NYU Evaluation Newsletter

The students at NYU Stern School of Business are out with their latest Evaluation Newsletter. This third issue focuses on a wide range of issues, including some investment recommendations. Enjoy:

NYU Stern Evaluation Dec 2014

Howard Marks on Oil

Howard Marks, the founder and Chairman of Oaktree Capital, is out with his latest missive. This time he writes about the recent pull-back in oil. Enjoy:

Howard Marks Lessons of Oil

Pershing Square Q3 2014 Letter to Investors

Bill Ackman's Pershing Square is out with their Q3 2014 letter to investors. Due to a well timed bet in Allergan they are up 35% net YTD. In the letter they talk about their position in Allergan (AGN), Canadian Pacific (CP), Air Products and Chemicals (ADP), etc. Enjoy.

Pershing Square Q3 14

Julian Robertson on Bloomberg TV Part 3

Julian Robertson continues his segment on Bloomberg TV talking about the Bank of Japan's monetary policy and how he thinks that will impact global currency.

Julian Robertson on Bloomberg TV Part 2

Julian Robertson continued his recent interview on Bloomberg TV talking about the state of the hedge fund business:

Julian Robertson on Bloomberg Part 1

Julian Robertson was on Bloomberg recently talking about his belief that currency was a good area to be investing right now. He then touched on the large bond bubble that was brought on by the interest rate policies.

Graham & Doddsville Fall 2014

Columbia Business School is out with their latest issue of Graham and Doddsville. In this issue they interview Wally Weitz, Guy Gottfried, and the team from Development Capital Partners. In addition there are two student write ups: a short on B&M European Value Retail SA (LON: BME) and a long on Countrywide, Plc. (LON: CWD). Enjoy:

Graham & Doddsville Fall 2014

Third Point Capital's Q3'14 Letter to Investors

Dan Loeb's Third Point Capital is out with their Q3 2014 letter to investors. In the letter they discuss Amgen (which Loeb spoke at the Robin Hood Investor Conference about), EBAY, and Alibaba (BABA). They also exited Sony in the quarter. YTD Third Point is up 6%.

Third Point Q3 2014 Investor Letter TPOI

Nathaniel August - short WWE and long FIG

Nathaniel August of Mangrove Partners was presenting at the Robin Hood Investor Conference where he shared his short pitch on Mesoblast (ASX:MSB) and then went on CNBC to talk about why he was short WWE and long FIG:

David Einhorn on CNBC - Short ATHN

David Einhorn was presenting at the Robin Hood Conference this week. He made an appearance on CNBC to share his updated thoughts on Athena Health (ATHN) and bubbles overall.

David Einhorn on CNBC - Long SUNE

David Einhorn presented at the Robin Hood investor conference where he discussed why he was long Sun Edison (SUNE). Enjoy:

David Einhorn on CNBC - Finding Opportunities in the Market

David Einhorn was on CNBC as part of his appearance at the Robin Hood Conference where he talked about where he is finding opportunities in the market. Enjoy:

David Einhorn - Long Apple

David Einhorn was on CNBC discussing why he was long Apple (AAPL)

Corvex Capital - Robin Hood Presentation

Keith Meister of Corvex Capital presented at the Robin Hood Investor Conference today. He presented a long idea on Crown Castle International (CCI) and why he thought it could be worth 25% to 60% above the recent price. Presentation is below. Enjoy:

Corvex Management 2014 Robin Hood Investment Conference Presentation

Carson Block Presentation at Baruch

Below please find a video recording of the presentation that Carson Block of Muddy Waters gave on shorting at Baruch College.

Kerrisdale Capital Presentation on GSAT

Kerrisdale Capital today came out with their short thesis on Globalstar (GSAT) arguing that the spectrum is worthless and that the company is a zero. Enjoy:

Kerrisdale Capital - GSAT - 2014.10.06 (Presentation)

Bruce Berkowitz on WealthTrack

Bruce Berkowitz of the Fairholme Capital Management recently came on to Consuela Mack's Wealth Track. He explains why nearly 80% of his portfolio is in four financial stocks shunned by most investors (AIG, FNMA, BAC, and FMCC). Quite enjoyable as always:

David Tepper on Bloomberg TV

David Tepper was on Bloomberg TV today. He was talking about the bond bubble, how you can't fight Draghi, and how he finds certain stocks interesting. Enjoy.

Starboard's Darden Presentation

Starboard released a tome of a presentation on Darden (DRI). They go into incredible depth arguing that breadsticks should be limited at Olive Garden and not using salt in pasta water would prolong the pots useful life. While I am not sure if length of presentation has any correlation with investment returns they are sure putting that to the test on this one. Enjoy:

Starboard Value Transforming Darden

Jeff Gundlach Presentation - Fixed Income Playbook

The founder and CEO of DoubleLine Funds - Jeff Gundlach had a call today to share his thoughts on the fixed income market. As always he produced a lengthy presentation full of good macro stats. Enjoy:

Gundlach Fixed Income Playbook

Whitney Tilson's Presentation from the 2014 Fall Value Investing Congress

Here is Whitney Tilson's presentation from the 2014 Fall Value Investing Congress. In the presentation he discusses his thoughts on shorting as well as two past short ideas: K12 (LRN) and Lumber Liquidators (LL) and his current favorite: Exact Sciences (EXAS). Enjoy.

My Favorite Idea WhitneyTilson ValueInvestingCongress 9-9-14

Howard Marks latest Memo - Risk Revisited

Howard Marks is out with his latest memo - risk revisited. In the memo he discusses properly analyzing risk encapsulates a range of possibilities and how knowing probabilistic outcome doesnt yield knowing what will happen. While there are many possibilities there is only one eventual outcome. Good stuff - enjoy.

Howard Marks Risk Revisited by marketfolly.com

Tepper Bond Bubble is nearing an end

David Tepper released a statement on Bloomberg today talking about how he thinks the world bond market rally is over.

Anonymous Analytics - Tianhe Chemicals Group

Anonymous Analytics released a scathing report of Tianhe Chemicals Group (1619). They basically say the revenue is vastly overstated and that it is a large fraud. Enjoy reading their analysis:

Tianhe-pdf (1)

John Burbank of Passport Capital on Bloomberg

John Burbank the founder and portfolio manager of Passport Capital was recently on Bloomberg TV sharing his thoughts on the market and how he thinks there could be another 1987 type crash. Enjoy:

Pershing Square Capital Q2 2014 Letter to Investors

Pershing Square Capital is out with their Q2 letter to investors. They have had quire the year, and soon you can participate too as Bill Ackman is taking public his hedge fund. Read on to learn more:

Pershing Square Q2 Letter

Greenlight Capital Q2 2014 Letter to Investors

David Einhorn's Greenlight Capital is out with their Q2 letter to investors. In the letter they reveal they are up 6.4% YTD. They reveal a new position in Lam Research (LRCX). Enjoy:

Qlet2014-02

Jeremy Grantham of GMO Capital Q2 2014 Letter to Investors

Jeremy Grantham of GMO Capital is out with his latest letter to investors. Interestingly, my read is he is a little bullish. This is surprising given he is somewhat of a perma-bear. Enjoy:

GMO-Q2-2014

Bruce Berkowitz on Managing Risk / Reward at Fairholme

Nelson Peltz at Delivering Alpha

Nelson Peltz gave a talk at CNBC's delivering alpha conference. At the conference he shared his thoughts on his current activist campaign at Pepsi. Enjoy:

Carl Icahn at Delivering Alpha

Carl Icahn was a keynote at the CNBC delivering Alpha conference this week. Below is an excerpt of his talk:

Stanley Druckenmiller at CNBC's Delivering Alpha

CNBC hosted their delivering alpha conference this week and at the conference Stanley Druckenmiller gave a talk on his thoughts on the economy and IBM:

Third Point Q2 2014 Letter

Dan Loeb is out with his Q2 2014 Letter to investors. In the letter he reveals that Third Point is up 6.0% YTD vs. 7.1% for the S&P 500. He also discusses positions in Kroton Educacional SA, Fibra Uno, Argentina, and Royal DSM NV. Enjoy:

Third Point Q2 2014

Prescient Point Short Thesis on CBI

Prescient Point was out today with their short thesis on CBI. Quite the detailed analysis filled with salacious accusations. Enjoy:

Prescient Point - CBI - 2014.06.17

Bill Ackman on Valeant Part 3

Bill Ackman was on CNBC talking about Valeant. This is the third part of the video. In this part they discuss whether or not Pershing's move into Allergan is fair. Bill makes the analogy that the activist investor brings things to the company that allow them to benefit - his example is that they would not have bought Canadian Pacific if they had not known they were going to make Hunter Harrison the CEO. So looks like activists play by special rules.

Bill Ackman on Valeant - Video 2

Bill Ackman was on CNBC recently sharing his opinions on Valeant. In this video he continues to make the case of why Jim Chanos is wrong on his Valeant short. The interesting tidbit is apparently Jim Chanos has never been a fan of serial acquirers and was even short Danaher at one point.

Bill Ackman on Valeant Video 1

Bill Ackman was on CNBC recently discussing his opinion on Valeant are arguing its not a bad company and is a good roll up:

Howard Marks on CNBC

Howard Marks was recently on CNBC sharing his opinion on the markets and his investment strategy. He doesnt think we are close to bubble levels. He thinks we are no where near where we were in 2000. He is not a raving bull on the U.S. economy but thinks it could catch.

Nice Profile of Bruce Berkowitz

Institutional Investor recently came out with a nice profile on the mad genius behind the Fairholme Fund - Bruce Berkowitz. The article can be seen here Enjoy it. There is also a small video clip explaining Bruce and his success:

Kyle Bass talking about the potential Canadian housing bubble

At the Texas Investor Summit Kyle Bass gave a presentation sharing his thoughts on the macro landscape. In this clip he shares his thoughts on the potential for a Canadian housing bubble. He is not alone on his bearishness on Canadian housing - Mick McGuire's Marcato Capital Management also shares this sentiment. Enjoy:

NYU MBA Investment Newsletter - EValuation Spring 2014

NYU is out with their latest MBA student investment newsletter - Evaluation. In this issue they interview Marc Lasry, Dr. Edward Altman, Julia Bykhovskaia, Nick Wells, Stuart Kovenksy, Allan Brown, and Max Holmes. They also share the finalist student pitches from Stern's Stock Competition. The pitches were on: ULTA, URBN, and AAPL.

Evaluation May 2014 by marketfolly.com

Steve Kuhn of Pine River on CNBC

Steve Kuhn the founder of Pine River was on CNBC today and talked about why he thinks bonds are poised to fall. He thinks the right trade is to buy equities that look like bonds: Rock-Tenn, Conagra, and Coca-Cola.

Jim Chanos is short Green Mountain and Soda Stream and is long Starbucks

Jim Chanos walks through why he is short Green Mountain and Soda Stream and is long Starbucks.

Jim Chanos gives an update on his China short thesis

Jim Chanos was on CNBC today and gave an update on why he is still short CNBC. They are starting to see cracks in luxury goods and gambling in Macau.

Jim Chanos on why he is short Valeant

Jim Chanos was on CNBC today and talked about why he is short Valeant (VRX). He is short since they are a roll up. He thinks they are doing some aggressive accounting and the insider selling is a key sign.

Jim Chanos on why he is short Sotheby's

Jim Chanos was on CNBC today and shared his thoughts on why he is short Sotheby's. Basically he thinks there is a bubble in the art market.

Leon Cooperman walks through his thesis on Monitise

Leon Cooperman was on CNBC today and walked through his thesis on Monitise. He thinks if they get to 200m subscribers they could earn 0.15 per share and it should be a 30x or so multiple business. He thinks this business could displace some of the existing financial players. In this light MasterCard and Visa have been aggressively investing in Monitise. He thinks if they go from 20m to 200m customers he will make a lot of money.

Leon Cooperman favorite stock picks on CNBC

Leon Cooperman was on CNBC today as part of his appearance at the SALT Conference. He walks through his favorite stock picks. He likes Monitise, AIG, Citigroup, Actavis, Thermoelectronics, Sprint, SiriusXM, and Sandridge Energy. They think AIG gets to mid 60s in the next few years as they get to 10% ROE. He also talked about why he sold GM. He also shared his thoughts on TimeWarner Cable which is their way to get exposure to Comcast (due to the acquisition). They also like Dollar General. Omega exited Apple at $650 and invested in Qualcomm they then went back into Apple in the low $500s and think its worth mid $600s.

Leon Cooperman on CNBC part 2

Leon Cooperman was on CNBC today. He was talking about his thoughts on the market. He thinks the fair multiple on the market is 16x which is fair valuation. He thinks David Tepper has changed his view on the markets due to concerns with the ECB. Leon thinks the market is fairly valued today so there is not a huge risk of a correction. Omega does not have a lot of excess cash as they are pretty fully invested. He doesnt see any signs of recession.

Leon Cooperman on CNBC part 1

Leon Cooperman was on CNBC today talking about why he still thinks stocks are the best asset class around. He doesnt think a bear market is coming about anytime soon.

John Burbank of Passport Capital on CNBC part 2

John Burbank was on CNBC today after his appearance at the SALT Conference. In this clip he talks about what he sees as the risks in the market and why he has been hedging those. He thinks we could have a bear market solely due to behavioral factors since the fundamentals are pretty strong.

John Burbank of Passport Capital on CNBC Part 1

John Burbank the founder and head of Passport Capital was on CNBC today after speaking at the SALT Conference yesterday. He walked through his thesis on VIPshop Holdings (VIPS). He has been long since the IPO in 2011. Their internal earning numbers are 60% above Wall Street consensus. He thinks investors underrate China and thinks that the Chinese ecommerce market is bigger than in the U.S.

Jamie Dinan the founder of York Capital on CNBC

Jamie Dinan the founder and head of York Capital was on CNBC today. Later today he is a speaker at the SALT Conference. He thinks there will be a lot more M&A deals in the industrial sector going forward.

Jacob Gottlieb of Visium Asset Management on CNBC

Jacob Gottlieb, of Visium Asset Management, was on CNBC today at the SALT Conference and was explaining why he is finding opportunity in the biotech bounce, and U.S. energy renaissance.

Greenlight Capital's Presentation from Ira Sohn on Shorting ATHN

David Einhorn rocked the financial markets on Monday evening when he presented his short thesis on ATHN. Below please find his presentation along with some speaking notes.

Greenlight Capital - 2014 Ira Sohn - ATHN Short

Larry Robbins and Glenview Capital's presentation from 2014 Ira Sohn

Larry Robbins presented at the recent Ira Sohn conference in New York. He is long on HUM, WLP, and MON. Below please find his slide deck. Enjoy:

Glenview Capital - HUM, WLP, & MON - 2015.05.05

Pershing Square Capital's Presentation at 2014 Ira Sohn

Below please find Bill Ackman's lengthy slide presentation from the recent Ira Sohn conference on FNMA and FMCC:

Pershing Square - 2014 Ira Sohn - FNMA and FMCC

David Einhorn on Bloomberg TV

David Einhorn of Greenlight Capital was on Bloomberg TV today talking about the markets, Athena Health (his short he presented at Ira Sohn yesterday), the Fed, etc. Quite a lengthy but enjoyable interview.

Spring 2014 Graham & Doddsville

The fine students at Columbia Business School are out with their latest issue of Graham & Doddsville. In this issue they interview: Philippe Jabre, Arnold Van Den Berg, Eric Rosenfeld, & Kevin Byun. There is also some student pitches from the 2014 Pershing Square Challenge on: ALLE, CVC, CCL, and a Nasper's stub trade. Enjoy:

Graham & Doddsville - Issue 21 - Spring 2014

Dan Ariely of Duke University at Ira Sohn

Dan Ariely a professor at Duke University was at Ira Sohn talking about behavioral finance today. Enjoy:

Michael Novogratz at Ira Sohn

Michael Novogratz of Fortress Investments was at Ira Sohn today talking about why he was long Brazil.

Bill Ackman at Ira Sohn

Bill Ackman was at Ira Sohn today where he gave a long 110 slide pitch on why he thinks Fannie Mae (FNMA) and Freddie Mac (FMCC) are significantly undervalued (something like 7x). Enjoy:

Jim Grant at Ira Sohn

Jim Grant was at Ira Sohn today saying he was long Gazprom at 2.5x forward earnings. Good things happen to cheap stocks.

Larry Robbins at Ira Sohn

Larry Robbins of Glenview Capital Management presented at Ira Sohn today. He was long on Humana and Well Point and Monsanto. Enjoy:

Third Point Letter to Investors

Third Point Capital is out with their Q1 2014 letter to investors. In the letter Dan Loeb walks through his investing thesis on Dow Chemical, Softbank, and IHI. He also talks about his thoughts on the economy and how he likes the US economic growth going forward. Enjoy: Third-Point-Q1-2014.pdf

Activist Investors and the Search for Alpha

At the Milken Conference they hosted a panel on activist investing. It was a star studded panel featuring: Clifton Robinson, Jeff Ubben, Barry Rosenstein, and Chris Teets. Worth listening to. Enjoy:

Marcato Capital Presentation at Active-Passive Investing Summit

Mick McGuire of Marcato Capital recently gave a presentation at the Active-Passive Investor Summit. He gave reasons why he is long Sotheby's (where he recently announced he is siding with Dan Loeb and Pershing Square) and Dillard's (DDS). ENjoy: Marcato-Sothebys-Dillards.pdf

Pershing Square Presentation on Allergan

Following the big news of Bill Ackman's fund Pershing Square taking a stake in Allergan (AGN) Pershing has produced their customary lengthy slide presentation. Enjoy:

Bill Ackman Allergan Presentation by CanadianValue

Greenlight Capital Q1 2014 Letter

Below please find Greenlight Capital's Q1 2014 letter to investors. In the letter David Einhorn talks about his concerns on a pending tech bubble. We also find out that Greenlight ended Q1 down 1.5%. They established positions in SUNE, CONN, ATC, and Resona. Great stuff as always. Enjoy:

Greenlight

Barry Rosenstein the head of JANA on CNBC

Barry Rosenstein the head of JANA was on CNBC today talking about activist investing and his recent stake in Walgreen's (WAG). He thinks WAG has a lot of value levers to pull.

Jeff Ubben on CNBC (part 2)

Here is part 2 of the Jeff Ubben interview on CNBC. In this interview he shares his thoughts on Microsoft (MSFT). Enjoy:

Jeff Ubben on CNBC (part 1)

Jeff Ubben of ValueAct Capital was on CNBC recently sharing his opinion on Microsoft (MSFT) and Valeant Pharmaceuticals (VRX). Here is the first interview in which he shares his thoughts on VRX and the recent news that Bill Ackman's Pershing Square is partnering with the company to help it take over Allergan. Enjoy:

Dan Loeb's latest Presentation on Sotheby's

The battle is heating up a bit now with some back and forth between Dan Loeb and Sotheby's. Enjoy:

BID - Third Point - 2014.04.15

Jim Chanos on CNBC talking about the Slow Death of the PC

Jim Chanos was on CNBC today talking about the slow death of the PC industry. He is long the innovators like Apple and Samsung but is short HPQ, IBM, and the disk drive maker. He thinks they will lose out to the cloud movement - Google and Amazon even make their own servers. Over half of HPQ's cash flow is from factoring receivables which they only disclose in the footnotes and they changed management incentive to FCF. He is not short Microsoft since he thinks they are figuring out the cloud.

Jim Chanos - CAT Short is No Brainer

Jim Chanos on CNBC today talking about why his short in Caterpillar (CAT) is a no brainer as they are a derivative of the Chinese economy and will collapse with it.

Jim Chanos on CNBC

Jim Chanos was on CNBC today discussing how tough it is shorting and how Sotheby's (BID) is one of the best bubble indicators.

Michael Mauboussin AIC Keynote

Michael Mauboussin gave the keynote address at the recent 17th annual Credit Suisse Asian Investment Conference. His talk was about his recent book and how to untangle skill and luck in the business context. Its good stuff. Enjoy:

Joel Greenblatt on CNBC

Joel Greenblatt was on CNBC today. He surprisingly recommended buying a bucket of cheap tech stocks: AAPL, HPQ, etc. He thinks it comes down to valuing businesses and buying them at a discount. He thinks large caps have a much better valuation than small caps.

George Soros talking at the LSE

George Soros recently gave a talk at the LSE on the Tragedy of the European Union. Very shortly he is also releasing a book, which has the same title. Basically he thinks the EU is a mess and will eventually be broken apart. Enjoy:

Daniel O'Keefe on Wealthtrack

Daniel O'Keefe of Artisan Partners (he was named the 2008 and 2013 Morningstar International Fund Manager of the year) gives a rare interview talking about how he is looking at the investing environment and where he is finding value today.

Roger Lace talking to Ivey Business School

Roger Lace the President of Hamblin Watsa Investment Counsel (the investing arm of Fairfax) recently gave a speech to the Richard Ivey Business School on value investing and which investors matter to him.

Kyle Bass on CNBC talking about GM

Kyle Bass was on CNBC yesterday talking about GM and why he thinks they can still be worth $50 per share.

Kyle Bass on CNBC talking about Nationstar Mortgage Holdings

Kyle Bass of Hayman Capital Partners was recently on CNBC to talk about Nationstar Mortgage Holdings (NSM).

Pershing Square's presentation Herbalife in China

This week Bill Ackman's Pershing Square gave another lengthy webcast presentation on their Herbalife (HLF) short. This time they focused on HLF's practices in China and how they thought HLF was operating illegally. The presentation can be found below:

Herbalife in China

Yacktman Funds 2013 Annual Report

Don Yacktman the founder and CIO of Yacktman Funds is out with their 2013 Annual Report. AMG bought Yacktman a few years back. In the past year the fund returned approximately 27%. The average annual return over the past five years has been 22.4% (impressive to say the least).

ANN Yacktman

Whitney Tilson - Kase Capital Fund Raising Presentation

It looks like Whitney Tilson is hitting the fund raising road with his fund - Kase Capital. They put out an investor deck that gives the nitty-gritty detail of the funds. With $77m in AUM he has done an amazing job making his voice much larger than his capital base. Interesting stuff.

t 2 Investor Presentation

Carl Icahn on CNBC - Part 2

Carl Icahn was on CNBC today. In this clip he shares his thoughts on Herbalife (HLF) and Bill Ackman's efforts to date. While its nothing new its interesting to get his take on some of the recent news of the lengths Pershing has gone to. Enjoy:

Carl Icahn on CNBC - Part 1

Carl Icahn called into CNBC today to share his thoughts on a wide range of issues. While it wasn't as electric as his on air debate with Bill Ackman it was interesting none-the-less. In this first video he shares his thoughts on EBAY and talks about what he thinks needs to change:

Leon Cooperman on CNBC Talking his Portfolio

Leon Cooperman of Omega Advisors was on CNBC earlier today talking up his portfolio and sharing his thoughts on the market. He likes AIG which he thinks can rally 25%, Citi and JPM at 10x look attractive, Sallie Mae, Sandridge Etc. Overall it was his typical talk but interesting to hear. Nothing earth shattering. Enjoy:

Jamie Dinan of York Capital on CNBC

Jamie Dinan was on CNBC today talking about how he thinks American Airlines is going to be worth $60 which is 10x their forward EPS estimate of $6. He also thinks Mens Warehouse is an interesting company with the Jos. A. Banks merger.

Reuters Summit: Jim Chanos

Jim Chanos recently spoke at the Reuters Investment Summit. Today he sat down for an interview to discuss his current short positions. He is short coal miners as an extension of his short on China and is also short Exxon which he views as more of a value trap than a value play. Enjoy:

Tom Steyer on Bloomberg Titan's at the Table

Tom Steyer the founder of Farallon Capital was recently the focus of Bloomberg's Titans at the Table. In the episode they talk about his background, investing style, and recent environmental activism. Enjoy:

Bruce Berkowitz on Bloomberg Talking About Fannie Mae and Freddie Mac

Bruce Berkowitz was on Bloomberg TV earlier today talking about his opinions on Fannie and Freddie. He is currently pursuing a lawsuit to remind the government that both Fannie & Freddie are still owned by all shareholders and not just the government. He won the ability to do some federal discovery to find out some more information on the companies and understand whether or not they will be privatized or taken over completely by the government. This is a fairly big position of Fairholme and is also a "hot" name with other hedge funds. Bill Ackman's Pershing Square has acquired substantial amounts of common stock in both Fannie & Freddie and thinks it can return 10x. Other hedge funds have also started to circle the names.

Corvex Capital - Change at CWH

Keith Meister's Corvex Capital is out with their latest presentation at CommonWealth REIT (CWH). They think the NAV today is $35 versus a recent price of $27. They continue to fight to unlock value. The presentation is worth flipping through. Enjoy:

Corvex Capital - The Case for Change now at CWH

Jeff Gundlach on CNBC

Jeff Gundlach of DoubleLine capital was on CNBC today sharing his thoughts on the market. He isn't interested in Puerto Rican Bonds, thinks long-term rates will go to 2.5%, still thinks Apple is a buy, and thinks Chipotle is a short. Enjoy.

Graham and Doddsville Winter 2014

Columbia Business School is out with their fantastic G&D newsletter.  Issue XX of Graham and Doddsville, Columbia Business School's student-led investment newsletter, co-sponsored by the Heilbrunn Center and the Columbia Student Investment Management Association. This issue features interviews with Lee Ainslie of Maverick Capital, Ken Shubin Stein of Spencer Capital Management, Geoffrey Batt of Euphrates Iraq Fund, Jim Grant of Grant’s Interest Rate Observer, as well as Justin Muzinich of Muzinich and Co. Inc. The publication also includes the finalists’ pitches from the fifth annual Moon Lee Prize Competition: Long XPO, Long P, Short WLRD, and long POST.  It also features a short pitch on FUEL.

Enjoy: 

  Graham & Doddsville - Issue 20 - Winter 2014

Elliott Management Presentation on Juniper Networks (JNPR)

Elliott Management recently came out with a presentation on why they think Juniper Networks (JNPR) is undervalued.

Enjoy:

  Elliott Management - JNPR

Jeremy Grantham and GMO Capital Q4 2013 Letter to Investors

Jeremy Grantham is out with his Q4 2013 letter to investors.  As usual Jeremy and GMO share their usual wit and wisdom on the economy, natural resources, etc.  Enjoy:

  GMO Capital Q4 2013 Letter

Leon Cooperman on Bloomberg

Leon Cooperman was on Bloomberg today.  He thinks the market correction was healthy and the market should bounce back accordingly.  He also likes eBay, AIG, and Citi.  

Carson Block on Bloomberg and why he is short Blinkx

Carson Block was on Bloomberg recently talking about why he is short Blinkx.  This follows HBS Professor Ben Edelman coming out with a posting talking about why he thinks Blinkx was engaging in fradulent behavior.  Edelman showed how Blinkx after acquiring Zango and AdOn continued to engage in rampant clickfraud.

Enjoy:

Conversation with Robert Shiller

Robert Shiller recently sat down for an interview to discuss his view on the global economy, what Davos was like, etc.

Enjoy:

Ray Dalio on CBS with Charlie Rose

Ray Dalio sat down with Charlie Rose for an interview on CBS.  He discussed his view on the markets how he thinks about Bridgewater, etc.   Decently enjoyable.

Leon Cooperman on CNBC

Leon Cooperman was on CNBC today talking about how he thinks the EM issue is overblown and the sell off in stocks is overall a good thing.

Corsair Capital Thesis on Alere

Corsair Capital is out with an appendix to their annual letter describing their thesis in one of their positions - Alere (ALR).  They think its worth $70 to $80 versus a recent close of $39.

Enjoy:

Corsair-Capital-Alere.pdf

Meryl Whitmer's Thesis on Wyndham Worldwide

Meryl Whitmer chose Wyndham Worldwide for her pick at the Barron's Roundtable this year.  She thinks its worth around $100 per share versus a recent close of around $72.

Enjoy:

Joel Greenblatt on CNBC

Joel Greenblatt of Gotham Capital Partners was recently on CNBC sharing his thoughts on the market.  As usual he touts the power of the magic formula (somewhat of a broken record but needs to be said).

Enjoy:

Daniel Arbess on CNBC

Daniel Arbess of  Perella Weinberg Partners was recently on CNBC sharing his thoughts on the markets.  He likes airlines and Google.  And - like every other HF in the world thinks we are in a stock pickers market.

Enjoy:

Greenlight Capital Q4 Letter to Investors

Greenlight Capital is out with their Q4 2013 letter to investors.  For the year they were up 19.1% which is inline with their performance since inception of 19.5%.  In the letter they give the bull case for Micron Technology and BP. Enjoy:  

Dear Partner:

The Greenlight Capital funds (the “Partnerships”) returned 6.5%,1 net of fees and expenses, in the fourth quarter of 2013, bringing the full year net return to 19.1%. Since inception in May 1996, Greenlight Capital, L.P. has returned 2,211% cumulatively or 19.5% annualized, both net of fees and expenses.

The long, short and macro portfolios contributed 10.4%, 4.0% and 0.7% of alpha respectively to the gross annual return of the Partnerships; market beta added an additional 10.4%. We do not expect to keep pace with a straight up market, and we didn’t – the S&P 500 index soared another 10% in the fourth quarter to end the year up 32.4%.

The parabolic rise of a growing number of market-leading story stocks created a challenging environment for value investors. Speculators have momentarily accepted the ruse that, for these visionary companies, profitability would be a mistake. Eventually, the market will remember that having a disruptive product that customers will happily buy if sold near cost is not the same as having a valuable business. Philosophically, since we would not expect to be long these highfliers, the best we can hope to do is not be short them at the wrong time. For the most part, we weren’t.

For the quarter, our longs modestly outperformed the S&P 500, our shorts went up less than the index, and macro (led by the yen) was a slight contributor. The big winners (alphabetically) were Apple, General Motors, Marvell, Micron and the yen. The big losers were Chipotle and U.S. Steel.

Technology (MU) and medium-sized positions in BP plc (BP) and Anadarko Petroleum (APC). MU is a manufacturer of semiconductor memory chips (DRAM and NAND flash). This isn’t our first go-round with MU; it was a large short position from January 2001 to February 2005. Back then, DRAM was a lousy industry with too many competitors selling an undifferentiated product, often below cost. In the first quarter of 2001 when the shares were trading in the low $40s we wrote:

MU is valued at 6.5x current run-rate revenues and, today, generates no profits. In its best year ever (fiscal 2000), MU recorded $2.52 per share of earnings, making the current price 17x the peak earnings of a cyclical, commodity manufacturer. In the previous two years, MU lost money.

At the time, the valuation was kept aloft by the hopes and dreams of sell-side analysts. In our next letter we shared the following anecdote:

In an exchange of e-mails with a leading sell-side analyst who recommends purchase of MU with a $70 per share target, we solicited his justification for the current $24 billion market capitalization (let alone the $40 billion suggested by his target.)

Our analyst friend explained he tried to use cyclical valuation methodologies to come up with a rationale for buying the stock but failed because such an approach suggests “the stock should trade in the teens.” However, he maintains, should we have a good pricing environment next year, “people will treat the stock the same way [as they have] and take it much higher than they should.” Lest we be unclear about his raison d’être, he added he “could just perennially stamp an underperform on MU because he can’t justify the $24 billion, but that would be boring.” He need not worry; we are fans of boring.

This sort of unchecked cheerleading among sell-side analysts is by no means gone. Today, they spin different fables to justify otherwise inexplicable valuations for the latest flavor-of-the-month stocks. As for MU, a decade of poor results exposed every flaw in the business and killed any love for the stock. The sell-side groupthink has reversed: the mostly bearish analysts now contort themselves to justify earnings estimates that are too low, price targets that are too pessimistic, and stock ratings that are too negative.

We established a position in MU at an average price of $16.49, marking the first time we have taken a long position in a company in which we once had a material short position. The industry has changed and so has MU. Its purchase of Elpida Memory out of bankruptcy in August 2013 marks the end of a decade of consolidation from roughly a dozen major DRAM players down to just three. Technological advances and locked-up intellectual property have made it unlikely that any new players will enter the industry in the intermediate term.

MU and its competitors have signaled that they will refrain from adding capacity and will instead prioritize economic value-add. For the first time in memory, MU intends to use its excess cash flow to shrink the outstanding share count rather than build new factories. We believe the company will approach $4 per share of earnings and free cash flow in calendar 2014, and should enjoy a better multiple as investors begin to appreciate the new dynamic. The shares ended the quarter at $21.75.

We established a position in BP at an average price of $47.39. The Deepwater Horizon oil spill was nearly four years ago. Since then, investors have focused on the ensuing legal cases regarding clean-up and restitution efforts, while overlooking BP’s improved return on capital in its core businesses. Allowing for more negative legal outcomes than BP has currently provisioned, we believe the company’s net asset value (NAV) is nearly $70 per share. It can therefore create substantial value by selling assets at or above NAV and using the income to repurchase stock at a significant discount. This is exactly what BP has been doing. Further, BP has restricted capital expenditures and increased dividends – all evidence of a more shareholderfriendly approach. As the legal issues subside, we expect the market to appreciate BP’s portfolio value and its improved capital allocation. In the meantime, we own an industry leader at 9x earnings with a 5% dividend yield. BP shares ended the quarter at $48.61.

APC is a global exploration and production company with a high-quality upstream portfolio comprised of U.S. onshore resources, deep-water Gulf of Mexico assets, and interests in other high-potential oil and gas basins around the world. The company also owns 91% of Western Gas Equity Partners (WGP), a publicly traded master limited partnership created in 2012 to hold APC’s limited and general partner interests in Western Gas Partners (WES).

In mid-December the company suffered a legal setback stemming from its 2006 acquisition of oil and gas assets from Kerr-McGee, whose titanium dioxide unit went bankrupt. With APC facing potential damages of $14 billion or $5 billion, investors dumped the shares, which we then acquired at an average cost of $78.55. Assuming a worst-case legal outcome, APC’s core valuation net of its stake in WGP and its interest in an undeveloped, but valuable prospect in Mozambique, is less than 4x EBITDA. This is cheap compared to peers that lack APC’s valuable upstream assets and exciting exploration prospects, but nonetheless trade at higher valuations. Our legal analysis suggests that the ultimate payment is likely to be the lesser of the two amounts and will be partly tax deductible. APC shares ended the quarter at $79.32.

We closed out positions in Airbus Group, formerly known as the European Aeronautic Defence Space Company (France: EADS), and ThyssenKrupp (Germany: TKA).

We bought the shares in EADS during a sell-off in response to the company’s unpopular proposal to buy BAE Systems in 2012. EADS ultimately abandoned the merger and instead repurchased a lot of stock while also reorganizing its corporate structure to reduce the influence of several government shareholders. The shares rallied and we sold for a nice gain. We also bought TKA shares in 2012. Though management made significant progress in restructuring the company, a difficult external environment meant that asset sales and cash flow generation fell short of their hopes and ours. We exited with a very small loss.

On the organizational front, we added Amanda Armstrong as an executive assistant. Amanda joins us from the fashion industry and has a bachelor’s degree from the University of Vermont.

We believe that in addition to her office management experience, Amanda’s sartorial expertise will raise the caliber of our Annual Partner Dinner Tie Selection Committee. Welcome Amanda!

Jaime Lester joins Greenlight as a research analyst. Jaime spent the past nine years managing Soundpost Partners. He has an MBA from Columbia and an AB in Applied Mathematics and Economics from Harvard. Though his official start date wasn’t until January, Jaime opted to begin his tenure early and join us at our annual getaway in December where he was gracious enough not to steal anyone’s thunder on the basketball court. Welcome Jaime! Most of our operations staff has relocated from the north side of our office on the 24th floor to our new space on the 23rd floor. When you come for a visit, Justin would be happy to give you a tour.

The new digs are so nice that the staff upstairs wants their floor updated to match. Henry ‘Hank the Tank’ Lepone was born October 20, 2013 to Justin and Erin. Henry’s arrival added 1% to the global population of people with the last name Lepone. Justin proudly points out that the 0-6 New York Giants went 7-3 after Henry entered the world. We expect you will find it more interesting that the Partnerships made a third of the annual return since then.

Finally, Alexis returned from her winter getaway married. That’s the first surprise wedding at Greenlight … ever. Congratulations to Alexis and Rob!

At quarter-end, the largest disclosed long positions in the Partnerships were Apple, General Motors, Marvell

Technology Group, Micron Technology and Vodafone Group. The Partnerships had an average exposure of 125% long and 70% short.

“I did three things yesterday! Now I’m supposed to keep doing things? It’s like the things never end!”

— Allie Brosh

Best Regards,

Greenlight Capital, Inc.