market folly

At day two of the Value Investing Congress, Boykin Curry of Eagle Capital gave the case for going long Aon (AON) and Goldman Sachs (GS) in a presentation entitled "Time Horizon & Analytical Tools."

Be sure to check out all our notes from the Value Investing Congress.


Boykin Curry (Eagle Capital)

Aon (AON): Should have a 15% compound return for five years. It's a duopoly with a free call option (their new GRIP system) and another call option (multiple expansion). However, the company won't have any organic growth and GAAP measure makes it look less attractive.

He mentioned that the turn in the insurance cycle should be a tailwind. Compound rates are over 100% and some natural disaster/catastrophe will be a catalyst for insurance premiums to increase. We've analyzed AON in a past issue of our Hedge Fund Wisdom newsletter.


Goldman Sachs (GS): Company is facing a lot of short-term headwinds but if you put a 14x multiple on the i-banking division you get $1 billion and you put a 13x multiple on the PE division. He gives a liquidation value of $155 billion and most of their assets are liquid. Curry says GS could buyback 30% of equity over 3 years.


Q&A Session:

1. Goldman's balance sheet? They are borrowing money and sitting in cash to protect against bank run and to take advantage of potential opportunities.

2. Regulatory uncertainty will continue to be a problem for GS but he thinks they should still make a bunch of money.


About Boykin Curry: Eagle Capital has over $10 billion AUM and since inception in 1988 has returned 15.1% annualized.


Don't miss the rest of the hedge fund manager presentations in our notes from the Value Investing Congress.