Below please find the latest from Robert Rodriguez the legendary manager of FPA. Now that he is back from his sabbatical he is as nervous as ever. Basically saying more of the same policies can only result in another crisis. Pretty spooky stuff, especially considering this guy has nailed the last two stock market downturns and has a very enviable track record in both the bond and equity worlds (not many if anyone can lay claim to that).
Enjoy.
Robert Rodriguez More of the Same 2011
Thursday, September 29, 2011
Wednesday, September 28, 2011
David Cui of BofA ML on China Hard Lading
David Cui, BoofA ML's top rated China analyst is out with a presentation on China's systemic risk in the event of a hard landing. He thinks there is still some downside risk but in the near term they appear oversold. He highlights the risks with a hard landing - which he believes won't happen until 2013. Given China's importance to the global economy I thought this research was particularly interesting.
China the Systematic Risks 11090934[1]
China the Systematic Risks 11090934[1]
Monday, September 26, 2011
Whitney Tilson's Presentation from the Hedge Fund Roundtable
Below please find Whitney Tilson's (of T2 Partners) presentation at the Hedge Fund Roundtable. In it he describes what concerns him about the economy. Where he is currently seeing value - Dell, Microsoft, Berkshire Hathaway, InBev, etc.
He also went on to describe how he is picking up cheap options and jumped on Bill Ackman's HKD trade (presentation can be seen here). He also went on to mention how he was looking at Kyle Bass' Japan trade and looking for other areas of cheap options.
Enjoy.
Whitney Tilson New York Hedge Fund Roundtable Presentation
He also went on to describe how he is picking up cheap options and jumped on Bill Ackman's HKD trade (presentation can be seen here). He also went on to mention how he was looking at Kyle Bass' Japan trade and looking for other areas of cheap options.
Enjoy.
Whitney Tilson New York Hedge Fund Roundtable Presentation
Marc Faber on CNBC discussing the recession and gold's drop
Marc Faber was recently on CNBC discussing his portfolio along with an update on his opinion of the market and the current selloff in Gold. This is particularly interesting given the sell off and subsequent rally from the lows that Gold and Silver have experienced this morning. He then goes on to discuss he potential slowdown in Asia and what that could mean.
Enjoy.
Enjoy.
Thursday, September 22, 2011
Soros on CNBC
George Soros was on CNBC discussing the Euro crisis. He said he expects some of the countries to defualt and leave the EU. He thinks we will likely see defaults from smaller countries but they will not impact the Euro. He also thinks the US is in a double dip recession and that we will start to see that data.
Enjoy.
Enjoy.
Third Point's Presentation on Yahoo!
Below please find a copy of the presentation that Daniel Loeb and Third Point gave on Yahoo!. One particular slide does a nice job walking you through their value attribution analysis and why they think its worth around $25 per share up from about $13.90 today ($14.26 at the time of the presentation).
Enjoy:
Third Point - Yahoo! - 2011.09.14
Enjoy:
Third Point - Yahoo! - 2011.09.14
Wednesday, September 21, 2011
Bill Browder of Hermitage Capital interview with L'Echo
Bill Browder of Hermitage Capital was recently interviewed with L'Echo and gave his opinion on the markets and how he is positioning himself. For those unfamiliar with Bill Browder he is probably one of the best emerging market ivnestors of all time. See my prior post (highly reccomended) on his interview with Stanford, here.
The interview is translated and pasted below, however for my francophiles out there here is a link to the original french interview.
Enjoy:
------------------
Bill Browder "The markets should be much lower than they are today"
The founder of hedge fund Hermitage Capital Management told us: he is afraid of the markets. And completely changed his management style. Here's why.
William Browder, founder of hedge fund Hermitage Capital Management, a manager is not like the others. We met in Paris just before the start of a hearing of the Council of Europe on the matter Magnitsky. Sergei Magnistky was the lawyer's business Browder, before it is ejected from Russia and declared persona non grata in 2005. Magnitsky himself has been imprisoned and died shortly after. With the exception of Russia, Browder has not yet lost his faith in emerging markets, where its money is invested. But we said it had completely changed his management style since the beginning of this year. A meeting with the politicians present at the summit in Davos was enough to become pessimistic about the markets. He explained why.
Market volatility shows how much investors are afraid right now. How do you explain this?
Investors have good reason to be afraid right now. There is an unraveling of the crisis of sovereign debt in Europe, a deficit out of control in the United States and a revolution in six Middle Eastern countries close to major oil producers. And most economic indicators suggest that the global economy is close to falling into recession. All these reasons, taken individually, are sufficient to make the markets down. Together, they should send the market much lower than they are now.
What prevents the stock market to collapse?
Market support based solely on government intervention. Central banks print money. The official name of this operation is the quantitative easing. The other market support based on low interest rates. They should be 3-5% higher than they are now, due to manipulation by central banks. This gives a terrifying combination for any holder of an asset, because the price of it is contingent of forces unrelated to the markets.
The search for the intrinsic value of an action is therefore no longer possible?
I prefer to speak of market value than intrinsic value. If interest rates are allowed to rise to the level of rates without government intervention, this would change everything. For example, real interest rates in the United States should be 5% instead of 0.25%. If they were to rise by 0-5%, the 30-year Treasuries to fall by 50%. The Apple stock is expected to lose 38%. Like other similar assets. Asset prices are completely all artificial.
The price of gold do they meet the same logic?
Gold occurs in a particular situation. Any asset class goes up 100% in a short period of time has a significant downside risk. On the other hand, gold prices are high because they compensate for the weakness of all major currencies. Gold has become an alternative currency to other currencies to depreciate. And if Greece out of the euro area or if there is an additional problem with the debt of other Western countries, the price of gold may go higher. The strength of gold is based on the lack of confidence in the inability of governments to protect the purchasing power of their currency. I have always gold. I bought 1,000 dollars an ounce. And I do not sell it soon.
But gold prices flirt with the 2,000 dollars an ounce. Is there still time to buy?
I would not advise anyone to buy whatever the price. I had myself reluctant to purchase gold at 1000 dollars.
Gold has no use yet, unlike all other commodities.
Well, that's an advantage for the gold. The raw materials are used for industry. In a recession, they undergo a correction. Just look at oil prices recently to be convinced. Gold as currency retains its value, unlike other commodities.
In August, hedge funds have experienced particularly difficult one months.
Was this your case too?
My money is fully "market neutral", meaning that each position corresponds to a higher position down. When the markets suffered a sharp correction in August, I had no directional exposure to them. Result, when markets lost 20%, we limited our losses to 3%. Since the beginning of the year, our performance is 2%, against 13% for emerging markets.
Your client did fear and threat does to withdraw money?
They emes calm, but I was afraid and I have reduced the net exposure of my portfolio from 100 to 0%. We were able to avoid the chaos of the markets. At the World Economic Forum in Davos in January, I spoke to different people and I realized that most of the politicians present there was optimism, but they had just seen all the major problems of the world economy. Markets reflect the same feeling that politicians who govern us. They ignore the problems. When I returned from Davos, I asked my team to reduce the net exposure of our portfolio. This has avoided being in the red since the beginning of the year.
In China, a wave of scandals involving listed companies. Some hedge funds have left their feathers. Your funds specializing in emerging markets, he was touched by these scandals?
I am invested in China on the rise and fall (he plays down BYD, the company car which is a shareholder Warren Buffett, ed.) The scandals we were not affected. But this shows that emerging markets should be treated more cheaply than Western stock exchanges.
The current situation is comparable with 2008?
You can not compare the current situation with that in the aftermath of the collapse of Lehman Brothers. For two reasons. The first is based on the completely unexpected nature of the bankruptcy of the bank in 2008. On the other hand, the scenario is worse this time because they are more companies that are likely to fail, but the States. The crisis of 2008 has been delayed by the intervention of governments that have injected massive amounts of money. We are in the second stage of the financial crisis that began in 2008.
The output of this crisis will she slow and painful, like the Japanese situation?
Each country has its own characteristics. But the problems of economies and markets in the U.S. and Europe make it difficult for any investment strategy to increase market long term. We must remember that over 20 years, the Nikkei lost 80% of its value.
But institutional investors like pension funds, insurance, and even mutual funds have the possibility to play down the markets. Their mandate requires them to be on the rise on them long term. How will they manage these market conditions?
We will witness the failures of pension funds and insurance companies. Companies with long-term commitments will have problems. Pensioners will be affected by these inevitable problems. The next decade will be difficult for everyone because of the accumulation of debt by governments and by individuals.
The interview is translated and pasted below, however for my francophiles out there here is a link to the original french interview.
Enjoy:
------------------
Bill Browder "The markets should be much lower than they are today"
The founder of hedge fund Hermitage Capital Management told us: he is afraid of the markets. And completely changed his management style. Here's why.
William Browder, founder of hedge fund Hermitage Capital Management, a manager is not like the others. We met in Paris just before the start of a hearing of the Council of Europe on the matter Magnitsky. Sergei Magnistky was the lawyer's business Browder, before it is ejected from Russia and declared persona non grata in 2005. Magnitsky himself has been imprisoned and died shortly after. With the exception of Russia, Browder has not yet lost his faith in emerging markets, where its money is invested. But we said it had completely changed his management style since the beginning of this year. A meeting with the politicians present at the summit in Davos was enough to become pessimistic about the markets. He explained why.
Market volatility shows how much investors are afraid right now. How do you explain this?
Investors have good reason to be afraid right now. There is an unraveling of the crisis of sovereign debt in Europe, a deficit out of control in the United States and a revolution in six Middle Eastern countries close to major oil producers. And most economic indicators suggest that the global economy is close to falling into recession. All these reasons, taken individually, are sufficient to make the markets down. Together, they should send the market much lower than they are now.
What prevents the stock market to collapse?
Market support based solely on government intervention. Central banks print money. The official name of this operation is the quantitative easing. The other market support based on low interest rates. They should be 3-5% higher than they are now, due to manipulation by central banks. This gives a terrifying combination for any holder of an asset, because the price of it is contingent of forces unrelated to the markets.
The search for the intrinsic value of an action is therefore no longer possible?
I prefer to speak of market value than intrinsic value. If interest rates are allowed to rise to the level of rates without government intervention, this would change everything. For example, real interest rates in the United States should be 5% instead of 0.25%. If they were to rise by 0-5%, the 30-year Treasuries to fall by 50%. The Apple stock is expected to lose 38%. Like other similar assets. Asset prices are completely all artificial.
The price of gold do they meet the same logic?
Gold occurs in a particular situation. Any asset class goes up 100% in a short period of time has a significant downside risk. On the other hand, gold prices are high because they compensate for the weakness of all major currencies. Gold has become an alternative currency to other currencies to depreciate. And if Greece out of the euro area or if there is an additional problem with the debt of other Western countries, the price of gold may go higher. The strength of gold is based on the lack of confidence in the inability of governments to protect the purchasing power of their currency. I have always gold. I bought 1,000 dollars an ounce. And I do not sell it soon.
But gold prices flirt with the 2,000 dollars an ounce. Is there still time to buy?
I would not advise anyone to buy whatever the price. I had myself reluctant to purchase gold at 1000 dollars.
Gold has no use yet, unlike all other commodities.
Well, that's an advantage for the gold. The raw materials are used for industry. In a recession, they undergo a correction. Just look at oil prices recently to be convinced. Gold as currency retains its value, unlike other commodities.
In August, hedge funds have experienced particularly difficult one months.
Was this your case too?
My money is fully "market neutral", meaning that each position corresponds to a higher position down. When the markets suffered a sharp correction in August, I had no directional exposure to them. Result, when markets lost 20%, we limited our losses to 3%. Since the beginning of the year, our performance is 2%, against 13% for emerging markets.
Your client did fear and threat does to withdraw money?
They emes calm, but I was afraid and I have reduced the net exposure of my portfolio from 100 to 0%. We were able to avoid the chaos of the markets. At the World Economic Forum in Davos in January, I spoke to different people and I realized that most of the politicians present there was optimism, but they had just seen all the major problems of the world economy. Markets reflect the same feeling that politicians who govern us. They ignore the problems. When I returned from Davos, I asked my team to reduce the net exposure of our portfolio. This has avoided being in the red since the beginning of the year.
In China, a wave of scandals involving listed companies. Some hedge funds have left their feathers. Your funds specializing in emerging markets, he was touched by these scandals?
I am invested in China on the rise and fall (he plays down BYD, the company car which is a shareholder Warren Buffett, ed.) The scandals we were not affected. But this shows that emerging markets should be treated more cheaply than Western stock exchanges.
The current situation is comparable with 2008?
You can not compare the current situation with that in the aftermath of the collapse of Lehman Brothers. For two reasons. The first is based on the completely unexpected nature of the bankruptcy of the bank in 2008. On the other hand, the scenario is worse this time because they are more companies that are likely to fail, but the States. The crisis of 2008 has been delayed by the intervention of governments that have injected massive amounts of money. We are in the second stage of the financial crisis that began in 2008.
The output of this crisis will she slow and painful, like the Japanese situation?
Each country has its own characteristics. But the problems of economies and markets in the U.S. and Europe make it difficult for any investment strategy to increase market long term. We must remember that over 20 years, the Nikkei lost 80% of its value.
But institutional investors like pension funds, insurance, and even mutual funds have the possibility to play down the markets. Their mandate requires them to be on the rise on them long term. How will they manage these market conditions?
We will witness the failures of pension funds and insurance companies. Companies with long-term commitments will have problems. Pensioners will be affected by these inevitable problems. The next decade will be difficult for everyone because of the accumulation of debt by governments and by individuals.
Tuesday, September 20, 2011
Bruce Berkowitz on Wealthtrack
Bruce Berkowitz was recently interviewed on Wealthtrack. In the interview he discusses his concentrated investing style, his view on financials as a whole, and his view on Bank of America (BAC). He thinks BAC could earn $3 per share in a normalized environment making the stock very undervalued at today's pricing. He goes on to discuss AIG, he thinks their tangible book value (which is a proxy for liquidation value for an insurnace company) is now at about $0.50 on the dollar, so in his opinion there is a significant margin of safety. He then goes onto say that his single best idea is to invest in BAC.
Enjoy:
Enjoy:
Alta Rock 1H 2011 Letter
Below please find Alta Rock's 1H 2011 letter (hat tip to Marketfolly for posting). Alta Rock has compounded at 11.9% since opening in 1989. In the letter they walk through their rationale on their positions in Domino's Pizza (DPZ), Mohawk Industries (MHK), and Carter's (CRI).
Enjoy.
AltaRock-Mid-2011-Letter
Enjoy.
AltaRock-Mid-2011-Letter
Monday, September 19, 2011
Ray Dalio at Bloomberg Markets 50 Summit
Ray Dalio of Bridgewater Associates was recently interviewed at the Bloomberg Markets 50 Summit. In the interview they talk about Ray Dalio's philosophy as well as some of his views. Enjoy:
Here is the transcript:
Ray-Dalio-Bloomberg-50-Sept-15-2011-Transcript
Here is the transcript:
Ray-Dalio-Bloomberg-50-Sept-15-2011-Transcript
Best Ideas Panel and Presentations from the Delivering Alpha Conference
As frequent readers know last week CNBC and Institutional Investor hosted the Delivering Alpha conference. There were a number of good panels and presentations at this conference much of which I have previously posted.
The final panel of the day was the best ideas panel where Kyle Bass of Hayman Advisors; Leon G. Cooperman of Omega Advisors; Philip Falcone of Harbinger Capital Investments; J. Tomilson Hill of Blackstone Marketable Alternative Asset Management; Daniel S. Loeb of Third Point LLC; and Anne B. Popkin of Symphony Asset Management, all presented their best investment ideas.
It was a pretty start studded panel to say the least. Pay particular attention to Kyle Bass' presentation. The presentations and content is well worth reviewing. Below please find some of the presentations along with the video of the panel.
Enjoy:
Video:
Presentations:
Blackstone:
110914_Blackstone_JTH_DA
Omega Advisors:
110914 Omega Lgc Da
Symphony Asset Management:
110914 Symphony DA
The final panel of the day was the best ideas panel where Kyle Bass of Hayman Advisors; Leon G. Cooperman of Omega Advisors; Philip Falcone of Harbinger Capital Investments; J. Tomilson Hill of Blackstone Marketable Alternative Asset Management; Daniel S. Loeb of Third Point LLC; and Anne B. Popkin of Symphony Asset Management, all presented their best investment ideas.
It was a pretty start studded panel to say the least. Pay particular attention to Kyle Bass' presentation. The presentations and content is well worth reviewing. Below please find some of the presentations along with the video of the panel.
Enjoy:
Video:
Presentations:
Blackstone:
110914_Blackstone_JTH_DA
Omega Advisors:
110914 Omega Lgc Da
Symphony Asset Management:
110914 Symphony DA
Friday, September 16, 2011
Leon Cooperman on CNBC
Leon Cooperman of Omega Advisors recently gave a presentation at the delivering Alpha conference. As part of this he went on CNBC to discuss a couple investment ideas. He is still fairly bullish on the long-term prospects of the U.S. economy (provided you make some assumptions about events that are likely to happen: 1. The US is not like Japan and we will have a growing economy, 2. The ECB will step up for European financial institutions, 3. The President softens his anti-wealth, anti-business stance, and 4. Stability in the Middle East). He also talks about some stock ideas like Apple (AAPL), Sallie Mae (SLM), KKR Financial (KFN), and Boston Scientific (BSX).
Enjoy:
Enjoy:
Bill Ackman / Pershing Square Presentation on HKD
Below please find the link to Bill Ackman's presentation on the HKD/USD trade that he gave recently at the delivering alpha conference. Basically he thinks the Hong Kong dollar (HKD) is undervalued and thinks that the USD in respect is depreciating against it so there will be some readjustment in the not too distant future (next five years). This readjustment possibility presents a very asymmetric bet (i.e. heads I win tails I don't lose much).
Ackman says there are four principal revaluation alternatives:
1. Allow the HKD to float
2. Repeg the HKD to a trade-weighted basket
3. Repeg the HKD to the RMB
4. Keep the USD peg, but revalue to an appropriate exchange rate
It is an interesting presentation to say the least. What is interesting is that this is very much a shift from his typical stock / real estate bread and butter. This may worry some investors but personally I think its interesting when people scour the world for value (ala Michael Burry).
Enjoy the presentation:
Bill Ackman's Presentation on the Hong Kong Dollar: Linked to Win
Ackman says there are four principal revaluation alternatives:
1. Allow the HKD to float
2. Repeg the HKD to a trade-weighted basket
3. Repeg the HKD to the RMB
4. Keep the USD peg, but revalue to an appropriate exchange rate
It is an interesting presentation to say the least. What is interesting is that this is very much a shift from his typical stock / real estate bread and butter. This may worry some investors but personally I think its interesting when people scour the world for value (ala Michael Burry).
Enjoy the presentation:
Bill Ackman's Presentation on the Hong Kong Dollar: Linked to Win
Wednesday, September 14, 2011
Delivering Alpha: Emerging Markets
CNBC and Institutional Investor are hosting the delivering alpha conference in NYC today. There are a number of interest panels worth watching and luckily CNBC and Institutional Investor have pretty good coverage of it all.
One of the first interesting panels was the panel on emerging market investing. This panel consisted of Marko Dimitrijević (Founder, Everest Capital), Scott Kalb (Chief Investment Officer, Korea Investment Corporation), and Martin J. Whitman (Chairman and Portfolio Manager, Third Avenue Management).
The panelists discuss their opinions on emerging markets and where they are putting their money. Overall its pretty interesting, a bit logn but definetely worth putting on in the background. Enjoy.
One of the first interesting panels was the panel on emerging market investing. This panel consisted of Marko Dimitrijević (Founder, Everest Capital), Scott Kalb (Chief Investment Officer, Korea Investment Corporation), and Martin J. Whitman (Chairman and Portfolio Manager, Third Avenue Management).
The panelists discuss their opinions on emerging markets and where they are putting their money. Overall its pretty interesting, a bit logn but definetely worth putting on in the background. Enjoy.
Dan Loeb / Third Point letter to Jerry Yang
The battle between Third Point and Yahoo! is heating up. Dan Loeb and friends are out with a new amended 13D and attache to it is another letter disclosing recent events between Third Point and Yahoo!'s board. Apparently they had a phone call that didn't go so well. Below please find the letter:
-------------
September 14, 2011
Mr. Jerry Yang
Yahoo!
701 First Avenue
Sunnyvale, CA 94089
Dear Mr. Yang:
Thank you for taking the time to speak with us by telephone on Monday. We are only sorry that we were not able to finish our conversation as a result of Mr. Bostock’s abrupt unilateral termination of the call.
Mr. Bostock’s failure on the call to acknowledge his pivotal role in, and accept responsibility for, the decline of Yahoo! makes clear that he does not intend to voluntarily follow his recently terminated hand-picked executive, Ms. Bartz, out the door. It is our strongly held belief that not only has Mr. Bostock been a destroyer of value, but also so long as he serves as Chairman of the Board, the Company will not be able to attract the talent it needs and deserves, particularly at the CEO level. This opinion is based not only on our prematurely truncated conversation, but on numerous discussions with Silicon Valley cognoscenti and other people familiar with both Mr. Bostock and the Company.
As a Founder and major shareholder of the Company, the abysmal record of the current leadership must be heart-rending to you personally, as well as damaging to your net worth. We urge you to do the right thing for all Yahoo shareholders and push for desperately-needed leadership change. We are prepared to support you and present you with suggestions on candidates who could help bring Yahoo back to its rightful place among the world’s top digital media and technology companies.
Sincerely,
/s/ Daniel S. Loeb
Daniel S. Loeb
cc: Yahoo Board of Directors
-------------
September 14, 2011
Mr. Jerry Yang
Yahoo!
701 First Avenue
Sunnyvale, CA 94089
Dear Mr. Yang:
Thank you for taking the time to speak with us by telephone on Monday. We are only sorry that we were not able to finish our conversation as a result of Mr. Bostock’s abrupt unilateral termination of the call.
Mr. Bostock’s failure on the call to acknowledge his pivotal role in, and accept responsibility for, the decline of Yahoo! makes clear that he does not intend to voluntarily follow his recently terminated hand-picked executive, Ms. Bartz, out the door. It is our strongly held belief that not only has Mr. Bostock been a destroyer of value, but also so long as he serves as Chairman of the Board, the Company will not be able to attract the talent it needs and deserves, particularly at the CEO level. This opinion is based not only on our prematurely truncated conversation, but on numerous discussions with Silicon Valley cognoscenti and other people familiar with both Mr. Bostock and the Company.
As a Founder and major shareholder of the Company, the abysmal record of the current leadership must be heart-rending to you personally, as well as damaging to your net worth. We urge you to do the right thing for all Yahoo shareholders and push for desperately-needed leadership change. We are prepared to support you and present you with suggestions on candidates who could help bring Yahoo back to its rightful place among the world’s top digital media and technology companies.
Sincerely,
/s/ Daniel S. Loeb
Daniel S. Loeb
cc: Yahoo Board of Directors
Tuesday, September 13, 2011
Julian Robertson on CNBC
Julian Robertson was on CNBC today. In the interview he discusses how bad the macro situation is. He is shorting the Euro, expects Greece to default, and sees the technology boom to continue to run. He is bullish on technology, Nokia (NOK), Apple (AAPL), Canada, Google (GOOG), and Mastercard (MA).
Interesting to see how he currently views the economy. Enjoy.
Interesting to see how he currently views the economy. Enjoy.
Bruce Kovner of Caxton steps down - letter to investors
Today Bruce Kovner of Caxton announced that he is stepping down and handing over the reigns of Caxton to his CIO Andrew Law. Under Bruce's watch Caxton has earned an IRR of about 21% over the past 28 years (impressive to say the least).
Below find the announcement letter:
Bruce Kovner's letter to investors
Below find the announcement letter:
Bruce Kovner's letter to investors
Friday, September 9, 2011
Jim Rogers on CNBC / Why he's long the USD
Jim Rogers was on CNBC today discussing his view of the global economy as well as revealing a couple of interesting positions - one of which is he is no long the USD.
Enjoy.
Part 1:
Part 2:
Enjoy.
Part 1:
Part 2:
Columbia Business School Pershing Square Challenge
Pershing Square hosts an annual stock picking presentation challenge and Columbia Business School. Here is the brief description:
The Pershing Square Challenge marks the culmination of a three-month competition among roughly forty teams of first- and second-year Columbia Business School Students.
Bill Ackman, founder and CEO of Pershing Square Capital Management LP, launched the challenge in 2008. The challenge is open to students who are enrolled in Applied Security Analysis class at Columbia Business School.
After an initial round of eliminations, five final teams present a stock pitch at the Pershing Square event. A panel of judges then selects one winning team, which receives $100,000 from Pershing Square. The winning team donates $50,000 of the prize to an area within the Columbia Business School, and can choose to do whatever they collectively decide with the remaining $50,000.
There were five finalists this year and they presented: Marsh & McLennan (MMC), Aéropostale (ARO), Lender Processing Services (LPS), Quest Diagnostics (DGX), and Motorola Solutions (MSI). The Motorola Solutions crew won this year's prize.
The students do a good job of presenting actionable investmetn ideas. Below please find a video recording of their presentations:
Part 1:
Part 2:
The Pershing Square Challenge marks the culmination of a three-month competition among roughly forty teams of first- and second-year Columbia Business School Students.
Bill Ackman, founder and CEO of Pershing Square Capital Management LP, launched the challenge in 2008. The challenge is open to students who are enrolled in Applied Security Analysis class at Columbia Business School.
After an initial round of eliminations, five final teams present a stock pitch at the Pershing Square event. A panel of judges then selects one winning team, which receives $100,000 from Pershing Square. The winning team donates $50,000 of the prize to an area within the Columbia Business School, and can choose to do whatever they collectively decide with the remaining $50,000.
There were five finalists this year and they presented: Marsh & McLennan (MMC), Aéropostale (ARO), Lender Processing Services (LPS), Quest Diagnostics (DGX), and Motorola Solutions (MSI). The Motorola Solutions crew won this year's prize.
The students do a good job of presenting actionable investmetn ideas. Below please find a video recording of their presentations:
Part 1:
Part 2:
Thursday, September 8, 2011
Thid Point - Dan Loeb's letter to Yahoo!
Third Point filed a 13D today on Yahoo! and with it they included a nice letter to the Board. It has been sometime since Dan Loeb and friends have filed a fund letter (unfortunately this one is not as scathing as in year's past). However it is a good read and they do walk through their perceived valuation which they believe lies somewhere in the $20s up from today's close of $14.45.
Enjoy:
--------------
September 8, 2011
Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Attention: Mr. Roy Bostock, Chairman
Dear Ladies and Gentlemen:
Third Point LLC (“Third Point”) is a registered investment adviser with approximately $8 billion under management. We are writing to inform you that certain investment funds we manage have acquired a 5.1% interest in Yahoo! Inc. (the “Company” or “Yahoo”), bringing our holdings of common stock and currently-exercisable equity options to 65,000,000 of the outstanding shares, and positioning us as the Company’s third largest outside shareholder.
This letter details our principled demands for sweeping changes in both the Board of Directors (the “Board”) and Company leadership, and outlines the hidden value of Yahoo, which has been severely damaged – but not irreparably – by poor management and governance.
The Failures of Yahoo’s Board of Directors Necessitate a Significant Infusion of Fresh Board Talent
Yahoo’s current Board of Directors has made a number of decisions that have directly harmed the Company and resulted in a stock price far below the Company’s intrinsic value. While we are focused on the future for Yahoo under new management, it is instructive to understand how this Board’s many mistakes have created the current conditions at an asset and talent rich company. Among others:
1) It is now widely accepted that the Board made a serious misjudgment in approving the hiring of Carol Bartz as Yahoo’s Chief Executive Officer, given her inexperience in the consumer-oriented internet space. Although we are pleased that the Board has terminated Ms. Bartz’s employment, we fail to understand why this decision was so long in coming given her abysmal performance over the last two and a half years. During this period, Ms. Bartz’s poor decision-making and communication skills publicly alienated the Company’s highly respected Asian partners, as well as its shareholders, sell-side analysts, bloggers, customers and employees.
While the decision to hire her alone is grounds for questioning the Board’s competence, its willingness to turn a blind eye to these serious problems and inexplicably remain supportive of Ms. Bartz notwithstanding the negative impact she was having on the Company is even more troubling. As recently as June 23, 2011, at the Company’s annual meeting, Chairman Bostock reportedly stated that the Board remained “very supportive of Carol and this management team” and that they were “confident that Yahoo [was] headed in the right direction." These comments demonstrate that this Board lacks the courage to urgently make the difficult decisions required by the situation today.
2) It is also now widely recognized that the Board made a gross error in turning down the $31 per share Microsoft bid in 2008, which would have generated significant returns for Yahoo’s shareholders. This mistake is all the more frustrating given Yahoo’s current depressed stock price of $13.61 per share — far below the Company’s intrinsic value, which we currently place in excess of $20 per share, as detailed below.
From the failed Microsoft sale negotiations, to a subsequent bungled and disappointing search deal with Microsoft, through a series of misguided CEO selections, and most recently the Alipay debacle, this Board’s failures have destroyed value for all Yahoo stakeholders. Ms. Bartz’s exit and Mr. Morse’s elevation to interim CEO makes him Yahoo’s fourth CEO in four years and further demonstrates the poor corporate governance Yahoo investors have been saddled with for too long. Even before Ms. Bartz’s hire, Yahoo’s shares materially underperformed the market and their peer group, as graphically evidenced in the Company’s most recent 10-K. Against this background, it is evident that merely replacing the Company’s CEO – yet again – will not be enough to alter the direction of the Company. Instead, a reconstituted Board with new Directors who will bring fresh eyes, relevant industry expertise and increased investor alignment to the table is immediately necessary.
Yahoo’s website states the Company’s values, among them: “We foster collaboration while maintaining individual accountability.” It is time that certain members of this Board were held accountable for its past failures and their individual roles. Accordingly, we insist that Mr. Bostock, who championed Ms. Bartz’s hiring and led the charge against the Microsoft deal, promptly resign from the Board. We also demand that fellow Directors Arthur Kern and Vyomesh Joshi, who have stood by silently during these last five years of woeful performance, join Mr. Bostock in resignation. Finally, we can only assume that Director Susan James, the President of Tri-Valley Animal Rescue, will also resign, given her close relationship with Ms. Bartz. If she does not do so voluntarily, the Board should request her resignation as well.
As the Company sets out to recruit a new CEO and evaluate strategic alternatives, we are adamant that reconstituting the Board is crucial to provide any serious CEO candidate or strategic counterparty with a stable and responsive governance structure. There is much work to be done and time is of the essence. Even after the Company announced Ms. Bartz’s dismissaland the pursuit of strategic alternatives, Yahoo shares rose only 5%. We believe the muted market reaction to Ms. Bartz’s dismissal represents a recognition that this management change is a necessary, but not sufficient, step towards unlocking Yahoo’s actual value. Investors’ reluctance to embrace the stock and their lack of confidence in this Board’s ability to lead the franchise is understandable given the current Board’s track record.
Third Point has held discussions with many highly respected entrepreneurial executives active in technology, internet, media and consumer-related businesses. From these discussions we have distilled an All-Star team of potential Director candidates, who would be indispensable in working with the reconstituted Board to pursue the three paths outlined in the recent company announcement: CEO search, business review and strategic options. We look forward to sharing our candidates with you shortly.
The Obscured Value in an Iconic American Technology Asset:
We firmly believe that there is much to be gained from a successful and rapid transition in management, as we are convinced that Yahoo is grossly undervalued. We have followed Yahoo for many years, and our analysis suggests that at a share price of $13.61, with $2.49 per share in tax adjusted net cash, $3.10 per share and $5.24 per share of after-tax values for the Yahoo! Japan and Alibaba Group stakes respectively, core Yahoo is left at an implied value of $2.78 per share or 2.2x 2012 EBITDA. With more effective and focused management, one could realistically envision a re-rating to at least 7.0x 2012 EBITDA, driving a target of over $19.00 per share. When coupled with tax efficient outcomes for its Asian assets, an additional $3.00-4.00 per share stands to be realized. Continued share count reduction via buybacks and other potential capital structure optimization alternatives would further bolster the Company’s stock price. In addition, based on our discussions with industry experts and entrepreneurs, we believe that with new management, there is significant further value in leveraging Yahoo’s globally trusted franchise and platform for a range of new products and innovations.
Focusing specifically on the Alibaba Group, the mid-term value potential for this stake alone could represent another $5.00 per share of upside. The e-commerce interests housed under the Alibaba Group umbrella hold the dominant positions in the “B2B” (63% of 2010 market share according to Marbridge Consulting), “C2C” (85% share) and “B2C” (51% share) Chinese e-commerce markets. Alibaba Group’s Taobao business is essentially Ebay and Amazon on steroids in terms of market share and revenue growth. According to Goldman Sachs, the Chinese e-commerce market was $75 billion in 2010, with a 3 year forward compound annual growth rate of 43% compared to the $193 billion U.S. market with compound annual growth of 14% over the same period. We currently estimate a pre-tax value for Alibaba Group of $25 billion. Given Alibaba Group’s growth potential and market share, it is entirely conceivable that Yahoo’s 40% fully diluted stake in Alibaba Group could double in value over the next 2-3 years, highlighting its tremendous value.
Looking deeper into core Yahoo, it is clear that the Company possesses unique scale and scope as the Internet’s premier digital media company. The near completion of significant platform transitions and increasing ad format creativity and client engagement translate to exciting prospects for 2012. These compelling Yahoo initiatives were sadly lost in the chaos surrounding Ms. Bartz’s tenure as CEO. Hidden by Yahoo’s senior management drama is a franchise benefitting daily from tremendous investment in resources and new platforms successfully built by Yahoo’s corps of talented, committed engineers, product development team and salespeople.
Finally, the Company’s leadership needs to rebuild relationships with its valued Asian partners in Yahoo Japan, Softbank and the Alibaba Group. These are important sources of value for Yahoo, and the Company needs to enter a new, constructive era with these critical allies and friends of the Company.
In conclusion, we are eager to present to the Board our candidates and thoughts on the Company’s future. We hope that the Board will take our proposals seriously and move towards the leadership overhaul that we are championing. While the decision to undertake Board turnover initially rests with individual directors, ultimately, shareholders like Third Point have other means to effect changes necessary to protect their investment. We are prepared to propose a slate of directors at the Company’s annual meeting next year should it become necessary. Such proxy disputes are burdensome, and we sincerely hope that one will not be necessary here. Shareholders have already suffered enough.
It is time for new leadership at Yahoo. Yahoo’s investors, employees, clients and users deserve it. We look forward to having what is great about Yahoo make headlines, encouraged and communicated by new CEO and Board leaders.
Sincerely,
/s/ Daniel S. Loeb
Daniel S. Loeb
Chief Executive Officer
Third Point LLC
CC: Ms. Patti Hart
Ms. Sue James
Mr. Vyomesh Joshi
Mr. David Kenny
Mr. Arthur Kern
Mr. Brad Smith
Mr. Gary Wilson
Mr. Jerry Yang
Enjoy:
--------------
September 8, 2011
Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Attention: Mr. Roy Bostock, Chairman
Dear Ladies and Gentlemen:
Third Point LLC (“Third Point”) is a registered investment adviser with approximately $8 billion under management. We are writing to inform you that certain investment funds we manage have acquired a 5.1% interest in Yahoo! Inc. (the “Company” or “Yahoo”), bringing our holdings of common stock and currently-exercisable equity options to 65,000,000 of the outstanding shares, and positioning us as the Company’s third largest outside shareholder.
This letter details our principled demands for sweeping changes in both the Board of Directors (the “Board”) and Company leadership, and outlines the hidden value of Yahoo, which has been severely damaged – but not irreparably – by poor management and governance.
The Failures of Yahoo’s Board of Directors Necessitate a Significant Infusion of Fresh Board Talent
Yahoo’s current Board of Directors has made a number of decisions that have directly harmed the Company and resulted in a stock price far below the Company’s intrinsic value. While we are focused on the future for Yahoo under new management, it is instructive to understand how this Board’s many mistakes have created the current conditions at an asset and talent rich company. Among others:
1) It is now widely accepted that the Board made a serious misjudgment in approving the hiring of Carol Bartz as Yahoo’s Chief Executive Officer, given her inexperience in the consumer-oriented internet space. Although we are pleased that the Board has terminated Ms. Bartz’s employment, we fail to understand why this decision was so long in coming given her abysmal performance over the last two and a half years. During this period, Ms. Bartz’s poor decision-making and communication skills publicly alienated the Company’s highly respected Asian partners, as well as its shareholders, sell-side analysts, bloggers, customers and employees.
While the decision to hire her alone is grounds for questioning the Board’s competence, its willingness to turn a blind eye to these serious problems and inexplicably remain supportive of Ms. Bartz notwithstanding the negative impact she was having on the Company is even more troubling. As recently as June 23, 2011, at the Company’s annual meeting, Chairman Bostock reportedly stated that the Board remained “very supportive of Carol and this management team” and that they were “confident that Yahoo [was] headed in the right direction." These comments demonstrate that this Board lacks the courage to urgently make the difficult decisions required by the situation today.
2) It is also now widely recognized that the Board made a gross error in turning down the $31 per share Microsoft bid in 2008, which would have generated significant returns for Yahoo’s shareholders. This mistake is all the more frustrating given Yahoo’s current depressed stock price of $13.61 per share — far below the Company’s intrinsic value, which we currently place in excess of $20 per share, as detailed below.
From the failed Microsoft sale negotiations, to a subsequent bungled and disappointing search deal with Microsoft, through a series of misguided CEO selections, and most recently the Alipay debacle, this Board’s failures have destroyed value for all Yahoo stakeholders. Ms. Bartz’s exit and Mr. Morse’s elevation to interim CEO makes him Yahoo’s fourth CEO in four years and further demonstrates the poor corporate governance Yahoo investors have been saddled with for too long. Even before Ms. Bartz’s hire, Yahoo’s shares materially underperformed the market and their peer group, as graphically evidenced in the Company’s most recent 10-K. Against this background, it is evident that merely replacing the Company’s CEO – yet again – will not be enough to alter the direction of the Company. Instead, a reconstituted Board with new Directors who will bring fresh eyes, relevant industry expertise and increased investor alignment to the table is immediately necessary.
Yahoo’s website states the Company’s values, among them: “We foster collaboration while maintaining individual accountability.” It is time that certain members of this Board were held accountable for its past failures and their individual roles. Accordingly, we insist that Mr. Bostock, who championed Ms. Bartz’s hiring and led the charge against the Microsoft deal, promptly resign from the Board. We also demand that fellow Directors Arthur Kern and Vyomesh Joshi, who have stood by silently during these last five years of woeful performance, join Mr. Bostock in resignation. Finally, we can only assume that Director Susan James, the President of Tri-Valley Animal Rescue, will also resign, given her close relationship with Ms. Bartz. If she does not do so voluntarily, the Board should request her resignation as well.
As the Company sets out to recruit a new CEO and evaluate strategic alternatives, we are adamant that reconstituting the Board is crucial to provide any serious CEO candidate or strategic counterparty with a stable and responsive governance structure. There is much work to be done and time is of the essence. Even after the Company announced Ms. Bartz’s dismissaland the pursuit of strategic alternatives, Yahoo shares rose only 5%. We believe the muted market reaction to Ms. Bartz’s dismissal represents a recognition that this management change is a necessary, but not sufficient, step towards unlocking Yahoo’s actual value. Investors’ reluctance to embrace the stock and their lack of confidence in this Board’s ability to lead the franchise is understandable given the current Board’s track record.
Third Point has held discussions with many highly respected entrepreneurial executives active in technology, internet, media and consumer-related businesses. From these discussions we have distilled an All-Star team of potential Director candidates, who would be indispensable in working with the reconstituted Board to pursue the three paths outlined in the recent company announcement: CEO search, business review and strategic options. We look forward to sharing our candidates with you shortly.
The Obscured Value in an Iconic American Technology Asset:
We firmly believe that there is much to be gained from a successful and rapid transition in management, as we are convinced that Yahoo is grossly undervalued. We have followed Yahoo for many years, and our analysis suggests that at a share price of $13.61, with $2.49 per share in tax adjusted net cash, $3.10 per share and $5.24 per share of after-tax values for the Yahoo! Japan and Alibaba Group stakes respectively, core Yahoo is left at an implied value of $2.78 per share or 2.2x 2012 EBITDA. With more effective and focused management, one could realistically envision a re-rating to at least 7.0x 2012 EBITDA, driving a target of over $19.00 per share. When coupled with tax efficient outcomes for its Asian assets, an additional $3.00-4.00 per share stands to be realized. Continued share count reduction via buybacks and other potential capital structure optimization alternatives would further bolster the Company’s stock price. In addition, based on our discussions with industry experts and entrepreneurs, we believe that with new management, there is significant further value in leveraging Yahoo’s globally trusted franchise and platform for a range of new products and innovations.
Focusing specifically on the Alibaba Group, the mid-term value potential for this stake alone could represent another $5.00 per share of upside. The e-commerce interests housed under the Alibaba Group umbrella hold the dominant positions in the “B2B” (63% of 2010 market share according to Marbridge Consulting), “C2C” (85% share) and “B2C” (51% share) Chinese e-commerce markets. Alibaba Group’s Taobao business is essentially Ebay and Amazon on steroids in terms of market share and revenue growth. According to Goldman Sachs, the Chinese e-commerce market was $75 billion in 2010, with a 3 year forward compound annual growth rate of 43% compared to the $193 billion U.S. market with compound annual growth of 14% over the same period. We currently estimate a pre-tax value for Alibaba Group of $25 billion. Given Alibaba Group’s growth potential and market share, it is entirely conceivable that Yahoo’s 40% fully diluted stake in Alibaba Group could double in value over the next 2-3 years, highlighting its tremendous value.
Looking deeper into core Yahoo, it is clear that the Company possesses unique scale and scope as the Internet’s premier digital media company. The near completion of significant platform transitions and increasing ad format creativity and client engagement translate to exciting prospects for 2012. These compelling Yahoo initiatives were sadly lost in the chaos surrounding Ms. Bartz’s tenure as CEO. Hidden by Yahoo’s senior management drama is a franchise benefitting daily from tremendous investment in resources and new platforms successfully built by Yahoo’s corps of talented, committed engineers, product development team and salespeople.
Finally, the Company’s leadership needs to rebuild relationships with its valued Asian partners in Yahoo Japan, Softbank and the Alibaba Group. These are important sources of value for Yahoo, and the Company needs to enter a new, constructive era with these critical allies and friends of the Company.
In conclusion, we are eager to present to the Board our candidates and thoughts on the Company’s future. We hope that the Board will take our proposals seriously and move towards the leadership overhaul that we are championing. While the decision to undertake Board turnover initially rests with individual directors, ultimately, shareholders like Third Point have other means to effect changes necessary to protect their investment. We are prepared to propose a slate of directors at the Company’s annual meeting next year should it become necessary. Such proxy disputes are burdensome, and we sincerely hope that one will not be necessary here. Shareholders have already suffered enough.
It is time for new leadership at Yahoo. Yahoo’s investors, employees, clients and users deserve it. We look forward to having what is great about Yahoo make headlines, encouraged and communicated by new CEO and Board leaders.
Sincerely,
/s/ Daniel S. Loeb
Daniel S. Loeb
Chief Executive Officer
Third Point LLC
CC: Ms. Patti Hart
Ms. Sue James
Mr. Vyomesh Joshi
Mr. David Kenny
Mr. Arthur Kern
Mr. Brad Smith
Mr. Gary Wilson
Mr. Jerry Yang
August Memo from Howard Marks / Oaktree
Howard Marks (of Oaktree fame) is out with his latest memo. In it he describes his take on the recent market tumult and what he thinks is causing it.
Enjoy.
Marks_AUG
Enjoy.
Marks_AUG
Wednesday, September 7, 2011
Interview with Prem Watsa
CFA magazine is out with an interview with Prem Watsa (CEO of Fairfax). In the interview he discusses his value investing philosophy. How he has been hedging against market declines and his deflationary bet. Overall its pretty interesting.
Enjoy.
CFA - Prem Watsa Interview - 2011.09.07
Enjoy.
CFA - Prem Watsa Interview - 2011.09.07
Friday, September 2, 2011
Third Point Monthly Performance
Below please find Third Point's monthly performance data for August. As you can see Dan Loeb and company have done pretty good and managed to be up 3.9% YTD. This is likely due to their heavy exposure to gold as well as a number of event driven investments that have been less correlated with the market. Interestingly enough we see he initiated a new large position in Technicolor - I bet we will get a full donwload on the thesis in the Q3 letter. Enjoy.
Third Point August
Third Point August
Thursday, September 1, 2011
T2 Partners September Letter
Below please find T2 Partners (Whitney Tilson & Glenn Tongue) investor letter summarizing their performance for the month of August. For the month of August they were down 13.3% which brings them down 21.9%. They also give some commentary on JC Penny, Iridium, Groupo Prisa, Goldman Sachs, Wells Fargo, and Dell. Enjoy.
Ltr to Investors-T2QF-Aug 11
Ltr to Investors-T2QF-Aug 11
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