which consists of the Company's non-United States clinical diagnostic laboratory operations in Ontario, Canada. It also provides specialty testing services in the areas of allergy, clinical trials, diagnostic genetics, women's health, cardiovascular disease, identity, forensics, infectious disease, endocrinology, oncology, coagulation, occupational testing and pain management."
Tuesday, October 13, 2015
Robin Hood Investors Conference 2015: Discount For Our Readers
Robin Hood invites you to the Third Annual Investors Conference.
Join us in New York City on November 16-17 for the 3rd Annual Robin Hood Investors Conference presented by J.P. Morgan and hosted by Hyatt.
Over the past two years, the Robin Hood Investors Conference has brought together the most influential policy experts, hedge fund managers, financial leaders, tech innovators, and real estate investors to share market insights and provide actionable, money-making ideas. Their stock picks have collectively outpaced the S&P 2:1.
2015 Robin Hood Speakers List
Paul Tudor Jones, Tudor Investment Corp
John Griffin, Blue Ridge Capital
Dan Loeb, Third Point
Philippe Laffont, Coatue Management
Bill Ackman, Pershing Square
David Einhorn, Greenlight Capital
T. Boone Pickens, BP Capital
Larry Robbins, Glenview Capital
Anthony Bozza, Lakewood Capital
Jamie Dimon, J.P. Morgan
Mike Cagney, SoFi
Mary Erdoes, J.P. Morgan Asset Management
Barry Sternlicht, Starwood Capital Group
Whitney Tilson, Kase Capital
Tim Ferriss, Angel Investor/Author
Roland Fryer, Harvard University
Dave Giroud, UpStart
Sam Hodges, Funding Circle
Discount For Our Readers
As in years' past, the conference will sell out so we urge you to click here to purchase tickets now as seats are limited.
Discount: Use code "market folly 15" to get 10% off your total ticket price.
As
with all things Robin Hood, 100% of ticket sales go to helping our New
York City neighbors living in poverty build better lives for themselves
and their families. We hope you will join us for this exciting event.
For more information and to register, head to Robin Hood's website.
Monday, October 12, 2015
Sohn Conference San Francisco: Excellence In Investing For Children's Causes
The 6th annual Sohn Conference San Francisco is coming up in two weeks. It brings together some of the world's top investors to share their ideas in order to benefit the Excellence in Investing for Children's Causes Foundation.
Conference Details
When: Tuesday, October 27th, 2015 (Registration at 10 a.m.)
Where: Hyatt Regency San Francisco
Website: https://www.excellencesf.org
Sohn San Francisco Speakers List
Jeffrey Ubben, ValueAct Capital
Mick McGuire, Marcato
J. Kyle Bass, Hayman Capital
Kurt Billick, Bocage Capital
Gil Simon, Apex Capital
William Duhamel, Route One Investment Company
Mike Wilkins, Kingsford Capital
Malcolm Fairbairn, Ascend Capital
Carl Kawaja, Capital World Investors
Marc Schneidman, Aquilo Capital
Christopher Chabris, author of The Invisible Gorilla
Next Wave Sohn Speakers
New this year, the event also features a 'Next Wave Sohn' event, held at 10:30 a.m. before the main conference. It features emerging managers sharing their best ideas. Speakers include:
David Brown, Hawk Ridge Management
Jonathan Goldberg, BBL Commodities
Steven Landry, Eastbay Asset Management
Richard Merage, MIG Capital
Moderator: George Fox, Titan Advisors
Event Flyer & Registration
You can register for the event by clicking here or you can call 415-728-4455
It should be a fantastic day full of investment ideas and also includes a buffet lunch and cocktail reception afterwards.
Remember,
conference proceeds support Bay Area organizations focused on improving
educational opportunities and life outcomes for underserved youth. A
portion of the proceeds also benefit their partner, The Sohn Conference
Foundation to treat and cure pediatric cancer and childhood diseases.
For more information, head to https://www.excellencesf.org
Jim Chanos Interview: Glencore, Tesla, Volkswagen & More
Short seller Jim Chanos of Kynikos Associates appeared on Bloomberg TV and talked about some of his latest short positions. Here are some of the highlights:
On Glencore: "We're not going to comment on our position on Glencore. But I will say is we know the company pretty well. Let's just say I'm a potential purchaser ... to close out a short you have to buy stock."
On Volkswagen: "No, we don't want to be short. If anything I think we'd be looking at Volkswagen on the long side. But we have not invested in Volkswagen. I think they'll survive"
On Tesla: "We haven't disclosed our position officially in Tesla. Let's just say I'm not very positive on the company and we'll leave it at that."
He also ended by saying his favorite short right now is US E&P companies.
Embedded below are the videos of Chanos' appearance on Bloomberg TV:
Video 1
Video 2
Video 3
Video 4
Video 5
We've also posted up Chanos' thoughts on some of his other shorts as well.
Baupost Group Discloses Orexigen Therapeutics Stake
Seth Klarman's investment firm Baupost Group has filed a 13G with the SEC regarding shares of Orexigen Therapeutics (OREX). Per the filing, Baupost now owns 17.17% of the company with over 25.82 million shares.
This is a newly disclosed equity stake for the firm as they did not show one at the end of the second quarter. The filing was made due to activity on September 30th.
Shares of OREX are down over 69% over the past six months, so this certainly fits Baupost's preference to buy beaten down names.
You can view other portfolio activity from Baupost Group here.
Per Google Finance, Orexigen Therapeutics is "a biopharmaceutical company. The Company is focused on the development of pharmaceutical product candidates for the treatment of obesity. The Company's product is Contrave, a fixed dose combination of bupropion hydrochloride (HCl) extended release (ER) and naltrexone HCl ER. The Company's product Contrave, is approved in the United States by the United States Food and Drug Administration (FDA) as an adjunct to a reduced-calorie diet and increased physical activity for chronic weight management in adults with an initial body mass index (BMI), of around 30 kilograms per square meter (kg/m2) or greater (obese), or around 27 kilograms per square meter or greater (overweight) in the presence of at least one weight-related comorbid condition. The Company also submitted an application for marketing authorization with the European Medicines Agency (EMA) for Contrave under the name Mysimba.."
Wednesday, October 7, 2015
What We're Reading ~ 10/7/15
Superforecasting: The Art and Science of Prediction [Philip Tetlock & Dan Gardner]
Fat tails, thin ice [Jason Zweig]
Are you prepared for the next bear market? [Fortune]
Most CFOs think the US market is overvalued [Alpha Architect]
Putting a price tag on the Volkswagen scandal [Aswath Damodaran]
A pitch on beaten down Sun Edison [Bronte Capital]
Case study on capital allocation and Rockwood Holdings [Before Losing My Sanity]
Do as they do: a guide to insider activity [Dead Companies Walking]
A look at Cable One [Punch Card Blog]
Some stock picks from François Rochon [Montreal Gazette]
How the Bloomberg terminal made history and stays relevant [FastCompany]
Sneaker wars: inside the battle between Nike and Adidas [GQ]
The decline of 'big soda' [NYTimes]
China's middle class dreams in peril [WSJ]
Can Comscore/Rentrak go toe-to-toe with Nielsen? [Variety]
Google Fiber's real innovation [Beyond Devices]
Why we fall for bogus research [Bloomberg View]
Alcoa and the painful business of making aluminum [Reuters]
The frustrating life of a McDonald's franchisee [Bloomberg]
Bill Ackman's Talk at Bloomberg Markets Most Influential Summit
Pershing Square's Bill Ackman sat down with Stephanie Ruhle for an interview at Bloomberg Markets Most Influential Summit yesterday.
It's around a 30-minute talk but here's the broad takeaways from the interview:
- Still owns Valeant Pharmaceuticals (VRX), but hasn't added to the position or sold any shares
- Looked at General Electric (GE) but passed because it wasn't cheap enough; thinks Nelson Peltz will do well with it
- More to come with his Herbalife (HLF) saga
- Notes Burger King (part of Restaurant Brands (QSR)) has cut costs, improved stores/experience and same store sales are doing well
- Thinks Bloomberg should run for President
Embedded below is the video of Ackman's Bloomberg talk:
For more from this manager, head to Pershing Square's semi-annual report.
Paul Tudor Jones Interview on Bloomberg: "Choppier Market" Ahead
Paul Tudor Jones of macro hedge fund Tudor Investment Corp recently sat down with Bloomberg to talk about the macro picture, the Federal Reserve, and more.
Jones said that, "But I think the reality is it's clear low interest rates hurts savers and help borrowers. I think what the Fed is doing and the reason why they won't raise interest rates now, I think it's kind of acknowledging to me a much larger macro issue, which is if you think about the last 50, 60 years, there's is a perfect negative correlation between the interest income paid by the Federal government and interest rates. So the higher the share of GDP that's paid in interest income by the Federal government, typically that correlates high interest rates also. So what the Fed is doing is recognizing there is a tail risk with low interest rates. There's a tail risk with zero. We seem to run perpetual deficits at minus two, minus percent."
When asked what QE4 would do, he replied, "Again, I think it's a really interesting time in the market. It's if you kind of just look at financial conditions index, if you look at where global growth is going, this is typically historically associated, been associated with the Fed lowering interest rates, some type of interest rate relief. And that's always typically been good for stock markets. And yet now we have a central bank that I think for the first time is actually -- is managing towards the credit side of the equation, as opposed to the economic side of the equation. And by that I mean they're looking at the balance sheet. They're uncomfortable with the size of it. That's why they want to get rates away from zero. I think they're concerned about the expanding global debt-to-GDP. And I think they're trying to probably insert back into the equation the fact that interest rates can rise and that people need to manage their balance sheets accordingly, particularly the federal government."
Jones was then questioned as to why they haven't already raised rates. He said:
"I think they had their opportunity last spring. They probably missed it. They're trying to catch up. And again, all you have got to do think about at zero rates it encourages this nonstop borrowing from the federal governments because of the fact that interest income as a percentage of GDP is at one of the lowest levels in the past 34 years because rates are at zero. It encourages bad behavior by a variety of different stakeholders, not the least of which is our federal government.
Well, again, I think the Federal Reserve Board is managing for the balance sheet, as opposed to local economic conditions. Every time we've had this kind of set of macro variables, a huge bear market in commodities, slowing global growth, you have typically seen the Fed respond with an easing. I think of '98 in particular. And normally it would be a great time to own stocks. Now I think for the first time since Volcker, probably, you see the Fed managing, in my mind, they're managing for the balance sheet to take out the tail risk associated, and associated with expanding debt virtually globally, and not to mention our federal debt. And I don't know if they necessarily say that avowedly, but to me it makes the most sense."
When asked if he thinks this points to a bear market, Jones said it points to a choppier market. He went on to add, "Again, the BOJ seems to be a reluctant easer, their balance sheet constrained, ECB, everyone expects them to go, but it will be an incremental step because I think they're, to a certain extent, balance sheet constrained and uncomfortable with it. So normally where you would be seeing a lot of interest rate relief globally, it's different this time. And I think that's one reason why the markets are going to be much choppier going forward."
Tudor Jones then ended the interview by noting that, "I think it's challenging times. There are a lot of crosscurrents. Again, it would be really easy to be super bullish on equities, given what the response function should be, but it's not going to happen."
Embedded below is the video of Jones' appearance on Bloomberg:
Tuesday, October 6, 2015
Viking Global Increases Kite Pharma Position
Andreas Halvorsen's hedge fund firm Viking Global has filed a 13G with the SEC regarding Kite Pharma (KITE). Per the filing, Viking now owns 6.1% of the company with over 2.68 million shares.
This is up from the 677,334 shares they owned at the end of the second quarter. The filing was made due to activity on September 25th.
You can view other recent portfolio activity from Viking here.
Per Google Finance, Kite Pharma is "a clinical-stage biopharmaceutical company. The Company is focused on the development and commercialization of cancer immunotherapy products to eradicate cancer cells. The Company does this using its engineered autologous cell therapy (eACT), which is an approach to the treatment of cancer. eACT involves the genetic engineering of T cells to express either chimeric antigen receptors (CARs) or T cell receptors (TCRs). It is conducting a Phase II clinical trial of a TCR-based therapy and multiple Phase I-IIa clinical trials of CAR- and TCR-based therapies. The Company's lead product candidate KTE-C19, is a CAR-based therapy, for the treatment of refractory diffuse large B cell lymphoma (DLBCL), primary mediastinal B cell lymphoma (PMBCL) and transformed follicular lymphoma (TFL). It is developing a pipeline of eACT-based product candidates for the treatment of advanced solid and hematological malignancies: CD19CAR, KTE-C19CAR and EGFRvlll CAR, among others."
Bridger Capital Raises TG Therapeutics Stake
Roberto Mignone's hedge fund firm Bridger Capital has filed a 13G with the SEC regarding shares of TG Therapeutics (TGTX). Per the filing, Bridger now owns 6% of the company with over 3.15 million shares.
This is basically double the 1.53 million shares they owned at the end of the second quarter. The filing was required due to activity on September 25th. TGTX shares are down over 27% over the past three months and Bridger has taken advantage of that dip.
Per Google Finance, TG Therapeutics is "a biopharmaceutical company focused on the acquisition, development and commercialization of treatments for b-cell malignancies and autoimmune diseases. As of December 31, 2014, TG had two therapies targeting hematological malignancies. TG-1101 (ublituximab) is a glycoengineered monoclonal antibody that targets a specific epitope on the CD20 antigen found on mature B-lymphocytes. The Company is also developing TGR-1202, an orally available PI3K delta inhibitor. As of December 31, 2014, both TG-1101 and TGR-1202 were in clinical development for patients with hematologic malignancies. The Company also has a pre-clinical program to develop inhibitors of IRAK4 (interleukin-1 receptor-associated kinase 4), as well as an antibody research program to develop anti-PD-L1 and anti- glucocorticoid-induced tumor necrosis factor receptor (GITR) antibodies, which were in pre-clinical development as of December 31, 2014."
Monday, October 5, 2015
Coatue Management & Maverick Capital Short Ashtead Group
Philippe Laffont's hedge fund firm Coatue Management has recently filed a disclosure with the UK's regulatory body regarding a short position. They are now short 1.02% of Ashtead Group's (LON:AHT) shares as of September 30th. This is up from the 0.91% of shares they were short just two days prior. This is also an increase from the 0.52% they were short back on August 6th.
Lee Ainslie's hedge fund Maverick Capital has also filed similar disclosures. Per their filing, Maverick now is short 0.74% of Ashtead Group as of September 24th. However, Maverick's position has decreased in size recently from the 0.85% of shares they were short on September 23rd.
Given the volatility in markets as of late, we're providing updates on
various hedge fund short positions. You can scroll through them all by
clicking here: hedge fund short positions.
The UK regulatory rules for short position disclosures state that hedge
funds must file when their net short position eclipses 0.2% of the
issued share capital of a company. Notification is also required again
at each 0.1% increment after that. This applies to both increases and
decreases in the position. Public disclosure is required when net short
positions reach 0.5% of issued share capital. Additionally, disclosure
is required when the position subsequently falls below 0.5%.
Per Google Finance, Ashtead Group is "a United Kingdom-based equipment rental company with networks in the United States and the United Kingdom. The Company operates through two business units: Sunbelt, which provides pump and power, climate control and scaffolding service, and A-Plant business, which operates through Eve Trakway Limited (Eve), which constructs temporary roadways and barriers; PSS, which offers trenchless technology and fusion services, and FLG (lifting) services. Both the units are also engaged in general equipment and related businesses. The Company rents a range of construction and industrial equipment across a range of applications. Its equipment can be used to lift, power, generate, move, dig, compact, drill, support, scrub, pump, direct, heat and ventilate. Its subsidiaries include Ashtead Holdings PLC, Sunbelt Rentals, Inc., Sunbelt Rentals Industrial Services LLC, Ashtead Plant Hire Company Limited, Ashtead Capital, Inc. and Ashtead Financing Limited."
Third Point Ups Short in Peugeot
Dan Loeb's hedge fund firm Third Point has recently filed disclosures with the French regulatory body regarding a short position. Per the filing, Third Point is now short 1.01% of Peugeot's shares in France as of September 24th.
This is up from the 0.98% of shares they were short on September 23rd. As we've previously highlighted, Viking Global is also short Peugeot (though they've been trading around the position as of late). Viking's last disclosure shows them short 0.99% of shares as of the end of September, down from as high as 1.52% of shares in the middle of the month.
Given the volatility in markets as of late, we're providing updates on
various hedge fund short positions. You can scroll through them all by
clicking here: hedge fund short positions.
You can view additional portfolio activity from Third Point here.
Hound Partners Boosts Short in Admiral Group
Jonathan Auerbach's hedge fund firm Hound Partners recently filed updated short position disclosures in the UK regarding their short of Admiral Group (LON:ADM).
Per the filings, Hound has disclosed they are now short 1.71% of shares as of October 1st. This is up from the 1.6% of shares they were short back on June 17th.
Given the volatility in markets as of late, we're providing updates on
various hedge fund short positions. You can scroll through them all by
clicking here: hedge fund short positions.
The UK regulatory rules for short position disclosures state that hedge
funds must privately file when their net short position eclipses 0.2% of the
issued share capital of a company. Notification is also required again
at each 0.1% increment after that. This applies to both increases and
decreases in the position. Public disclosure is required when net short
positions reach 0.5% of issued share capital. Additionally, disclosure
is required when the position subsequently falls below 0.5%.
Per Google Finance, Admiral Group is "a United Kingdom-based company engaged in the provision of car insurance. The Company has four operational segments, which include UK Car Insurance, International Car Insurance, Price Comparison and Other. The UK Car Insurance segment consists of the underwriting of car insurance and other products that supplement the car insurance policy. The International Car Insurance segment consists of the underwriting of car insurance and the generation of revenue from additional products and fees, from underwriting car insurance outside of the United Kingdom. The Price Comparison segment relates to the Company's price comparison Websites; Confused.com in the United Kingdom, Rastreator in Spain, LeLynx in France and compare.com in the United States. The Other segment comprises of the United Kingdom household insurance, the Company's commercial van insurance broker, Gladiator and commercial van insurance. It operates approximately 14 brands in seven countries."
Blue Ridge Capital Shorts Royal Mail
John Griffin's hedge fund Blue Ridge Capital has filed a short position disclosure with regulators in the UK. Per the filing, Blue Ridge is now short 0.75% of Royal Mail's (LON:RMG) shares as of September 25th. As far as we can tell, this is a newly disclosed short position.
Given the volatility in markets as of late, we're providing updates on various hedge fund short positions. You can scroll through them all by clicking here: hedge fund short positions.
The UK regulatory rules for short position disclosures state that hedge
funds must privately file when their net short position eclipses 0.2% of the
issued share capital of a company. Notification is also required again
at each 0.1% increment after that. This applies to both increases and
decreases in the position. Public disclosure is required when net short
positions reach 0.5% of issued share capital. Additionally, disclosure
is required when the position subsequently falls below 0.5%.
Per Google Finance, Royal Mail plc provides postal services. The Company's segments include UK Parcels, International & Letters (UKPIL), General Logistics Systems (GLS) and Other. The UKPIL segment provides letter and parcel services to and from countries across the world under reciprocal arrangements with other overseas postal administrations. It is also responsible for the design and production of the United Kingdom's stamps and philatelic products. The UKPIL segment includes Royal Mail Group Limited, Royal Mail Estates Limited and Royal Mail Investments Limited. The GLS segment operates in continental Europe and the Republic of Ireland and operates ground-based parcel delivery network in Europe. The GLS segment includes GLS Germany GmbH & Co. OHG, GLS Italy S.p.A. and GLS France S.A.S. The Other segment includes its subsidiaries, Romec Limited, which is engaged in facilities management; NDC 2000 Limited, a provider of design services, and Quadrant Catering Ltd, a provider of catering services.
Lone Pine Capital Increases Short Position in Rolls Royce
Steve Mandel's hedge fund firm Lone Pine Capital has recently made some disclosures regarding their short position in shares of Rolls Royce (RR.L) in the UK.
We previously highlighted Lone Pine's initial short in RR shares earlier this summer and now they've increased their short position further. Per filings made with the UK's FCA, Mandel's firm increased the short to 0.66% of shares on September 22nd, up to 0.76% of shares on September 23rd, and then finally up to 0.85% of shares a day later. This is the most recent disclosure.
As we've also detailed, this is now somewhat of a battleground stock between two well respected investment managers as Jeff Ubben's ValueAct Capital is long RR. They obviously saw an opportunity for activism here and are long-term investors. Lone Pine, on the other hand, is looking to take advantage of the near-term troubles at the company.
We've posted a bunch of short position updates this week. You can scroll through them all by
clicking here: hedge fund short positions.
The UK regulatory rules for short position disclosures state that hedge funds must file when their net short position eclipses 0.2% of the issued share capital of a company. Notification is also required again at each 0.1% increment after that. This applies to both increases and decreases in the position. Public disclosure is required when net short positions reach 0.5% of issued share capital. Additionally, disclosure is required when the position subsequently falls below 0.5%.
You can read more recent portfolio activity from Lone Pine here.
Glenview Capital Buys More Tenet Healthcare
Larry Robbins' hedge fund firm Glenview Capital recently filed a Form 4 with the SEC regarding its position in Tenet Healthcare (THC). Per the filing, Glenview now owns 16.49 million THC shares.
They acquired 500,000 shares on September 30th at weighted average prices of $36.21 and $36.92. Tenet has been a longstanding holding of the hedge fund's as part of their for-profit hospital basket. THC shares are down 36% over the past three months.
We've also highlighted other recent portfolio activity from Glenview here.
Per Google Finance, Tenet Healthcare is "a healthcare services company. The Company operates regionally focused, integrated healthcare delivery networks in large urban and suburban markets. As of December 31, 2014, it operated 80 hospitals, 210 outpatient centers, six health plans and Conifer Health Solutions, LLC (Conifer), which provides healthcare business process services in the areas of revenue cycle management, value-based care and patient communications. It provides operational management for revenue cycle functions, including patient access, health information management, revenue integrity and patient financial services. It also offers communications and engagement solutions to optimize the relationship between providers and patients. Conifer operates a management services business that supports value-based performance through clinical integration, financial risk management and population health management. It has two operating segments: Hospital Operations and other, and Conifer."
Fairholme Capital Updates Stakes in Sears Canada, St. Joe's
Fairholme Capital's Bruce Berkowitz recently made a few filings with the SEC. First, an amended 13G on its position in Sears Canada (SRSC). According to the SEC filing, Berkowitz now owns 17.23% of the company with 17.55 million shares. The filing was made due to activity on September 29th. This compares to the 16 million shares that Fairholme reported in its last 13F filing as of the second quarter.
Second, Fairholme also filed an amended 13D on their longtime holding St. Joe's (JOE). Per the filing, Fairholme now owns 32.3% of the company with 24.4 million shares. This filing was required due to activity on September 28th. This is a slight decrease from the 24.6 million shares Fairholme was shown to own at the end of Q2 per its most recent 13F filing.
Fairholme's latest 13D shows they sold 105,000 shares at $18 on September 21st and 2,200 shares on August 21st at $16.78 and the fine print notes theses sales were "sold in an issuer tender offer at the direction of an advisory client" and then "sold at the discretion of an advisory client" respectively.
You can view past Fairholme portfolio activity here.
Avenue Capital's Marc Lasry: "The Best Place To Invest Is The US"
Avenue Capital's Marc Lasry today appeared on Bloomberg TV to talk about markets.
Pulled from the full transcript, Masry commented that:
On the U.S. economy, Lasry said: "I actually think the U.S. economy is doing great compared to the rest of the world. So the first question is where would you want to invest? Do you want to invest in the U.S., do you want to invest in Europe, do you want to invest in China, do you want to invest in emerging markets? At the end of the day, the best place to invest is the U.S. So if I was going to be an equity investor, I would be an investor in the U.S."
On the idea of more Fed stimulus, Lasry said: "I think it would be the worst thing in the world…I think right now, we have been living off of theses low interest rates and having more stimulus isn’t what you need. What you actually need is you need to get back to a little bit of normalacy and understand that the Fed can’t keep on pumping more and more stimulus into our economy. Our economy is fine. Let it grow and let it do what it needs to do."
Embedded below are some of the videos of Lasry's interview on Bloomberg TV:
Video 1
Video 2
Video 3
Video 4
For more from this manager, head to Marc Lasry's interview on Wall Street Week.
John Burbank Lecture at UC Berkeley Haas - Invest In Things That Have Never Happened Before
Passport Capital's John Burbank earlier this year gave a talk at UC Berkeley Haas that's well worth your time watching. In it, he lays out Passport's approach of combining three different types of investing: macro, fundamental, and quant.
He notes that all risk is backwards looking and hedging is for regression to the mean.
He presented a concept that "Price is a liar." He argues that, "Price means nothing other than the equilibrium of liquidity." Counter that with the typical thinking that "Price is all the information that exists in the market."
He says that when something new happens it takes yeas for all the liquidity in the world to discount that thing
Burbank went on to say: "Do not imagine you know where we are in 2019. The market doesn't, it has no idea." That said, he laid out his best guesses for the next 5 years: low global growth, leading equities over fixed income, US over emerging markets, stronger dollar, favor quality & liquidity, innovation & governance win.
His longs have been positioned to benefit from a stronger dollar while his shorts the opposite (foreign companies that have borrowed in dollars, commodity exposed companies, etc.) The Passport managers also feels that yields are going lower.
Burbank's talk is intriguing and thought provoking. He also echoes another salient point that other investors have highlighted: you have to match your investing style to your personality.
Embedded below is the video of Burbank's talk at Berkeley:
For more from the Passport manager, head to Burbank's presentation at the SALT conference from earlier this year.
Nelson Peltz's Trian Fund Presentation on Their New Stake in General Electric
Nelson Peltz's investment firm Trian Partners has disclosed a new stake in General Electric (GE). Trian now apparently owns 98.5 million shares of GE worth around $2.5 billion.
Trian's amended 13F filed with the SEC for the second quarter now shows that they owned 49.6 million shares of GE at the end of June.
Of the stake, Peltz said that "We invested in GE because it is undervalued and underappreciated by the market despite what we believe is a transformation that will allow its world-class industrial businesses to drive attractive shareowner returns. Our recent discussions with Jeff and his team have solidified our belief that they are highly motivated to fully deliver on GE's transformation and share much common ground with Trian on ways to improve long-term shareowner value."
Trian's Ed Garden also added, "Trian believes GE has significant long-term potential and that its implied target value per share, including dividends, could be $40 to $45 by the end of 2017 based on our view that GE can deliver EPS of at least $2.20 in 2018. We believe that the strategy of GE management and the board is broadly in line with our recommendations and we look forward to continuing to interact with management as GE works to expand operating margins, drive organic growth, increase capital efficiency and execute a disciplined capital allocation strategy.”
Trian's Presentation on General Electric
Embedded below is their presentation on GE:
You can download a .pdf copy here.
For more on this firm, head to Trian's recent portfolio activity.
Donald Drapkin on Wall Street Week
Anthony Scaramucci's rebooted show Wall Street Week this time around featured Donald Drapkin of Casablanca Capital, as well as former NYSE Chairman & CEO Dick Grasso and James Frischling of NewOak.
Embedded below is the video of Drapkin's appearance on Wall Street Week:
For more from this show, check out Steve Tananbaum's appearance on Wall Street Week as well as their previous interview with Eminence Capital's Ricky Sandler.
Thursday, October 1, 2015
Sohn Canada Investment Conference Notes 2015: Capitalize For Kids
The Sohn Canada / Capitalize For Kids 2015 investment conference just ended and was another great success benefiting children's brain health. Below are links to notes from each speaker's presentation. Enjoy!
Sohn Canada / Capitalize For Kids Conference Notes 2015
- Howard Marks' Talk (Oaktree Capital)
- Mick McGuire (Marcato Capital): 2 long ideas
- David Zorub (BlueMountain): Short Mattel (MAT)
- Dinakar Singh (TPG Axon): 2 long ideas
- Clifton Robbins (Blue Harbour Group): Long AGCO
- Jeff Smith (Starboard Value): Long Advance Auto Parts (AAP)
- Daniel Dreyfus (3G Capital): Long Reliance Steel & Aluminum (RS)
- Daniel Lewis (Orange Capital): Long Amaya
- Philip Hilal (Clearfield Capital): Long SS&C Technologies (SSNC)
- John Khoury (Long Pond Capital): long Forest City Enterprises (FCE/A)
- Jacob Doft (Highline Capital): Long cruise lines
- Jody LaNasa (Serengeti Asset Management): Long IRSA
- Reno Giancola (Alignvest): Long Great Canadian Gaming
- Dan Zwirn (Arena Investors) Presentation
- Ted Goldthorpe (Apollo Investment) Presentation
- Anna Nikolayevsky (Axel Capital) Bearish Presentation
- David Lorber (FrontFour Capital): Long Ubisoft
- Blair Levinsky (Waratah Capital): Short High Liner Foods
- Paul Sabourin (Polar Securities) and Greg Mills (RBC Capital) Presentation
Howard Marks' Capitalize For Kids Presentation (Sohn Canada 2015)
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Howard Marks from Oaktree Capital.
Howard Marks' Sohn Canada/Capitalize For Kids Presentation 2015
- China changing from an export economy to a consumption engine. They are not invested in China due to their lack of knowledge surrounding debtor rights and landscape. Have some small investments to gain experience in the area. China’s threat to the US is not direct as < 10%, maybe 5% of GDP are directly from China. It will hurt through second order effects through trade partners such as Australia and Canada. Worry about the countries dependent on China.
- They focus on distressed in non-commoditized markets such as real estate, shipping, power and European MPL’s. See opportunities in Oil but prefer to invest in financially distressed rather than operationally distressed.
- Wants rates to go up as low rates reward borrowers and penalize investors and creditors.
- It "absolutely is not" a great time to be a distressed investor.
- One of the worst things you can do as an investor is to invest in something you just don't understand.
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Mick McGuire's Sohn Canada Presentation: Long Sotheby's & Virtus Investment Partners
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Mick McGuire from Marcato Capital. He presented two long ideas: Sotheby's (BID) and Virtus Investment Partners (VRTS).
Mick McGuire's Sohn Canada Presentation
- LONG Sotheby’s (BID)
- Agent in the art collection industry primarily hosting auctions and private sales
- Trading at 8x EBITDA, 31% EBITDA margin, 47% share of a $12.9Bn market
- Business is split into two divisions: agency and financial services
- Agency performs the auction and private sale process
- Not capital intensive, provides consistent return with a fairly amount of inherent leverage as larger purchases provide additional commissions.
- Interest at 7%, < 50% LTV, guaranteed by collector
- Funds this business with a low cost $1Bn revolver
- Run rate $50MM
- Frothy art market may be a negative catalyst but Mick sees growth in the private sales market as this has little penetration to date from Sotheby’s.
- Opportunity to grow financing division to add additional net interest income
- Reasons for undervaluation
- $450MM excess cash on books
- $250MM in inventory a.k.a. art and jewelry, sell side appoints no value to this but there is definitely value in these items
- Real estate owned by the company, approximated value of $175MM for the NYC location and $250MM for the London location
- Additional value in the loan book
- Currently $774MM in loans, $594MM in debt against these loans, currently 77% LTV with a target of 85% providing additional interest margin.
- Catalysts
- Refinancing of the NYC location should close in Q3
- $250MM share repurchase
- Approximately $1.1Bn in non-operating assets a.k.a. redundant assets that could be sold which is 40% of the market cap
- A new CEO was brought in and personally invested $2MM and has a compensation package oriented to long term stock price appreciation.
- With the redundant assets removed, the stock is trading at 4.1x EBITDA
- Mick sees the position at ~$50/share or 60% upside from today’s prices.
- LONG Virtus Investment Partners Inc (VRTS)
- Asset management with a distribution platform that primarily uses sub advisors to manage funds.
- The balance sheet is misunderstood providing upside for the stock if value can be released.
- It has a market cap of approximately $1Bn and an enterprise value of $480MM
- Trading at 6x earnings
- Has a 15% AUM CAGR (which is evenly distributed between net inflows and performance)
- VRTS seeds most of its own capital to begin with, due to accounting these are seen as cash outflows which skews the cash flows from operations
- This is called their accelerate seed program and it is funded by a $100MM issuance and FCF - They have $115MM in FCF when adjusted for this
- EV/LTM EBITDA is 3.7x
- Have a reputational concern due to a fund “AlphaSector Fund” using backtested returns for marketing. Outflows from this fund have skewed the net inflows/outflows figure to the worse causing the trend to look poorly. When adjusted the AUM has had consistent inflows. Once the AlphaSector is behind them in Q1 2016, the figures will market properly.
- Industry EV/EBITDA is closer to 8x
- Cash and investments are approximately 50% of the net assets, most sell side analysts are putting discounts on this figure for unjustified reasons.
- Currently trading at $98, sees the stock at $224/share in 2-3 years through the combination of value activation activities such as returning cash to shareholders.
Be sure to check out the rest of the presentations from the Sohn Canada Conference.
David Zorub Short Mattel: Sohn Canada Presentation
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is David Zorub from BlueMountain Capital who pitched short Mattel (MAT).
David Zorub's Sohn Canada Presentation
- SHORT Mattel (MAT)
- Toy company with 12% global market share
- Sales declined 7% in 2014 along with margins contracting
- Brands make up a huge portion of this business at it is catered to retail
- They are seeing weakness in several brands such as Barbie, Monster High (as seen in brand ranking)
- Recent power brand Disney, specifically Frozen, has kept Mattel’s sales from cratering
- Starting in 2016, Hasbro will hold the licensing for Disney creating a huge gap in sales targets by many sell side analysts projections and little is there to fill the gap
- 2016 consensus sales is $5.6Bn, BM projects $5.1Bn. Consensus EBIT of $710MM is much higher than the BM projection of $400MM
- Bulls will think: new management team, legacy brands will fill hole
- Not true for 4 reasons:
o Difficult industry dynamics: children are fickle, it is a seasonal business (Q4 focus), low growth due to changing interests such as more digital options
o Monster High is fading: Brand ranked #1 in 2012, #3 in 2013, and #6 in 2014, trend is assumed to continue. Analysis was done on the industry and it was found that often these trends continue at a rate of 25%+ declines per year.
o Legacy brands are falling: Barbie is seeing lower sales as consumers are becoming more sensitive to what the toys stand for namely, thin body and dumb (blonde) etc. Barbie POS is on a 3 year decline.
o Licenses & content strategy: Hasbro has been dominating all the movie names (Spider man, iron man, etc.) and is adding Disney. These are generally long-term contracts so Mattel will have a tough time catching up in short order.
- Management is not new! The “new” CEO has been on the board since 1996.
- Mattel is on its 4th restructuring since 2008, not sure how many more cost cutting initiatives are needed before they give up.
- Risks: key product launch, if another “Frozen” were to happen – seen as unlikely. M&A activity is an option but will not likely be used as it is a bad signal to the market that they have no organic growth left. Activist or LBO – do not see a take private or activist due to the lack of growth potential or FCF generation.
Be sure to check out the rest of the presentations from Capitalize For Kids Conference.
Dinakar Singh's Sohn Canada Presentation: Long Hitachi & India Private Banks
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Dinakar Singh from TPG Axon. He pitched two long ideas: Hitachi and India private banks (Yes Bank and Axis Bank).
Dinakar Singh's Sohn Canada Presentation
- Currently seeing problem markets rather than problem world
- Services are doing well and manufacturing is doing poorly
- Zero capex growth in 1990’s, may see this happen again
- See opportunities in Japan (through restructurings) and India (earnings growth)
- Long Hitachi: see operating margins improving from 6.5% to 10%, 8x PE, see going to 14x in line with industry
- Long India private banks (Yes Bank and Axis Bank): bank sector restructuring, consumer growth, cyclical recovery, dramatic growth for private banks
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Philip Hilal's Sohn Canada Presentation: Long SS&C Technologies
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Philip Hilal from Clearfield Capital. He pitched SS&C Technologies (SSNC) as a long.
Philip Hilal's Capitalize For Kids Presentation
- Special situations such as companies undergoing transformation. Previously worked at Kingdon and Bill Ackman is reportedly an investor
- LONG SS&C Technologies (SSNC)
- Market Cap $7Bn, sees 40% upside
- Serves the financial services industry with administration for hedge funds among other services
- Sell side doesn’t follow closely, under appreciates the synergies in the 3 most recent acquisitions
- They have mission critical software – regulation will drive more business going forward
- Highly recurring revenue with 90% retention
- High margins over 40% EBITDA margin and high FCF
- Bill Stone is CEO, has completed 40 acquisitions and owns 12MM shares
- Has a history of improving acquired businesses
- Still small in industry and has room to expand
- These 3 transformative acquisitions stand to double EBITDA
- Advent acquisition should be 25% accretive and Citi Fund services should be 18% accretive
- $5 earnings forecast for 2017 and a 20x multiple applied puts stock at $100, compared to current levels ~$70
- Catalyst: Nov 4 2015, investor day, may refresh guidance on synergies in acquisitions
- Risks: Integration (mitigant: long history of integrating businesses), Organic growth decline (mitigant: possible but most likely temporary), and leverage (successful history of deleveraging)
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
John Khoury's Sohn Canada Presentation: Long Forest City Enterprises
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is John Khoury from Long Pond Capital. He pitched a long of Forest City Enterprises (FCE/A).
John Khoury's Capitalize For Kids Presentation
- Questions to ask:
o Is it cheap?
o Why is it cheap/misunderstood?
o Why will it cease to be cheap?
o What is the downside protection?
- Long Forest City Enterprises (FCE/A): 40% discount to NAV, 70% upside potential
- Was over levered in 2008 and it dropped 90%.
- In 2011, FCE/A brought in a non-family member CEO (family owns 500million in stock)
- They own office, retail and multifamily properties
- Office: 8.3million leasable area, 38 properties, focused in NYC, Boston and Washington - Retail: > $500 spsf
- Multifamily: 95% occupancy
- Large development pipelines, often a place for undervaluation as sell side does not attempt to value these projects
- Reasons for discount: not a REIT, has non-core assets (complicated BS), lower operating margins and high leverage
- Catalysts: becoming a REIT in 2016, selling non-core assets and deleveraging.
- The stock is up 7% since 2011, underperformance of 35% behind REITs in the US.
- With the value of margin expansion and development properties included the NAV will be approximately $35/share. Trading at $20 currently.
- Only real estate company over $5Bn that’s not a REIT, should cause appreciation upon conversion as indexes and ETFs will need to include it
- Non-core assets such as Brooklyn Nets and Barclays center will be sold
- Have ~$600MM of assets left to sell
- Cost cutting should add $35-45MM savings per year, adds 5% to NAV
- They see apartments adding margin as low hanging fruit
- Are currently deleveraging from 10x currently to 7.5x in net debt/EBITDA
- Projected asset sales, conversion of convertible debt and NOI growth will help to bring down leverage
- Downside protection: high quality real estate, non-recourse debt, incentivized board and management team
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Clifton Robbins' Sohn Canada Presentation: Long AGCO
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Clifton Robbins from Blue Harbour Group. He pitched a long of AGCO.
Clifton Robbins' Capitalize For Kids Presentation
- Friendly activist and target $2-10Bn companies
- Long AGCO, own 7.5%
- 3rd largest equipment manufacturer
- $4Bn market cap, $5Bn EV
- Concentrated industry, lots of price increase opportunities
- Strong network of dealers, 55% of sales in Europe
- 20% market share in Europe, 6% in North America
- 98% of profits from Europe
- See Europe as a different agriculture industry, more focused on small tractors versus larger
- Stock has come down on concerns in US market
- Short term issues in Brazil, only small part of business anyway
- Attractive valuation, improving margins, 24% ownership of TAFE which is a hidden balance sheet
- 9% FCF yield with trough earnings
- TAFE (India) worth $7/share
- AGCO has high earnings power
- Management targeting 10% operating margins (10 year average of 7.4%), $10Bn revenue or $7.82 EPS
- They can support more debt, closer to 2x debt/EBITDA
- Therefore can buy back 17% of stock with the proceeds
- Interest coverage will remain above 5x
- Buybacks of 13% of stock over last 6 quarters
- M&A opportunity being < $5Bn
- $75-$95/share at historic multiples, from $45 today
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Jacob Doft's Sohn Canada Presentation: Long Cruise Lines
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Jacob Doft from Highline Capital. He pitched going long the cruise lines, including Royal, Carnival, and Norwegian.
Jacob Doft's Capitalize For Kids Presentation
- Long Cruise Lines including: Royal (RCL), Carnival (CCL), Norwegian (NCLH)
- For 4 reasons:
o Low End consumer – sentiment rising (Retailer CEO’s change tune on customers a.k.a. more optimism such as Walmart), oil prices falling and unemployment falling. Cruise ships offer travel for $200/day versus fly and hotel trips around $450/day.
o China – government through the Ministry of transportation is endorsing cruise ship travel. Chinese can visit Japan, Korea and Taiwan via cruise ships. Port infrastructure is built and can accommodate 7 million people. Relaxed visa restrictions will drive future demand. Carnival and Royal have 9 ships in China. 2015 new ship capacity of 4,150 people.
o Rest of world improvement – 4 ship builders build ~5 ships/year. 2010-2015, ½ average goes to China per year. 2015-2020, 3/5 ships will go to China. Cause demand outside of China for cruises and price appreciation.
o Cuba: cruise ships already go around Cuba. Cruise ships are a good way for Americans to go to Cuba.
- Projects approximately 50% upside from current prices.
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Daniel Dreyfus Long Reliance Steel & Aluminum: Sohn Canada Presentation
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Daniel Dreyfus from 3G Capital who pitched a long of Reliance Steel & Aluminum (RS).
Daniel Dreyfus' Capitalize For Kids Presentation
- Finds opportunities where profit margins are low and average valuation is applied
- Wants something levered to US economy to shield global worries
- Long Reliance Steel & Aluminum (RS)
- FCF yield 9.2% 2014
- $6Bn EV, $53 stock price
- Distribution business, levered to US
- Largest buyer of steel, cut it to fit for client and deliver
- Basically activity increases and falls with US economy
- Size is their moat
- Volume game, low margins
- 1 quarter since 1994 IPO with lost money so it’s a cash machine
- Serves non-residential construction
- Sees oil recovery as a free option in stock as it will see huge upside if the oil producers start building again
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Dan Zwirn's Sohn Canada Presentation
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Dan Zwirn from Arena Investors.
Dan Zwirn's Capitalize For Kids Presentation
- Dan Zwirn – Westaim Corporation and Arena Investors LP
- Provide liquidity when needed (almost like a pawn broker)
- Credit investments and legal agreements provide downside protection
- 6 areas: corporate private credit, real estate credit, commercial and industrial, structured credit, consumer assets, corporate securities
- Create partnerships with specialists
- Spreads very tight, invest in idiosyncratic credits with wide diversity to prevent concentration risk and be long put index spreads to capitalize on irrationality in the pricing
Be sure to check out the rest of the presentations from Capitalize For Kids Conference.
Ted Goldthorpe's Sohn Canada Presentation
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Ted Goldthorpe from Apollo Investment Corporation.
Ted Goldthorpe's Capitalize For Kids Presentation
- Yield is difficult to find, there is $7 trillion of negative yielding bonds
- Only 15% of bonds yield > 4%
- Issuances are currently covenant light
- Dealer inventories are shrinking, hedge funds stepping in as liquidity providers
- Energy and Industrials widest spreads
- Cablevision → 95 to 75 in bonds
- PetroBras → 100 to 75 - Big effect by Basel 3 and Dodd-Frank
- Finding opportunities in complicated and illiquid credits. Found and structured a mid teens yield loan secured by aircrafts which is much than unsecured 4% bonds in public markets
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Anna Nikolayevsky's Bearish Sohn Canada Presentation
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Anna Nikolayevsky from Axel Capital Management.
Anna Nikolayevsky's Capitalize For Kids Presentation
- Fixed capex of 45% of GDP in China compared to 12% in USA
- Set records on commodity imports, debts have skyrocketed, and there has been overinvestment
- Causing ghost cities, real estate losses have caused input prices to crater
- Led to capital flight out of China, fraud discovery, government subsidiary intervention, low prices and overcapacity.
- All countries will be affected.
- China contagion risk will hurt resource heavy countries and industries.
- Overlevered energy companies will be hurt by oil collapse and this will continue.
- Charge-off rates at lows (a.k.a. bank bad loans likely to rise)
- Canada and Australia have high consumer debts
- USD appreciation causing international corporate defaults due to currency differences
- Short Banks, Australia, and Canada
- Trade to capitalize on devaluation in the USD.
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Jeff Smith's Sohn Canada Presentation: Long Advance Auto Parts
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Jeff Smith from Starboard Value. The activist investor revealed a new long of Advance Auto Parts (AAP).
Jeff Smith's Capitalize For Kids Presentation
- Long Advance Auto Parts (AAP)
- They look for value, plan, path
- See stock going from $171.40 to >$350
- Specialty retailer of aftermarket automotive parts
- Have two divisions retail stores to buy parts and commercial distribution business for garages to buy parts
- They are seeing consolidation in the industry
- Cars are getting older and more complicated, seeing consumers taking cars to auto shops to fix their cars versus self-fix due to this.
- SSS growth in all markets over last few years, yet AAP has underperformed by 295% vs peers
- Peers have more retail which is known as higher margin business but this may be misunderstood
- AAP does have a margin problem but not a revenue problem
- There is a 800bp gap between margins in EBITDA to competitors (or as he put it best in class margins)
- It is trading at 10x, 6.3x proforma, peers at 12x
- Thesis: 600-740bp margin improvement, fix NWC. Grow SKU count to provide better service and get first calls from customers. Increase leverage from 1.1x to 2.5x. Consolidation and returning cash for further returns.
We already posted up Smith's slideshow presentation on AAP as well.
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Jody LaNasa's Sohn Canada Presentation: Long IRSA
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Jody LaNasa from Serengeti Asset Management. LaNasa pitched long IRSA.
Jody LaNasa's Capitalize For Kids Presentation
- Argentina credit re-rating after politician change in coming months
- Highly educated and young people
- Underlevered due to limits of leverage after past bankruptcies which has slowed growth
- Have been subsidizing power and limited cattle exports which has led to 25% inflation since 2007
- Long IRSA
- One of the largest mall operators in Argentina, they are packed, 98.4% occupancy
- Highest rent and sales psf in North and South America
- Rent adjusted for inflation as rent is calculated based on sales of stores
- 20% implied cap rate
- 5-7% average market cap rates
- 60% upside or 2.5x MOIC
- Hidden value in IDB, sum of parts worth >2x book value
- Land Bank – properties bought in early 90’s
- Including these assets: 4.0x MOIC potential
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Daniel Lewis' Sohn Canada Presentation: Long Amaya
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Daniel Lewis from Orange Capital who pitched a long of Amaya.
Daniel Lewis' Capitalize For Kids Presentation
- Global event-driven, top 10 positions make up 60% of fund
- Long Amaya
- 40% EBITDA margin
- Reverse merger
- 8.4Bn EV
- 70% global market share of poker market
- Most revenue is regulated
- High barriers to entry
- Different possible verticals such as casino or sports betting online
- C$1Bn EBITDA in FY2018
- $575MM in 2014, almost double in 4 years
- Catalyst: US regulation approval, deleveraging through FCF
- Risks: AMF investigation, Russia, currency, and leverage
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Blair Levinsky Short High Liner Foods: Sohn Canada Presentation
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Blair Levinsky from Waratah Capital Advisors who pitched a short of High Liner Foods.
Blair Levinsky's Capitalize For Kids Presentation
- Questions:
o What is the situation?
o Why does it exist?
o How is it going to change?
- Crowding in non-resource equities
- Hot IPO market, expensive food companies
- Short High Liner Foods (TSE:HLF)
- Customers such as Walmart, McDonalds for seafood
- Have seen growth in sales and EBITDA yet volumes have declined 13 quarters in a row, margins have compressed.
- Attempting to bail themselves out of the mess through acquiring companies with debt.
- Now they are overlevered and have bad businesses to run
- Through analysis of the cash flow statement it looks like realized incremental EBITDA/Capex+acqusitions+NWC inv. Between 2011 and 2014 imply average acquisition price of 13.3x multiple which is very high for industry
- High Liner claims to have a 30% pay out ratio but have averaged -$40MM in FCF for the last 5 years but have been increasing the dividend payout for the large family shareholder who likes dividends
- Current earnings are $71MM (without adjustments), have told the street they will see $150MM in EBITDA in 2016, difficult to manage given lack of balance sheet flexibility and inability to drive cost cuts
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Reno Giancola's Sohn Canada Presentation: Long Great Canadian Gaming
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is Reno Giancola from Alignvest who pitched a long of Great Canadian Gaming.
Reno Giancola's Capitalize For Kids Presentation
- Long Great Canadian Gaming
- 50% upside
- Rod Baker – CEO since 2009
- Reasons for upside: underlevered, strong ROIC, Unique assets
- Vancouver BC location with many VIP gamblers, have 50% market share in BC
- River rock is a unique assets with revenue per table of 2x the market average
- Relaunched Hard Rock Casino Vancouver due to construction in the area and should reach previous revenue levels in 2016
- Ontario gaming is an area for growth as bundles are sold, they have purchased 1 for $50MM and expect 20% ROIC on the purchase
- Buybacks will drive further shareholder value
- Can grow earnings 45% if they releverage
- Own the real estate, trend to spin off assets into REITs, could unlock additional value
- $31-32 price target excluding buybacks and M&A
- Cheap compared to Australian gaming industry, comparable due to Asian consumers
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
David Lorber's Sohn Canada Presentation: Long Ubisoft
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is David Lorber from FrontFour Capital who pitched long Ubisoft.
David Lorber's Capitalize For Kids Presentation
- Value event-driven fund
- Long – Ubisoft (French listed video game country)
- Levered to game development industry (XBOX one and PS4 coming out)
- Higher margin point of sale, and upgrades add additional margin
- Shift from physical to digital sales has increased margins
- Strong North American footprint and have prices pegged to USD
- 3/10 of the top 10 best sellers in 2014
- Strong pipeline of games to come
- Valuation is cheaper than EA & Blizzard
- 77% upside to 32 euros/share
- “For Honour” (new game to come out) looks to be a possible home run with very high quality multi-player play modes
- Brand extensions will provide additional opportunity through licensing and royalties
- Secular tailwinds, cheapness of company compared to comps and industry consolidation provide opportunity to get into a great business with lots of upside.
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Paul Sabourin & Greg Mills Talk at Sohn Canada Conference
We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.) Next up is a chat between Paul Sabourin (Polar Securities) and Greg Mills (RBC Capital).
- Toxic trades are no longer tolerated by banks as capital becomes expensive to fund these for hedge funds
- Positive from hedge funds is they are seeing the bank work more as a team than ever before
- Prime brokers no longer want hedge funds to hold cash with them for capital charge reasons
- (Talk cut short due to timing)
Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.
Wednesday, September 30, 2015
Third Point Gets Board Seat at Baxter
Dan Loeb's hedge fund firm Third Point has filed an amended 13D with the SEC regarding its activist position in Baxter (BAX). Per the filing, Third Point now owns 9.9% of the company with over 53.85 million shares.
This is up slightly from the 52.5 million shares Third Point owned previously, though the filing shows their most recent buying activity as August 7th for 1.35 million shares at $41.80.
The filing was made due to activity on September 29th as the firm entered into a support agreement with the company. Additionally, Third Point's Munib Islam will join Baxter's board of directors.
Third Point also agreed to a standstill whereby they won't acquire more than 13% of the company's shares.
Third Point has already increased its Baxter stake in August. For more from this hedge fund, you can view Third Point's Q2 letter here.
