Investors are gathering at the?Marriott Marquis in Manhattan today and tomorrow to hear some of the world's top hedge fund managers present their investment picks at the annual Value Investing Congress (VIC).?
The event starts at 8:30 AM ET.
The conference speaker line-up features hedge fund heavyweights including, David Einhorn (Greenlight Capital), Bill Ackman (Pershing Square Capital Management), Glenn Tongue and Barry Rosentein (JANA Partners) among many others. ?
Ackman is scheduled to speak at 5 p.m. today. ?Einhorn, who presented his Green Mountain Coffee short in the past, will speak tomorrow.?
We're live blogging throughout this event, so refresh this page and check Clusterstock for all the latest news and investment picks coming from the VIC.
8:34 AM | We're up and running.
The Value Investing Congress should start any minute now. ?Stay tuned for all the latest updates.?
8:36 AM | We spoke with Whitney Tilson earlier
Tilson, co-founder of the Value Investing Congress, told us he thinks Bill Ackman's presentation after the closing bell today and David Einhorn's presention tomorrow could be market moving. ?
8:41 AM | Guy Gottfried, the founder and manager of Rational Investment Group, is up first.
He's presenting two investing ideas today.?
1. ?ClubLink Enterprises, which trades on the Toronto Stock Exchange, is his first investment idea. ?
The company operates 51 golf clubs in Canada and the U.S. ?However, it also operates a tourism business in Alaska, including a railway and a port. ?
He says that ClubLink offers two high quality businesses trading at 5.5x free cash flow (FCF). ?
Gottfried thinks the stock is overlooked because it has no sell-side coverage or conference calls. ?It's also illiquid as the CEO own a majority of the owndership. ?
He says that it's a fairly high quality business. ?First, it's the largest golf club operator in Canada and a bunch of those clubs are highly ranked. ?What's more is it's a highly cash flow generative business with annual dues and entry fees being paid up front. ?It also has a competitive advantage given that club members have access to the other clubs, he says. ?As for the tourism business, most Alaska cruise ship passengers dock at ClubLink's docks in the Port of Skagway, Gottfried explains. ?
Some other reasons for why Gottfried is picking ClubLink is despite the recession, he says that earnings have been "resilient". ?He also says that CEO Rai Sahi is a "terrific owner-operator." ?
He says that ClubLink has a massive opportunity in the Florida golf market.?
9:03 AM | Gottfried's second investment pick is Canam Group
Canam Group, a steel joint maker, trades on the Toronto Stock Exchange (CAM).?
He says that it's undervalued and that the company is well-run.?
9:28 AM | Kian Ghazi of Hawkshaw Capital says they're shutting down the hedge fund.
He made the decision to wind down the business and close Hawkshaw after nine years of business. ?
"We endured our workst year in 2011," he says, adding that they lost 11% in 2011.
So far, Hawkshaw Capital has liquidated its portfolio and they're in the final stages of closing down.?
9:33 AM | Ghazi's investment pick is Layne Christensen (LAYN)
Layne Christensen is a water-well driller and mineral exploration company.
For the company's valuation, Ghazi says he sees limited downside and that the stock rarely trades below tangible book. He says there's limited downside because the mineral exploration business offers a "firm floor." ?
He also sees a very attractive upside. ?
There are two ways to play this investment.
1. ?He says you can play this investment by hedging the mineral exploration business. ?He says there is a risk that the business fundamentals diverge between Major Drilling and Mineral Exploration, causing the hedge to fail.?
2. ?If one doesn't hedge, one could face the situation where the mining cycle rolls and MinEx profits dry up. ?Without any earnings support how firm of a support will TBV provide. Gazhi?says he personally owns it unhedged in this manner.
In summary,?Ghazi says...?
* ?The MinEx value alone at $19/share supports the entire market cap.?
* ?The problems in the water segment are isolated to one unit generating heavy losses?
* There have been key steps taken by the new CEO for a significant ?margin recovery in the water division.?
* ?The concerns about municipal exposure are misguided.?
Finally, he says LAYN is trading at tangible book value and the downside is limited. ?He also personally owns the stock.?
10:17 AM | It's break time. The conference will resume at 10:50 a.m. ET with Whitney Tilson presenting some of his favorite ideas. Stay tuned.
10:52 AM | We're back. Whitney Tilson is up next to present his favorite ideas.
10:53 AM | Whitney Tilson is going to talk about three stocks today.
First, he's giving an overview of the U.S. economy going over GDP, consumer confidence, jobs reports, etc.?He notes that the U.S. economy's recovery has been "quite strong." ?
There's a lot of mythology about the causes of the economic weakness, Tilson explains. He says there's tremendous weakness in housing market, government spending and layoffs that are the real headwinds in the economic recovery. ?
He is cautiously optimistic that a tepid recovery will continue in the U.S. with the S&P 500 up more than 16% YTD. ?He says the markets have already had a good year and he doesn't see much upside unless the economy really takes off.?
11:03 AM | Tilson: 'What would you rather own over the next 10 years?'
1. A 10 Year U.S. Treasury currently at 1.65%?
OR
2. The following four stocks, all of which are rated AAA?
* Exxon Mobil
* Microsoft
* ADP
*Johnson& Johnson?
He thinks it's absolute madness to favor the Treasuries over those stocks. ?He says that investors with a 10 year horizion should diversify their portfolio of dividend paying blue-chips stocks purchased at moderate multiples.?
11:09 AM | His three stock picks
1.?Netflix?-- Tilson has experience on both the short and long side. ?
On the long side, his investment thesis is that it's a market leader in a rapidly growing global business in streaming video. ?Tilson says there's a lot of talk about competition, but very little is currently detectable, he explains. ?The company is difficult to value, he says, because it has chosen to forego current profitability to drive growth by investing in a.) more, better streaming content and b.) international expansion. ?
He's also comparing Amazon to Netflix. ?He says they both use technology and the internet to deliver an old product "in a new way." ?He says they both have "visionary, entrepreneurial CEOs." He says Amazon is a great, convenient service at a low price. ?He says that both of the companies have extremely large, global growth opportunities. ?
He says Netflix reminds him of Amazon circa 2001. ?However, Tilson thinks that Netflix is a better business than Amazon.?
11:46 AM | Tilson's stock picks...
2.??Berkshire Hathaway?-- He says Berkshire (BRK.A) is 24% below intrinsic value of $175,500, close to a multi-decade low. ?He says it's "extremely safe" and very attractive. ?He says that it's likely Buffett is going to be running Berkshire for five more years and 50% likely he'll be running it for 10 more years. ?
3. ?Howard Hughes Corp.?-- Tilson says he's increased his position. ?
For HHC's valuation, Tilson has a range of $67 to $125 per share. ?He says that HHC makes a good inflation hedge. ??
11:46 AM | Tilson says that his hedge fund is 'about flat' year-to-date.
He says that it's been a rough couple of years. ?
11:52 AM | Up next is Zack Buckley's presentation 'Is It 1999 Again?'
Buckley runs Buckley Capital Partners, a Miami-based hedge fund. ?
He says the shorting China trade has already played out. ?
11:56 AM | Buckley's investment idea is shorting Splunk
Splunk (SPLK) is a software platform that helps analyze all sorts of data.
He says that it's easy to short. ?
Buckley says that Splunk is in a "very tough competitive position". ?It's squeezed into a niche between quality and price, he explains. Its competitors include HP, Intel, Oracle, Microsoft, among many others. ?
In conclusion, Splunk has a weak business model with low recurring revenue. ?It's an undifferentiated prodcut in a rapidly changing, fiercely competitive industry, he says.?
12:19 PM | Woah! Look at this chart of Splunk after Zach Buckley's presentation about shorting the stock. It was weak before, but he definitely moved it.
12:34 PM | It's lunch time. The conference will resume at 2:00 p.m.
Stay tuned for Barry Rosentein of JANA Partners and Bill Ackman later this afternoon.
2:09 PM | JANA Partners Barry Rosenstein's investment pick is Canadian fertilizer company Agrium.
Rosenstein says that Agrium (AGU) is a new position. ?He's giving a bullish case for the stock.
He says that Agrium is cheaper than its peers. ?JANA thinks that Agrium can unlock shareholder value by separating retail and wholesale. ?
From JANA...?
"JANA belives that for years Agrium's full value creation potential has been buried by the company's conglomerate structure and burdened by operational missteps in its retail distriubtion business. ?As a result, Agrium trades at a significant discount to its true value and as consistently underperfromed the weighted average of its peers in total shareholder return over the long term. ?Agrium has also underperformed its true earnings potential due to factors including a failure to manage costs, poor capital allocation and poor disclsoure..."
2:51 PM | Mick McGuire of Mercato Capital Management is talking mid-cap American stocks
His focus, here, is land.
2:54 PM | 3 companies, first up Alexander and Baldwin
Own commercial real estate in Hawaii and continental U.S., landholdings around Hawaiian islands.
They own: 8 million sq ft in retail office and commercial real estate, Hawaiian resort and residential properties, and millions of acres of land on Hawaii?
They own 20% of the island of Maui alone.
He sees value here as tourism to Hawaii is increasing and the first direct flight from China to Hawaii just started flying.
3:04 PM | Next stock from McGuire, GenCorp GY
More real estate holdings highlighted here.
Own 6,000 acres of?land near a mjor highway and good school districts in Sacramento. They've secured permits to develop this land.
Valuing this land at $50,000 and acre...?
His favorite aspect is that the reported net income understates the value of the company for a number of reasons.?
3:12 PM | Last idea from McGuire ? Brookfield Residential Properties BRP
It's a homebuilder but most of its assets are in landholdings.
Only 12% of property on balance sheet are homes, over 60% raw land.
They focus on acquiring, titling, developing land for homebuilders... they rarely build.
Why he likes 1. Housing is going to recover. 2. Good homebuilders will be replenishing their land supply was housing improves.
3:28 PM | Great nugget of wisdom on real estate companies from McGuire
The trick is to find companies with a good operating biz and good real estate holdings to match.
4:21 PM | John Mauldlin is talking uncertainty and risk.... don't worry there'll be stock picks along the way.
Most models are "worthless when reality hits them" uncertainty is the surprise, that's what moves our portfolios. They don't have to be bad necessarily, they're "the steam engines of our portfolios."?
4:32 PM | Mauldin... Europe is a disaster there is no way they can get out of their current malaise.
"The solution was to not form the EuroZone in the beginning, their problem was a policy mistake 14 years ago."
The U.S.'s biggest problem is defecite, we know how to solve it ? raise taxes and cut spending. This election is about finding a compromise. Neither the Republicans or Democrats have a solution that works... and he's confident we'll do that after the first of the year.
4:39 PM | I look for companies that have an edge in what's going to be around in the next decade.
Monsanto is one, says Mauldin.
"There's value to be found out there in looking OVER the current problems..."
4:43 PM | Mauldin: I don't get China
I don't get a country that has 50% of its money savings compounded at 8% per year.?
It's not like any business model I've seen, he says.
On the other hand:
"You gotta have nerves of steel to short something like that, Jim does, God bless him."
4:54 PM | Mauldin: This is the trade of the decade.
Short the yen, go long Japanese tech companies.
The Japanese are printing money which boosts their stock market. Think about it. He's seeing this as a 200-300% trade.
5:02 PM | Bill Ackman is up...
Ackman says the best part is at the end... here we go.
He's back on GGP... that means mall real estate. He calls it one of the "great stable businesses," but it's super hard to get into.
5:14 PM | Right now, he's telling to story of how Brookfield tried to sneak its way into controlling GGP
Brookfield had bought a stake from Fairholme. They also bought shares without filling out the necessary mpaperwork (form 4s).
Luckily, Ackman had a decent amount of voting power for directors on the board.
Source: http://www.businessinsider.com/value-investing-congress-day-one-2012-10
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