What We're Reading ~ 11/14/12

The Oracle Speaks: Warren Buffett In His Own Words [David Andrews]

Cash as trash, cash as king, and cash as a weapon [CFA Institute]

Buffett's latest bargain: Berkshire Hathaway [Barrons]

Charlie Rose talks to Jeremy Grantham [BusinessWeek]

Investing lessons: avoiding the Peter Lynch bias [Charles Sizemore]

See also: Lynch's principles & golden rules of investing [Market Folly]

Ebb and flow of cash plays key role in hedge funds' bets [Reuters]

Keys to successful investing by endowments & foundations [CAIA]

The missing piece: determining when to sell [GuruInvestor]

Another view: When to sell a stock [Gurufocus]

A presentation on investment process [Contrarian Edge]

Hedge fund legends with their humble beginnings [eVestment]

Would you invest Grandma's money in hedge funds? [Absolute Return]

On the future of cable, TV, wireless and more [BusinessInsider]

5 reasons Apple has peaked for real this time [Quartz]

Bill Ackman Not Throwing In The Towel On J.C. Penney (JCP)

After sales plunged at J.C. Penney, Bill Ackman of Pershing Square Capital appeared on CNBC to talk about his investment.  He has stressed in the past that he's in this investment for many years as the company is a turnaround story.

Ackman originally purchased his stake around $25 and the stock now trades around $18 so he has a paper loss.  He argues that J.C. Penney is now "two companies" with the new startup concept: jcp (the stores within a store concept) and then the old J.C. Penney.

The Pershing Square man essentially argues that since the new jcp concept stores are generating a much higher return per square foot than the original concept, the growth there will be when old stores convert to the new jcp concept and then when the number of 'mini stores' within the store increases.

Embedded below is a video of Bill Ackman's appearance:



For more from this hedge fund manager, we've also posted Ackman's presentation at the Value Investing Congress.

Hedge Fund Short Positions in Finland: Tiger Cubs Short Nokia

Continuing our coverage of hedge fund short positions in Europe, next up is Finland.  New European rules are obliging hedge funds to disclose information about the most carefully guarded part of their business activities: short positions.

Since November 1st when the EU Regulation on short positions came into force, there has been a deluge of information from financial regulators in EU countries giving information on short positions across all market sectors.

Public disclosure is required for net short positions of shares that reach 0.5% of the issued share capital of the company concerned and again at each 0.1% increment above that.  Additionally disclosure is required publicly when the position subsequently falls below 0.5%.  Here are the latest disclosures in Finnish markets:


Hedge Fund Short Positions In Finland Disclosed

AQR Capital: Short -0.9% Konecranes, -0.9% Nokian Renkaat, -0.6% Rautaruukki

Axial Capital: Short -0.74% Sanoma

Blue Ridge Capital: Short -1.34% Nokia

Carlson Capital: Short -0.93% Outotec

Coatue Management: Short -0.8% Nokia, -0.62% Stora Enso

Eton Park Capital: Short -0.95% Nokian Renkaat

Lansdowne Partners: Short -1.57% Metso

Lone Pine Capital: Short -0.57% Nokia, -0.92% Stora Enso

Maverick Capital: Short -1.7% Nokia, -2.8% Outotec, -1.53% Stora Enso

Odey Asset Management: Short -0.6% Kemira

Pennant Capital: Short -1.38% Outokumpu

SAC Capital: Short -0.6% Neste

Viking Global: Short -2% Nokia


Obviously, there are many 'Tiger Cub' hedge funds short Nokia.  There's an interesting dichotomy here as some value investors have gone long the troubled handset maker due to valuation, while many GARP (growth at a reasonable price) investors short the company due to its falling market share.

Many Tiger Cubs often go long the 'best of breed' companies in various sectors and short the struggling companies in that same sector.  As an example, many have been long Apple (AAPL) and short Nokia (NOK) as smartphone market penetration exploded and iOS gained market share while Nokia struggled to find a winning strategy.


To see more hedge fund shorts, head to our other coverage:

 - Hedge fund short positions in the UK

- Hedge fund short positions in Germany

- Hedge fund short positions in France

- Hedge fund short positions in the Netherlands

Sohn London Investment Conference Next Week: Hohn, Chanos & More

Continuing the busy investment conference season, we wanted to make sure our European readers were aware of the Sohn London Investment Conference taking place next week on November 19th.  This is the inaugural London event and it is hosted by The Sohn Foundation London.

Top hedge fund managers will present their latest investment ideas to raise funds for pediatric cancer care and research, supporting Great Ormond Street Hospital Children's Charity.  You can register for the event here.

The conference brings together top professionals from the investment world, such as Chris Hohn (The Children's Investment Fund), Nicola Horlick (Rockpool Investments), Jim Chanos (Kynikos Associates) and Nick Moakes (The Wellcome Trust), to share their views on current market conditions and future opportunities/trends.


Full Speakers List

Chris Hohn, The Children's Investment Fund
Jim Chanos, Kynikos Associates
Nick Moakes, The Wellcome Trust
Nicola Horlick, Rockpool Investments
John Armitage, Egerton Capital
Carson Block, Muddy Waters Research
Jan Hummel, Paradigm Capital
Russell Napier, CLSA Asia Pacific Markets
Bruno Rocha, Dynamo Capital
Davide Serra, Algebris
Nicolai Tangen, AKO Capital
Nicolas Walewski, Alken Asset Management


Event Details

Date & Time: Monday November 19th, 2012 from 13:00 - 18:00
Location: London Marriott Hotel Grosvenor Square

For more information and to register, please click here.

Hedge Fund Short Positions in the Netherlands: Elliott, Passport, Marshall Wace & More

Continuing our coverage of hedge fund short positions in Europe, next up is the Netherlands.  New European rules are forcing hedge funds to disclose information about the most carefully guarded part of their business activities: short positions.

If you missed them, we've already posted up hedge fund short positions in the UK, as well as hedge fund short positions in Germany, and hedge fund short positions in France.

Since November 1st when the EU Regulation on short positions came into force, there has been a deluge of information from financial regulators in EU countries giving information on short positions across all market sectors. 

Public disclosure is required for net short positions of shares that reach 0.5% of the issued share capital of the company concerned and again at each 0.1% increment above that.  Additionally, disclosure is required publicly when the position subsequently falls below 0.5%.  Here are the latest short positions disclosed in Dutch markets:


Hedge Fund Short Positions Disclosed In The Netherlands

AQR Capital Management: Short -0.51% SBM Offshore, -0.61 Fugro

Carlson Capital: Short -0.51% NSI 

Elliott Management: Short -1.42% AMG Metallurgical Group 

GLG Partners: Short -2.27% SNS Reaal 

Marshall Wace: Short -0.52% PostNL 

Passport Capital: Short -0.58% Tom Tom 

The Children’s Investment Fund: Short -0.68% Royal Imtech


Marshall Wace's short position in PostNL is worth flagging because Clint Carlson's hedge fund firm Carlson Capital recently pitched long PostNL at the Great Investors' Best Ideas Conference.


To see more short positions, be sure to check out the rest of our coverage:

- Hedge fund short positions in the UK

- Hedge fund short positions in Germany

- Hedge fund short positions in France

Hedge Fund Short Positions in France: Eton Park, Lone Pine, Maverick & More

With new EU regulations on short selling providing more transparent disclosures, we're continuing our coverage today with hedge fund short positions in France.  If you missed them, we've also posted up hedge fund short positions in the UK as well as hedge fund short positions in Germany.


French Regulatory System

The French disclosure system has been one of the most transparent in Europe in relation to short positions for some time. In many respects the French approach seems to have served as an influence for policy-makers when they were drawing up the new EU Regulation on short selling as it uses the same thresholds and requires the disclosure of shorts across all sectors.  Even so, due to the new EU Regulation we are suddenly seeing new short positions in France that we had not reported before.


Hedge Fund Short Positions in France Revealed

The following percentages represent the amount of a company's shares the hedge fund is short:

AQR Absolute Return Master: Short -1.35% Vallourec, -1.33% Alcatel Lucent, -0.71% Veolia Environnement, -1.08%  

Eton Park: Short -0.56% lliad  

Lone Pine Capital: Short -0.51% Neopost, -0.98% Gemalto, -0.64% Air France-KLM  

Maverick Capital: Short -1.37% Gemalto  

Odey Asset Management: Short –2.23% Alcatel Lucent, -2.76% Peugeot  

Pennant Capital: Short -0.72% Neopost


As you'll note above, a few hedge funds are short Neopost and we've written extensively on the thesis there which you can read at the above link.


For more new hedge fund disclosures, head to our coverage of:

- Hedge fund short positions in the UK

- Hedge fund short positions in Germany

- Hedge fund short positions in the Netherlands

Notes From Invest For Kids Chicago 2012: Mandel, Peltz, Grant & More

Today we're posting up notes from the fourth annual Invest For Kids Chicago 2012 event that just concluded and was a great success raising money for charity.  17 of the 19 picks from last year were up, so we'll see how this year's do.  Click the links below for notes from each speaker's presentation.

Thanks to Kyle Mowery for taking notes on our behalf.  Kyle founded GrizzlyRock Capital in 2011 to provide clients exemplary investment services focusing on strong risk-adjusted investment return and preservation of capital regardless of market environments.  The firm utilizes a long/short approach in both corporate credit and equity securities.  You can contact Kyle at kyle@grizzlyrockcapital.com for further information or to be added to the firm's distribution list.


Notes From Invest For Kids Chicago

Steve Mandel's Latest Stock Pick (Lone Pine Capital)

Nelson Peltz's Presentation on Danone (Trian Fund Management)

Kyle Bass: Short Japanese Government Bonds (Hayman Capital)

Sam Zell: Invest in Black Swan Scenarios (Equity Group Investments)

James Grant's Two Ideas (Grant's Interest Rate Observer)

Frank Brosens: 3 Catalysts For General Motors' Repricing (Taconic Capital)

Alex Klabin's Investment Idea (Senator Investment Group)

Jeff Ubben's Two Picks (ValueAct Capital)

Steven Romick's Pitch on Renault (First Pacific Advisors)

David Herro's Two Investment Ideas (Harris Associates)

Kelly Cardwell: Long Nexstar Broadcasting (Central Square Management)

Ari Levy: Short InterOil (Lakeview Investment Group)

Steve Mandel's Pitch on VeriSign: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago is Steve Mandel of Lone Pine Capital.  His presentation focused on how "technological change creates winners and losers" and how there is "no bigger disruptive market force than the Internet."


Mandel's Pitch on VeriSign (VRSN)

•    Lone Pine owns 9% of the company.  We revealed Lone Pine's initial stake in VRSN that they took in August (back then they owned 5.5% of the company)
•    VeriSign is the registry operator for .com and .net & handles the queries of each day
•    Thesis is combo of 5% to 7% growth in domains and 5% increases in price
•    This should lead to 25x EPS growth over next few years
•    This business should not be trading at 13x
•    CEO built RSA before founding VeriSign.  The board brought founder back in 2008 to focus on the business after a handful of non-core acquisitions
•    Management has been divesting non-core operations and now the company has operating margins of 50%
•    15 years of strong operating performance
•    Defense community views VeriSign as important to national security
•    If no price increases are allowed by the government the downside is low even in draconian case

His last point is noteworthy mainly because recently shares of VRSN sold off when it was announced that the Commerce Department and Department of Justice have been reviewing VRSN's .com Registry Agreement pricing terms.  The government may not complete its review in time before the current agreement expires on November 30th.

The fear is that the contract might not allow for price increases or they'll have to re-negotiate.  However, Mandel still thinks this stock is appealing even if price increases aren't allowed.

VeriSign (VRSN) was analyzed in the most recent issue of our premium newsletter: Hedge Fund Wisdom. A new issue is only two weeks away so be sure to sign-up.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

Kyle Bass: Short Japanese Government Bonds (Invest For Kids Chicago)

Next up in our notes from Invest For Kids Chicago is Kyle Bass of Hayman Capital.
 
•    Casual observation from Bass: He has heard the same sentiment as Zell that uncertainty is massive and they are buying tail protection from billionaires across the world
•    Hayman is a global event-driven fund which is 90% long in short duration things like mortgage backed securities etc.
•    Bass sees convexity in pricing and “all the convexity of world is in Japan.”
•    The next 18 months will set the stage for the Japan
•    Central banks have replaced traditional intermediaries – that is why global volatility is so low
•    Availability heuristic - people can only process data from readily available data
•    Accepting the logical conclusion is detrimental to many factors of our life


Bass: Short Japanese Government Bonds

•    3 false axioms of Japan

o    (1)  Can Japan run a current account surplus to self fund?  Bass says no.
o    (2)  Bank of Japan is not buying debt. Bass says false.  Monetization is occurring.
o    (3)  Retail investors will actually be able to hold all the debt.

This is largely in-line with what Bass presented at the Great Investors' Best Ideas conference recently as well if you want further thoughts from him.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

Nelson Peltz's Presentation on Danone: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago is Nelson Peltz of Trian Fund Management.  Here are notes from his pitch of Danone as well as his slideshow presentation:

•    Peter May's been a partner at his firm for 35 years.  Trian “invests in and fix businesses with great risk profiles where they aren't getting it quite right.”
•    Start on the income statement.
•    If you find a dollar on income statement it's worth 15 or 20 as opposed to a dollar on balance sheet which is a dollar
•    Founded current fund in 2005 and think of himself as a "constructivist"
•    Focus on getting businesses to grow
•    Trian has had success with food companies including: Heinz, Cadbury, Dr. Pepper, and Kraft Foods.
•    These food co’s have irreplaceable brands, high dividends, liquidity, and great balance sheets and are currently trading at half the premium to the S&P 500 that they normally maintain 


Peltz's Pick: Danone

•    Cheap with 3% dividend & focus on health & wellness products including yogurt, water, baby food etc
•    Trian owns 1% of Danone  and informed company last night of the stake per French law
•    Trading at 7% FCF yield, 14.8x P/E, 9.3x EV / 2013 EBITDA, basically priced in-line with slower growing domestic peers
•    40% of EBIT comes from yogurt (Activa a dominant brand)
•    37% is baby food & medical
•    Bottled water 17 percent of EBIT (and margins can be improved in this segment)
•    Sales are geographically diverse with 52% in emerging markets. 94 percent of world pop growth will come from emerging markets.
•    Danone’s margins in their emerging markets are above margins in the developed markets.  This is very rare.


Peltz Sees Danone Worth €78 by the End of 2014
 
•    One of the bear cases is significant European exposure to Spain, Italy, etc
•    Geographies are not static.  W Europe has been shrinking as a percent of sales for 20 years
•    Compared to many fresh portfolio of brands (Activia) etc
•    Premium water is excellent business (Evian)
•    Nestle and Kraft have product portfolios that aren’t as friendly to health & wellness
•    Company is leveraged to births thouerhg baby food and aging demographics with adult diapers
•    Milk formula at 12.1% is the top growing food category.  Other growth rates put Danone in the 8% growth area for the intermediate term
•    Nestlé bought Pfizer infant formula business at 20x EBITDA.
•    Danone should trade at 17x EPS. Trading at current multiples
•    French corporate governance is issue – Trian believes this should be fine.
•    Saw that in international hotel group earlier this year which re-rated
•    Peltz is looking for both sales & EPS growth and does not want dilutive M&A (bought health co in 2007) at 22x EBITDA


Peltz's Slideshow Presentation

Embedded below is Peltz's .pdf with his analysis of Danone:




For more from this investor, we've also posted up past activity from Nelson Peltz here.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

Sam Zell: Invest Some Capital in Black Swan Scenarios

Next up in our notes from Invest For Kids Chicago is Sam Zell of Equity Group Investments.  He gave a sobering talk and recommended putting some money in 'black swan scenarios.'

•    Zell was the most active real estate investor in US in 1974 through 1976 
•    Zell is just glad he “didn’t have to mark to market” 
•    Wrote an article in which he described his activities as a "grave dancer" (GrizzlyRock Note: Thus earning him one of the better moniker’s in the business!) 

•    How does Zell get the confidence or optimism to go forward in face of uncertainty?  
o    What he found was that he had the confidence because it was embedded in the belief that he was buying things inexpensively 

•    Same sort of situation in 1990 and 1991.  Zell was buying office buildings at less than replacement costs with no value being ascribed to the land

•    What does the world look like circa 2012? 
o    Europe with disintegrating currency and cross winds between parties, 
o    Demographic death spiral, attempt to create austerity 
o    Europe going into recession and maybe more than a recession 
o    Emerging markets growth slowing (China, India, etc) 

•    "Why are stocks so high?  Why are re prices sky high?" 
 •    Would seem to Zell that things would be cheaper that they are given the environment 
•    Middle market debt inefficiently priced and thus interesting 
•    There are "sand dunes of uncertainty" in the US. 
•    Solving uncertainty is better than flooding the world with dollars" 


Zell's Idea: Black Swan Scenarios

•    Zell's idea was to invest some capital in true black swan scenarios 
•    Long run certainty is lacking and a fundamental problem in the US.

This is interesting when you consider that Tiger Management's Julian Robertson (who has seeded tons of hedge funds) was recently interviewed where he said many hedge funds are overly hedged and poised for doomsday scenarios.  Robertson also cited this as a reason as to why hedge funds are underperforming.  Zell obviously agrees with those managers as he advocates some tail risk hedges.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

Jeff Ubben's Presentation on Moody's & CBRE Group: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago is Jeff Ubben of ValueAct Capital.  He presented two ideas: Moody's (MCO) and CBRE Group (CBG).

•    Describes firm’s style as “strategic block investing” 
•    Expert is someone who has made & learned from many mistakes 
•    ValueAct looks for 12 companies that can flourish 
•    Join a board about half the time usually a couple years into the investment 
•    Motorola Solutions (MSI) = top holding 
•    ValueAct looks for companies with small cost of customers product but are valuable inputs 
•    Don't like traditional financials as its hard to analyze banks 
 

Ubben on Moody's

•   Moody's: Investment is in the 5th inning  and is a 9% position for ValueAct (they run a concentrated portfolio) 
•    Maintenance fees are 60% of revenue and is very critical 
•    Moody’s rating are a de minims cost of debt 
•    Transaction revenues provide huge growth potential 
•    European growth in credit markets as banks fall away as source of funds is highly probable 


Ubben on CBRE Group

•    CBRE Group (CBG): Investment is in the 2nd  inning 
•    Scale & cross sales 
•    Real estate is the last bastion of outsourcing as companies have already done HR etc. 
•    CBRE essentially now a partner to companies instead of a broker 
•    Scrapping bottom of property sales 
•    "Ridiculously cheap cyclical" with tons of transaction volume coming (2/3rds of commercial wave expected to trade hands with 1/3rd refinancing) 

Jeff Ubben also pitched MCO & CBG and other stocks at the Value Investing Congress if you want more color.


For the rest of the hedge fund presentations from the event, check out our notes from Invest For Kids Chicago.

James Grant Likes Gold & Metropolitan Life: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago is James Grant of Grant's Interest Rate Observer.

•    Grant founded his firm is 1983 and called Japanese bubble and housing bubbles
•    Tongue in cheek legal disclaimer is that “Congress shall make no law abridging the freedom of the press”


Grant's First Idea: Metropolitan Life

•    Metropolitan Life
o    Japanese life insurers died out in long run.
o    825 billion of assets - a great franchise
o    Long due to potential for dividend.


Grant's Second Idea: Gold

•    Gold: is a “legacy monetary asset”
•    1920 there was a depression (not Great Depression). 18 months after peak then industrial production jumped significantly
•    "I'm a professional interest rate observer.  There are none"
•    Grant notes interest rates move in generational cycles

Grant is obviously not alone in his fondness for the precious metal as numerous hedge funds own gold for a myriad of reasons.  Some own it as a hedge against inflation or currency debasement, while others view it as an uncertainty hedge.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

Frank Brosens: 3 Catalysts for Repricing of General Motors (Invest For Kids Chicago)

Next up in our notes from Invest For Kids Chicago is Frank Brosens of Taconic Capital.

Brosens' Thesis on the 'New' General Motors

•    There are 3 catalysts for the repricing of GM

•    (1) New management team 
o    Better capital allocation since going public in November 2010 with new CEO Dan Akerson (Private equity background)
o    Better capital allocation will lead to resurgence

•    (2) Administration willing to sell post election
o    Treasury stake (mid 40s cost basis) is goings to come to market
o    Overhang of would be gone.  Institutions would come back to the stock (including being added to indices)
o    32 billion cash until treasury sells stake (only need 20bn to run company) and have $10bn revolver.
o    Company could buy back half of treasury stake. (Boosts EPS 16%)

•    (3) Valuation is currently overly conservative assumptions (Brossens notes the stock could triple).
o    SAAR is improving and could hits 15 MM next year
o    30% of GM’s 2013 line-up is re-engineered and the refresh cycle is driver of profitability and market share
o    The 2013 GM lineup has many trucks (GM makes ~10K per truck sold).  This is significantly in excess of the last truck refresh cycle in which GM made $2 to 3K per truck. Overall, a $3.5 billion dollar incremental opportunity
o    Average car age on road is beyond 11 years
o    GM trades at a discounts on EBITDA basis to Ford, Toyota, and VW
o    By 2015 if the current EV to EBITDA multiple stays flat the equity price will be $67 and if the FCF multiple stays flat the stock could be worth $89

It's also worth pointing out that Greenlight Capital's David Einhorn pitched GM at the Value Investing Congress as well.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

Alex Klabin's Thesis on Rayonier: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago is Alex Klabin of Senator Investment Group.  His presentation was cleverly entitled 'Pulp Friction.'

Klabin's Thesis on Rayonier (RYN)

•    Company has two main business lines:
•    7th largest of US timberland "TimberCo" worth around $4 billion
•    Performance fiber business "FiberCo"
•    Value realization event is potential spin-off of FiberCo in 2013
•    FiberCo #1 provider of cellulose specialties (ether)
•    FiberCo has no true public comps.  It's comped against commodity pulp players such as Tembec but this drastically undervalues the business due to the value added nature of FiberCo’s business vis a vis other commodity pulp businesses.
•    Rayonier has a lack of buy side following due to disparate nature of asset (both FiberCo and TimberCo)
•    Has ether bulking agent for foods
•    Wood chips could go into a MLP which would be worth $7 per share
•    As fiber business grows, the current REIT structure may be untenable which would force the spin-off of FiberCo (Perhaps in 2014)
•    Rayonier is 30% to 60% undervalued currently

Market strategist Jeff Saut also recently recommended Rayonier in his weekly commentary.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

Steve Romick's Pitch on Renault: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago is Steve Romick of First Pacific Advisors.

•    “We are circumspect” and “invest across the capital structure”
•    Real GDP is declining and are now at a Keynesian endpoint
•    Romick anticipates tremendous 2nd order effects of QE-Eternity and is thus “investing in a nervous fashion"
•    Large cap stocks are relatively inexpensive with especially low values in Europe


Romick's Pitch on Renault

•    Renault: Operating cash conversion from EBITDA of 104%
•    Half of sales are from outside US where the cost of labor is 50 to 90% less
•    “Entry level cars are more profitable”
•    Carlos Ghosn CEO of both companies Nissan and Renault and sees synergistic opportunities
•    Renault has no net debt including off-balance sheet liabilities
•    Sum of Renault’s publicly traded assets are €54.4 with the Renault stub is worth $5 billion currently
•    Romick is short Nissan and Volvo against Renault
•    CarCo could pay a dividend
•    Debt could be upgraded

Romick also recently touched on his favorite stock picks in an interview.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

David Herro Likes Daiwa Securities & Publicis: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago is David Herro of Harris Associates.

•    Value investors focus own low price and high quality.  Mr. Market is an exogenous variable.
•    Negative macroeconomic problems.  Positive impact on valuation.
•    Recommends investors get more exposure to stocks
•    Japan still attractive
•    Weak macroeconomic conditions in western world
•    Judge value of business as cash stream
•    Often co is located in weak environment and are thus irrationally cheap


Herro's First Idea: Daiwa Securities

•    Daiwa Securities (same idea he presented at Invest for Kids Chicago two years ago with the added benefit of being cheaper now)
•    Operating performance improved
•    Trading at half book value



Herro's Second Idea: Publicis

•    Publicis: Global ad agency focused on digital   (World’s leading digital agency)
•    Digital ad spending not going away
•    Flexible cost structure dampens margin attrition in period of declining margins
•    Trading at 8.6x EV / 2013 EBITDA


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

Ari Levy: Short InterOil (Invest For Kids Chicago)

Next up in our notes from Invest For Kids Chicago is Ari Levy of Lakeview Investment Group.

Levy Says Short InterOil (IOC)

Lakeview was founded in February 2005 and the fund has compounded at 12% since inception

 •    Short InterOil: Firm has geological and market uncertainty
•    Management has made materially inaccurate misstatements to investors which have caused the stock to be overvalued
•    Natural gas does exist in their area of Papua New Guinea
•    Well test in 2009 was strong but InterOil has declined to do this test
•    Tipping point is now

We've also highlighted in the past how T2 Partners' Whitney Tilson has been short IOC as well.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

Kelly Cardwell Pitches Nexstar Broadcasting: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago is Kelly Cardwell of Central Square Management.  He was part of the emerging manager panel.

Cardwell's Pitch on Nexstar Broadcasting (NXST)

•    Stock could double based upon increasing retransmission revenues among others
•    Balance sheets in good position with small and middle markets
•    45% of revenue are from local content generated by the stations
•    18% of revenue are retransmission fees
•    Firm just bought Newport TV
•    Can go on offense now with better balance sheet


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

What We're Reading ~ 11/7/2012

Hedge funds are the rock stars of the investment world... for now [Abnormal Returns]

Hedge fund analysis: in-depth guide to evaluation return potential & risks [Frank Travers]

Stocks for an Obama victory [StreetInsider]

On predicting a recession and reducing portfolio risk [Reformed Broker]

Bridgewater's macro play: long gold oil & euro [Hedge Fund Intelligence]

On the irrational behavior of investors [Psy-Fi]

David Einhorn's comments on GLRE conference call [Santangel's Review]

Investors seemingly always under-diversify [Jason Zweig]

Most important question for investors: when do you need the cash? [Aleph Blog]

Howard Marks established Oaktree as leader in distressed [P&I]

Hedge fund industry returning to its tiny roots [Barrons]

Do fund managers manipulate prices? [Turnkey Analyst]

Julian Robertson seeds Tiger Pacific Capital [Reuters]

Greenlight Re shows benefit of hedge fund reinsurer strategy [Artemis]

Empirical characteristics of mega hedge fund firms [SSRN]

Trader's journal: 7 attributes to give you the edge [Stockcharts]

Profile on Anheuser Busch InBev [BusinessWeek]