market folly

Next up in our notes from Invest For Kids Chicago is Steve Romick of First Pacific Advisors.

•    “We are circumspect” and “invest across the capital structure”
•    Real GDP is declining and are now at a Keynesian endpoint
•    Romick anticipates tremendous 2nd order effects of QE-Eternity and is thus “investing in a nervous fashion"
•    Large cap stocks are relatively inexpensive with especially low values in Europe


Romick's Pitch on Renault

•    Renault: Operating cash conversion from EBITDA of 104%
•    Half of sales are from outside US where the cost of labor is 50 to 90% less
•    “Entry level cars are more profitable”
•    Carlos Ghosn CEO of both companies Nissan and Renault and sees synergistic opportunities
•    Renault has no net debt including off-balance sheet liabilities
•    Sum of Renault’s publicly traded assets are €54.4 with the Renault stub is worth $5 billion currently
•    Romick is short Nissan and Volvo against Renault
•    CarCo could pay a dividend
•    Debt could be upgraded

Romick also recently touched on his favorite stock picks in an interview.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.