market folly

We're posting up notes from the Ira Sohn Conference 2013 in New York.  Next up is a summary of the presentation from David Stemerman of Conatus Capital.  Prior to founding his fund, he worked at Lone Pine Capital.  He presented a negative view on South African consumer credit.  He recommended shorting African Bank (ABL:SJ).


Negative on South Africa, Short African Bank (ABL:SJ)

His factors: 1. Quality of Business 2. Management quality 3. Industry cycles

Short Idea: Short when boom turns to bust. South Africa. Banks in South Africa. Unsustainable increase in consumer credit, unsound lending practices, cycle is turning from boom to bust, and African Bank (ABL:SJ) is vulnerable to a downturn.

Short African Bank. (Listed only in South Africa) Consumers are spending 48% of their income on debt service! Trades at 1.3x book value.


Check out the rest of the hedge fund presentations from the event: notes from Ira Sohn Conference 2013.