Ideas from the 2009 Value Investing Congress New York
This past Monday top value investors from across the country gathered in New York to discuss their investment ideas at the 5th annual Value Investing Congress. I was planning to attend, but some unforeseen events back at home prevented me from traveling to New York. Thankfully, since I was registered for the event, I have access to all the presentation slides. I read through all the presentations yesterday and here are the investment ideas that were shared at the conference.
David Nierenberg of the D3 Family of Funds discussed Brooks Automation (BRKS) management turnaround. A similar process is underway at Move Inc. (MOVE). Nierenberg sees the potential for MOVE to go up by 3.5 times or more. His final pick is Heartland Payment Systems (HPY). Nierenberg believe Heartland Payment Systems has exemplary governance and management, but has faced other challenges including a security breach of their processing network and the forced sale of the CEO’s stock position in the company. Here he sees the potential for the stock to go up three fold.
Sean Dobson of Amherst Securities Group discussed investing and distressed RMBS securities. See Todd Sullivan’s video on Wall Street Media for more details on this excellent real estate presentation.
David Einhorn of Greenlight Capital is investing for inflation. He has bought gold via the ETF SPDR Gold Shares (GLD) and he is now buying physical gold, which he now favors over the ETF. Einhorn said, “Gold does well when monetary and fiscal policies are poor and does poorly when they appear sensible.” Einhorn considers his gold position a better alternative to holding cash. David Einhorn has also bought long-dated options on much higher U.S. and Japanese interest rates. He noted that the options in Japan are particularly cheap because the historical volatility is so low. I prefer options to simply shorting government bonds, because there remains a possibility of a further government bond rally in response to the economy rolling over again. You can read a complete transcript of his presentation titled, Liquor Before Beer… In the Clear by clicking on this pdf link.
Julian Robertson of Tiger Management did not prepare a presentation, so I’m not certain exactly what his recommendations were. According to what I’ve read, Robertson is still bullish on Mastercard (MA) and Visa (V). His more recent picks include Intel (INTC) and Google (GOOG). He is also bearish on the UK Pound Sterling and bullish on the currencies of Norway, Czech Republic, and New Zealand.
Lloyd Khaner of Khaner Capital Management shared several turnaround examples. The first one was Molex, Inc. (MOLXA) with a one-year turnaround. The second example was Praxair, Inc. (PX) with a three-year turnaround. The final past example was Campbell Soup Co. (CPB) that is approaching the end of a five-year turnaround. Finally, Khaner shared his recent turnaround play, Starbucks Corporation (SBUX), where he expects a one-year turnaround.
Candace King Weir & Amelia F. Weir of Paradigm Capital Management gave a presentation on bottom up stock picking. They favor small cap stocks and also mentioned the specialty retail sector.
Paul Isaac of Cadogan Management shared his pick, Waste Management (WM). He called it “the Michigan J. Fox of the Large Cap Market.”
Jason Stock and William Waller at M3 Funds discussed opportunities in banks and thrifts. One of their favorite long ideas is Beneficial Mutual Bancorp (BNCL). It is trading at 79% “fully converted book value.”
Kian Ghazi of Hawkshaw Capital Management presented a detailed analysis of Core-Mark Holding Company (CORE). Ghazi valued the stock at between $45 and $50 per share with a potential upside of 50 to 70 percent.
Eric Sprott of Sprott Asset Management recommended Norseman Gold PLC (ASX: NGX), Corridor Resources (TSX: CDH), and Sensio Technologies (TSX-V: SIO).
Alexander Roepers of Atlantic Investment Management provided a case study on The J.M. Smucker Company (SJM). His12-month target price for Smuckers shares is $74, based on 12x EV/EBIT on FY2011 estimates.
Whitney Tilson and Glenn Tongue of T2 Partners presented more grim mortgage numbers. Their stock ideas included shorting the homebuilders via the iShares Dow Jones US Home Construction ETF (ITB) and going long shares of Iridium (IRDM).
Zeke Ashton of Centaur Capital Partners recommended Alleghany (Y). He values the shares at $340-345 using a sum of the parts valuation. Ashton’s second pick was Lab Corp (LH). He assumes that if the market assigns a 15-17X FCF multiple, LH is worth $95-105. Ashton’s final pick was MVC Capital (MVC). It is trading to at a 45% discount to net asset value, but there could be some significant risks.
Bill Ackman of Pershing Square presented on Corrections Corp of America (CXW). He believe it’s worth $40-$54 per share. Ackman also followed up on his short idea Realty Income (O) which he presented on October 6th at the Great Investors’ Best Ideas symposium.
I hope to follow up on several of these investment ideas over the next few days.
Disclosure: I do not own shares of any of the stocks mentioned in this article at the time it was posted.