Investors from all over have gathered at the Marriot Marquis in Times Square to hear some of the brightest minds in the hedge fund industry share their best investment picks.?
The event begins at 8:30 a.m. ET. ?
Last year, Einhorn announced that he's shorting Green Mountain Coffee Roasters. ?We're eager to find out what he'll be doing this year. ?
We'll be live blogging throughout the event, so check Clusterstock for all the latest news and investment picks.?
8:41 AM | We're up and running at the Value Investing Congress.
8:41 AM | Lloyd Khaner, of Khaner Capital, is making a bullish case for Jamba Juice $JMBA.
He's talking about the company as a potential turnaround.
He thinks the valuation is currently at the turnaround valuation. ?
9:13 AM | Alex Roepers of Atlantic Investment Management is up next.
Roepers, who runs $1.8 billion Atlantic Investment Management, says he's going to give five investment ideas.
For his investment approach, they use significant mintority stakes (2% to 7%) to enhance shareholder value through "constructive shareholder activism."
9:30 AM | Roepers five investment ideas
1. Energizer Holdings (ENR, $75.43)
2. Rockwood Holdings (ROC, $48.89)
3. ?Clariant
4. FLSmidth
5. Joy Global (JOY)
10:10 AM | It's the morning break. David Einhorn will be on at 10:30 a.m. ET.
10:53 AM | David Einhorn is on Green Mountain Coffee again.
"Here's the story of what they did wrong, and how long they'll do it again."
Einhorn basically said that GMCR has no cashflow...
10:56 AM | We believe GM is much healthier now, says Einhorn.
It's reduced costs extensively... gross cash at about 3.4 of its market cap that could be returned to shareholders. They also won't have to pay US taxes for about a decade.?
Their pensions looks managable, costs contained, balance sheet healthyish.
10:57 AM | Thinks the consensus forecast which shows good growth is too low.
Sees a significant imporvement in product cycle over the next few years... Europe is a problem, but it's a problem for everyone and GM could get it to break even in 3 years.
10:59 AM | Annual improvement of 1 car per 400 drivers would increase demand significantly.
Assuming GM keeps its current market share it would sell more than 300k units more in the coming years.
10:59 AM | GM's pending product refresh cycle should reverse its share loss.
60% new or refresh products in the next few years as opposed to 23% in the last 2 years.
11:01 AM | GM drive 38% of revenue from international ventures
And Latin America is about to see a product refresh cycle much like North America's.?
Europe isn't going to be cured, but it will improve over the next year or so. Einhorn thinks the idea that losses will improve indefinitely is too pessimistic.
11:03 AM | GM: $42 billion market cap, liquidity $38 million
11:03 AM | Upside: Better international results and the sale of the government's stake are huge opportunities.
11:05 AM | New stock... CI, Cigna, health stock.
To understand Cigna, first you have to understand HMOs and Obamacare. Thejn relate that to Cigna and it's businesses that aren't HMOs
11:07 AM | Obamacare has intro'd a lot of uncertainty that adds complexity and reduces profits.
This has had HMOs trading lower, but Einohorn likes them. There's always a demand no matter how the economy is doing and it's growing. Starting an HMO is hard (REGULATORY HURDLES ETC) and the main players in the space have scale.
Cigna is the best performer in the HMO group.
11:09 AM | Why is CI awesome?
Immune to macro events ? PIIG Flu (as Einhorn says).
Earning less is still earning alot.
Trades at a value less than 8 times next year's estimates.
CI handles billings and claims but doesn't assume insurance risk in health care
11:14 AM | CI has just gotten started on Turkey and India, Einhorn sees growth in Asia
High quality, higer reutnr on capital, faster growing than its peers and is a cheap stock in a cheap sector.
11:15 AM | NEW SHORT: Chipotle!
11:16 AM | Chipotle is in its rapid growth phase but the copycats are coming.
1. The summer drought will hurt the company's costs.
2. They'll have to start providing healthcare with Obamacare.
3. Problems with undocumented workers.
4. THE BIGGEST CHALLENGE: TACO BELL
11:19 AM | Chipotle is up 8%, Taco Bell is up 13%.
TB has more locations, is cheaper. Chipotle may have pushed limits of pricing power ? according to Einhorn's survey (yes, he has one).
TB has a new Cantina Bell menu. It's higher ticket item but lower ticket than Chipotle. It looks better, fresher and competes with Chipotle products.
11:20 AM | Einhorn directed us to the nearest Taco Bell.
11:20 AM | 27% of Chipotle customers prefer TB's Catina Bell menu.
11:22 AM | Only 38% of Chipotle frequent customers prefer it to TB's Cantina Bell menu
And most frequent Chipotle eaters plan on cutting their spending.
If TB can siphon of 5-10% of Chipotle customers, it's gonna be a big deal.
11:26 AM | Einhorn: YUM is interesting bc of TB resurgence.
He isn't convinced anything good is happening at Pizza Hut, and KFC is interesting in China but so far he's been on the sidelines.
11:28 AM | Einhorn doesn't see government involvement in GM as a problem.
Thinks that the idea that it's government run is a conspiracy theory and sees the government as a passive investor.
11:40 AM | EINHORN just got asked about St. Joe's
Say there's "absolutely nothing going on at this company". Is shocked that the executive team wasn't on the call... what were they doing?
The value of land/company has fallen. They've cut costs to break even but that's about it. Stock trading at 2-3x what underlying land values are worth.
11:45 AM | Bob Robotti of Robotti and Co. is talking Fracking
His company tends to focus on mid-cap companies with a value-investing style. The most important edge, he says, is the behavioral edge. It's the hardest to explain, teach, learn.
1:55 PM | Glenn Tongue is talking about AIG.
He says that it's even more undervalued than when he presented it last year at the Value Investing Congress.
Tongue says "investors aren't likely to be victimized by unexpected losses as they were when AIG collapsed during the 2008 financial crisis."?
2:11 PM | Glenn Tongue's next investment idea is Iridium (IRDM).
Iridium is a global communications provider of mobile voice and data services. ?He says they're the only provider that covers 100% of the earth's surface.
2:42 PM | Our next speaker: Avoiding Complexity and the VAC Circle of Life Jeffrey W. Ubben, ValueAct Capital
This is 2nd conference.?
He's going to talk about some of the mistakes he's made as a value investor.
2:48 PM | The focus of this speech is running a hedge fund and keeping things simple.
Have a long term view ? don't complicate things with a long/short fund, this fund, that fund...
Everyone should have a stake in the business and there shouldn't be finger pointing when things go wrong.
Basically, you have to fix incentives too and to make sure everyone is on the same page.
2:58 PM | Now on to investing ? He doesn't like financials.
Why?
Financials can grow by making bad loans and then blow up in your face.
A challenge he has: The Fed is making it friendly for financials but he still wants to protect himself. What he does is find what he does like at a cheaper price (focusing on the business model not the industry) in the industry... He likes Moody's, for one.
Source: http://www.businessinsider.com/value-investing-congress-day-two-2012-10
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