Sohn Conference San Francisco 2014 Notes: Ubben, Billick, McGuire & More

The 5th Annual Sohn Conference San Francisco took took place on Wednesday October 29th.  MarketFolly was there to cover the event. Excellence SF is in partnership with the Sohn Conference Foundation and is focused on improving educational opportunities and life outcomes for underserved youth.  Conference proceeds also support the Sohn Conference Foundation.  Donations may still be made at www.excellencesf.org 


Sohn Conference San Francisco 2014 Notes


Jeff Ubben - ValueAct Capital - LONG Agrium (AGU) Thesis:  They have a $750M stake in the company.  Generally sees opportunity in the space.  AGU has continued to invest in the business the past 7 years, thinks this investment will start to show returns.  JANA went after mgmt and lost proxy battle, but this still lead to change in mgmt.  They agreed with Jana.  AGU's retail business is the jewel of the company.  Wholesale business is volatile.  AGU has put $7.6B into capex since 2012.  $1.7B should start to get returned to stockholders starting in 2016 or 2017.  Sees a share price of $120 to $150 a share. 

Key reasons for liking AGU:
1)  New CEO has a more focused game plan;
2)  Strong growth in FCF despite down cycle;
3)  Cheap any way you look at it;
4)  Well positioned in consolidating market. Thinks this is a good investment that offers potential returns of 20% a year for a few years.  


Kurt Billick - Bocage Capital - LONG Lundin Mng (LUNMF) Thesis:  Has a commodity focus.  For a while, China had been the key driver in increased commodity demand.  The lack of investment in infrastructure up to that point, lead to a steep climb in prices, which in turn lead to more capital and investment.  Nickel and Zinc are seeing excess inventories absorbed.  Copper is even more interesting.  Likes mining companies that mine base metals and LUNMF mines Nickel, Zinc and Copper.  


Mick McGuire - Marcato Capital Management - LONG Packaging Corp of America (PKG) Thesis:  Started his presentation out by noting that his pick from last year Sotheby's (BID) is down since he presented, and he likes it even more than he did last year.  With respect to PKG, it has a market cap of roughly $7B and they own roughly 3% of that.  Favorable trend for companies in this space as there has been consolidation leading to pricing power.  There's also an opportunity for part of the business that processes virgin wood pulp to become an MLP.  Sees possible price of $122 or 77% upside compared a price of roughly $70 at the time of the presentation.


Brian Zied - Charter Bridge Capital - LONG CaesarStone (CSTE) Thesis:  Likes to focus on industries driven by evolving consumer landscape.  CSTE's product is engineered quartz surfaces for kitchen countertops, bathrooms, floors and walls.  Quartz is gaining share vs. granite and marble.  Quartz has similar aesthetic, but superior performance.  Better characteristics include: scratch and heat resistant, non-porous, identical slabs, lifetime warranty.  Quartz is less expensive too.  Kitchens have become a larger part of the American home over time and are now a focal point of the home compared to say the 50s or 60s.  Remodels now usually also focus on kitchens first.  Quartz is gaining share relative to granite and marble.  CSTE is the only branded luxury quartz countertop maker.  EBIT margin and ROE are much higher than peers.  Compound sales growth over the last two years has been 45%.  Sees a possible stock price of $97 based on eventual EPS of $6.50 and a PE multiple of 15.  


Carl Kawaja - Capital Research Company - LONG Zulily (ZU) Thesis:  Internet retailer that is largely unpopular right now with large short interest.  IPO in November of 2013.  Most people in the audience at Sohn in SF are men, and men don't get ZU.  ZU vs AMZN, about half of items on ZU are not on AMZN.  Site is customized and successful.  ZU offers merchants better terms on their site.  Potential market is big.  Typical customer spends $150 in first year, but if they stay, they eventually avg $500 a year.  Reminds him of Costco.  Bear arguments include:  slow ship time, shipping charges not sustainable, and kid sales are dropping.  By 2018 he sees a potential market value of $11B compared to a bit over $4B right now.  


Sandy Colen - Apex Capital - LONG Container Store (TCS) Thesis:  Likes big opportunities that can be held for a long time.  TCS is down 60% YTD.  IPO'd at 18 and went to the 40s and is now at 17.  Some see weak traffic.  Keys to success include:  grow store base, branded closet line, controlled spending, improve operating leverage.  Sees potential EPS of $1.40 in 2017 and $8.50 in 2025 compared to analyst consensus of $1.00 for 2017.  


Mick Hellman - HMI Capital - LONG LPL Financial (LPLA) Thesis:  In money management there are two key groups, the manufacturers and the distributors.  LPL is in distribution.  Has over 14,000 advisors with $465B in Assets Under Control.  Stock is down a lot recently, but believes problems are solvable.  90% return on tangible capital.  Tailwinds include: large recurring opportunity, more need for financial advice, mix to fee based, client money tends to stay on platform.  Chokepoints include:  best platform, compliance and practice mgmt, scale play, stickiness of platform, flexible product platform.  Sees opportunity for low 20% annual returns.  


Scott Fearon - Crown Capital Management - LONG Grand Canyon Education (LOPE) Thesis:  Owns 115,000 shares of LOPE.  Focus is companies less than a couple billion in market cap.  Lots of money managers don't understand LOPE.  Of the for profits, LOPE is the only one up since 1/3/2012.  Revenues have also been growing.  There is a large short interest in the stock.  There are 11,000 students in the physical school and another 53,000 online.  Four positives about LOPE include: ground campus, affordable, christian, relevant degrees.  Outside possibility of turning dorms into REIT.  Admission standards are high.  Low default rates on student loans on par or better than traditional nonprofit colleges.  Potential for $12 in EPS in 10 years with a 15 PE implies a price potential of $180.


Meridee Moore - Watershed Asset Management - LONG W.R. Grace (GRA) Thesis:  This was also her stock pick in 2011.  Feels like October 2011 again.  All chemical companies are down, but GRA is different kind of chemical company.  Three main lines: Catalyst Technologies, Materials Technologies, Construction Products.  Focus is on ROIC.  Stock is at $89 now.  Was roughly at $39 when she recommended it in Oct. of 2011.  GRA emerged from Chapter 11 in February of 2014.  Stock could be up 37% a year from now based on peer value of EBITDA.  Risks: global slowdown, high rare earths prices, strong dollar, delaying in construction infrastructure spending, recent declines in oil if sustained could mean low prices for Catalyst Technologies.  


Jose Medeiros - Stonerise Capital Partners - LONG QVC (QVCA) Thesis:  Likes to have concentrated portfolio of 6 to 8 long investments a year.  QVC is value hiding in plain sight.  Digital retail.  High retention rates with spend per customer going up.  Attractive financial model and 8% FCF yield.  Was buried in LINTA before, but now trading.  Not much analyst coverage yet.  Trades at $25 with potential for a price of roughly $42 in 2016. Second Pick: LONG Global Eagle (ENT) Thesis:  In flight entertainment and connectivity is a growing market and ENT is a leader.  Has 150+ airline customers.  Deals with airlines are recurring and have long term contracts of 7 - 10 years.  Air traffic is doubling every 15 years and connectivity is growing even faster.  Penetration and take rates are low now.  Gogo, a competitor, is based on ground to air.  Doesn't work over water and other issues as well as that.  Satellite based better.  Market cap of $800M.  Is down more than 40% in the last 12 months.  Has a strong balance sheet.  Other potential catalysts like Dish sponsorship deal.  


Jeff Osher - Harvest Small Cap Partners - LONG Green Dot (GDOT) Thesis:  They own over $50M of stock.  Sees at least 88% upside over 6 to 12 months as concerns get addressed.  Growth is reaccelerating.  30% of cap is cash.  Has a $1.1B market cap.  TAM is 160M customers (17M unbanked, 51M underbanked, 90M unhappily banked).  Simple financial model, sales come from: sale of cards, transfers / reloads, interchange.  Amex entry into market scared investors, but Amex not doing well with prepaid cards.  Misconceptions include:  concerns about collapsing margins, structural growth issues, loss of WMT will destroy GDOT.  


For more recent conference coverage, head to our notes from Sohn Canada investment conference as well as a summary of the stock picks from the Robin Hood Investors' Conference.

Wally Weitz Interview: Columbia Business School's Graham & Doddsville

Columbia Business School is out with the Fall 2014 edition of their investment newsletter: Graham & Doddsville.  In it, they interview Wally Weitz of Weitz Investment Management, Guy Gottfried of Rational Investment Group, as well as the gentlemen from Development Capital Partners.

Additionally, the newsletter features student pitches on short B&M European Value Retail and long Countrywide Plc.

As always, this is definitely a worthwhile read.

Embedded below is the Fall 2014 issue of Graham & Doddsville:


You can download a .pdf copy here.

For more great stuff from past issues of this newsletter, be sure to check out Lee Ainslie's interview as well.

12 West Capital Discloses RetailMeNot Stake

Joel Ramin's hedge fund firm 12 West Capital has filed a 13G with the SEC regarding shares of RetailMeNot (SALE).  Per the filing, 12 West now owns 5.3% of the company with over 2.87 million shares.

This is a newly disclosed position for the firm and the filing was required due to activity on October 16th.

You can view additional portfolio activity from 12 West Capital here.

Per Google Finance, RetailMeNot "operates digital coupon marketplace, connecting consumers with retailers and brands."

Sachem Head Capital Files 13D on CDK Global

Scott Ferguson's activist hedge fund Sachem Head Capital has filed a 13D with the SEC regarding shares of CDK Global (CDK).  Per the filing, Sachem Head now owns 7.88% of CDK with over 12.64 million shares.  Their position includes over 4.94 notional shares underlying total return swaps.

This is a newly disclosed position and CDK was spun off from Automatic Data Processing just about a month ago.  The filing indicates that the hedge fund plans to engage management.

Prior to founding Sachem Head, Ferguson worked at Bill Ackman's Pershing Square.

Per Google Finance, CDK Global is "a global provider, both integrated technology and digital marketing/advertising solutions to the automotive retail industry. The Company’s solutions automate and integrate critical workflow processes from pre-sale targeted advertising and marketing campaigns to the sale, financing, insurance, parts supply, repair and maintenance of vehicles, with an increasing focus on utilizing big data analytics and predictive intelligence. The Company’s solutions address the entire automotive retailers’ value chain. The Company operates in three segments: Automotive Retail Solutions North America (North American Automotive Retail), Automotive Retail Solutions International (International Automotive Retail), and Digital Marketing Solutions (Digital Marketing)."

Viking Global Boosts Pioneer Natural Resources Position

Andreas Halvorsen's hedge fund firm Viking Global has filed a 13G with the SEC regarding its position in Pioneer Natural Resources (PXD).  Per the filing, Viking has disclosed they now own 4.7% of the company with over 6.73 million shares.

This marks an increase of over 2.66 million shares in their position size since the end of the second quarter.  The filing was made due to activity on October 14th.  It looks like Viking took advantage of the big recent sell-off in shares.

You can view other recent portfolio activity from Viking Global here.

Per Google Finance, Pioneer Natural Resources is "an independent oil and gas exploration and production company with operations in the United States and South Africa. Pioneer is a holding company whose assets consist of direct and indirect ownership interests in, and whose business is conducted substantially through, its subsidiaries. The Company sells homogenous oil, natural gas liquid (NGL) and gas units. The Company provides administrative, financial, legal and management support to United States and South Africa subsidiaries that explore for, develop and produce proved reserves."

Capitalize For Kids Sohn Canada Notes 2014: Ainslie, Dinan, Robbins & More

The inaugural Capitalize For Kids investors conference recently took place.  In partnership with the Sohn Conference Foundation, top investment professionals shared their latest insights in support of child health research and treatment.  Below are links to the speaker's presentations.


Capitalize For Kids Sohn Canada Conference Notes 2014

- Lee Ainslie (Maverick Capital): long Qihoo 360 

- Larry Robbins (Glenview Capital): 4 investment ideas

- Jamie Dinan (York Capital): a bunch of stock picks

- Frank Brosens (Taconic Capital): long Men's Wearhouse

- Jeff Smith (Starboard Value): long Yahoo & MeadWestvaco

- Brian Zied (Charter Bridge Capital): long Outerwall

- Steven Shapiro (GoldenTree): long Co-operative Bank

- Jacob Doft (Highline Capital): long Intercontinental Exchange

- Alex Roepers (Atlantic Investment Management): 3 long ideas

- Sahm Adrangi (Kerrisdale Capital): 2 longs

- Guy Gottfried (Rational Investment Group): long Tree Island Steel & TerraVest

- Jeff Hales (Alignvest Capital): long Corby Spirit & Wine

- Aaron Cowen (Suvretta Capital): long Burger King & Liberty Global

- Jody Lanasa (Serengeti Asset Management): 2 investment ideas

- Shawn Foley (Avenue Capital Group): 2 stock picks

- Michael Thompson (BHR Capital): long Golar LNG

- Evan Vanderveer (Vanshap Capital): long Keck Seng Investments

- Chuck Akre (Akre Capital): 4 case studies

Lee Ainslie Long Qihoo 360 Pitch at Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Maverick Capital's Lee Ainslie who pitched Qihoo 360 Technology (QIHU) long.


Lee Ainslie's Sohn Canada Presentation

He pitched Long Qihoo 360 Technology, a Chinese internet company.  China has penetration rates about half of the US (47% vs. 81%). It took Qihoo only 4 years to reach 6% of e-commerce penetration, great feat given Alibaba’s presence. This was helped by the growth of online advertising in China, now 36% of all advertising.

Revenue segments are: PC/Tablet Gaming (30%), Navigation page (AOL) 25%, App Store (23%), Search (22%). Believes management team is best in-class. Compared the CEO/Founder to Bezos, in a sense that he is looking to dominant difference domains and not his business acumen.

Insiders own ~22% of the company – a true rarity for Chinese based companies. Firstly, they have not monetized search, with traditional search based ads like Google or Bing. Secondly, both the “app store” and navigation/gaming have grown per user over the last 5 year quite well. Believes they have an opportunity in Search (since Google left), mobile app store (once Google left, the Android apps went away), Security (Government of China is looking for a domestic security company to to provide enterprise security, traditional have used US based companies on occasion. At the moment, they do not charge for their security feature.

China has recently passed a law to try and create a standard of enterprise security, in which it selected 5 different companies with Qihoo being one of them. Believes this change can lead to new business in 2015, could do as much as $60m in 2015 for security (admitted it could be way higher, but not sure). Opportunity is present following the selloff last 4-6 weeks.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Jamie Dinan's Stock PIcks at Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Jamie Dinan of York Capital who shared a myriad of investment ideas.


Jamie Dinan's Sohn Canada Presentation

Started off with some general comments. US growth is still quite healthy (although not considered by many people), Europe on the other hand is still not. With oil prices coming down, it will give a huge amount of money to the US consumer (essentially a $130B tax break for consumers – this of course assumes money is not relocated to other spending). Believes Europe will be a reactionary market to policies and this will create lots of distressed situations in Europe (and there is still plenty today).

Some merger-arb names which have ~90% probability of closing: Time Warner Cable/Comcast Corporation, Albemarle Corporation /Rockwood Holdings, and DIRECTV/AT&T Inc.

Next, pitched LONG Molson Coors Brewing (TAP), believes an event could happen with the recent news of Anheuser looking for a deal with SAB. Molson has a 42% stake in MillersCoors (The JV between Molson and SAB). This possible transaction will force SAB to divest their 58% interest from MillerCoors (STZ/BUD deal, divestment of Groupo Model JV), Molson seems like the only option. The deal will likely get done with debt and take Molson to 5x Net Debt-EBITDA. Believes Molson can realize great about of synergies (~$300M) from the US JV with their current Canadian operations. 

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Larry Robbins' Presentation at Capitalize For Kids Sohn Canada

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Larry Robbins of Glenview Capital who pitched a few stock ideas.


Larry Robbins' Sohn Canada Presentation

Looks for companies with excess cash on the balance sheet (cost of cash capital is low), debt capacity (companies with tangible assets and good credit history to leverage up), incremental debt capacity (under levered relative to industry and can leverage up without jeopardizing current credit rating) and finally defensive growth which protects the investor if company takes on leverage.

Pitched LONG on Thermo Fisher Scientific (TMO), Danaher Corporation (DHR), Endo International PLC (ENDP), and Actavis (ACT), which all fall under the criteria mentioned above.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Frank Brosens Long Men's Wearhouse: Capitalize For Kids Sohn Canada

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Frank Brosens of Taconic Capital who pitched a long of Men's Wearhouse (MW).


Frank Brosens' Sohn Canada Presentation

Runs a multi-strategy firm, with a focus on event driven ideas.

Pitched LONG The Men’s Wearhouse. Mentioned short term oriented traders flooded the stock during the merger battle with Jos. A. Bank Clothiers and has caused significant opportunities. The stock has sold off hard over last 2 weeks and they think it looks interesting again. The company can earn $5.50/share two years out with some catalysts to mention.

New CEO was appointed in 2011, but has just recently started implementing new plans and changes since chairman retired last year. Estimates the synergies of $100m by 2017. Men’s Wearhouse merger has a few unique opportunities; such as tuxedos, slimfit. Mentioned MW does $400M in tux rentals and Jos. A. Bank Clothiers only does $30M in tuxedo rentals.

Incremental margins are very strong, approximately 0.55 EPS accretion for every $50m incremental revenue gain for JOSB in tuxedos. Both JOSB and MW are well below peak margins due to heavy advertising spend. If MW can de-lever to ~2.5x Net Debt/EBITDA. They estimate MW can de-lever to 2.5x by 2018 and adjusting for 1x integration costs, FCF should exceed net income. Base case price target of $63 (~40% upside); upside and downside of +71% and -3%.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Alex Roepers' 3 Investment Ideas at Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Alex Roepers of Atlantic Investment Management who pitched 3 long ideas.


Alex Roepers' Sohn Canada Presentation

Looks to enter positions 7-8x EV/EBIT and close 10-12x EV/EBIT. Usually has a 12-24 month holding period but is a case by case basis. Considers the firm a gentle activist. Usually does not look to make too much noise (took a jab at some more public activist investors). Always has a plan ready once a position is taken and looks to work with management, if not, then work with the Board.

First pitch was LONG Owens-Illinois (OI). They are a glass bottle maker (the standard in most spirits). Price target $45 within 12 months (~71% upside from Friday’s close). Said it was un-economical to ship more than 300 miles which is why there is a need for plants to optimize distribution. The factories have an estimated replacement value of $13B. Believes can earn $3.25/share in 2014, target based on 14x 2015 EPS. The recent sell off has created an opportunity to get back in to the stock (has traded the stock since the firm’s inception in 1992).

Next, pitched LONG Triumph Group (TGI). Has a price target of $100 within 24 months (~62% upside from Thursday close). Should trade about 11x 2016 EPS. Operational improvements, share repurchases and M&A will lead to solid EPS growth.

Lastly, pitched LONG Harman International (HAR). Has a price target of price target $141, (~46% upside from Thursday close). The “infotainment” segment has 24% global market share and penetration is very high in car audio (10 out of 15 leading brands use Harman when). Was puzzled as to why Google or Microsoft hasn’t bought them yet. Lots of cross-over with a consumer focused and respected brand. A multiple year phase of 30% EPS CAGR, should allow return to higher multiple (14-15x) in 2016. Believes it could earn $7 2016 EPS.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Sahm Adrangi's 2 Long Ideas at Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Sahm Adrangi of Kerrisdale Capital who pitched two long ideas.


Sahm Adrangi's Sohn Canada Presentation

Address the crowd regarding his recent GSAT short. Mentioned holding your own conference/presentation is a good way to articulate your point.

Pitched LONG SS&C Technologies Holdings (SSNC). It’s a hedge fund administrator company, considered one of the top 5 companies. Very sticky customer base – similar to the way firms don’t change accountants, funds also avoid changing fund administrators, enormous hassle and data/history is often hard to transfer from one to another. Believes the company should trade at 20x FCF and has grown over 20% Revenue CAGR last 10 year (from organic growth). Posted any average retention rate of 90%, again, highlighting the stickiness of the business.

Next, pitched LONG Cognizant Technology Solutions (CTSH). This is a high performing IT service business which has recently experienced a weak quarter. Operations in India, causing a low cost provide advantage. Enjoys multi-year contracts to ensure a steady revenue stream and has a $3.5B contract over 7 years (health net). Price target of $70 using DCF valuation.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Guy Gottfried's Presentation on Tree Island Steel & TerraVest: Capitalize For Kids Sohn Canada

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Guy Gottfried of Rational Investment Group who pitched longs of Tree Island Steel and TeraVest Capital.


Guy Gottfried's Sohn Canada Presentation

Pitched LONG Tree Island Steel. They are the largest steel wire product manufacturer (think nails). Small company and a recent sell off has made it even cheaper. Currently trades at 3.5x normalized FCF (using 2006 EBITDA and adjusting for capex, interest & tax). Believes the company is well run and has considerable insider ownership, however is still cheap and unrecognized by the general market due to being a microcap, illiquid and no conference calls until second quarter this year.  Believes they have been “under earning” for last few years. However, insiders remain confident and have bought 7% of shares in the open market within the last year and higher prices than today.  In 2006, EBITDA was $25m and he believes they can get back to these levels.

Next, he pitched TerraVest Capital. It is a former conglomerate with six divisions. It has divested 4 of the divisions, simplifying their capital structure and using cash for special dividends and share buybacks. Currently trades ~6.5x FCF based on current run rate. This exists because the market is not understanding the recent acquisition of Jerico (only been in financials for 2 quarters). It has dramatic growth potential (especially with lots of dry powder waiting to be allocated). Considerable insider ownership and recent buying. Insiders have bought 8% of openly traded stock since February and at much higher prices than today. 

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Jeff Smith Long Yahoo & MeadWestvaco at Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Jeff Smith of Starboard Value who talked about various investments including Darden, Yahoo, and MeadWestvaco.


Jeff Smith's Sohn Canada Presentation

Spoke about being in the news with the recent Darden Restaurants (DRI) battle. Mentioned they did not want management to sell Red Lobster, and they did.

Next talked about about Yahoo (YHOO). Many shareholders called him, as they are frustrated with lots of clear unlocked value. With a ~$40 B market cap, Alibaba stake is worth $35B, Yahoo Japan stake worth $7.5B, cash on hand at $7.5B and finally the core business of $5.5B. Full value of $62B, much higher than the current value. Opportunity exists given that they will need to pay taxes to exit Alibaba stake. Management is working hard to find a tax structure that is efficient. Mentioned they are currently in a black-out period and will have more details once this period ends. Price target $63 within 12 months (50% upside).

Next, pitched LONG MeadWestvaco Corp (MWV). which is a consolidated packaging company. They are looking to spin off the Specialty Chemical business and the Real Estate piece, both non-core businesses. Plans to reduce overhead and explore alternatives to unlock value of pension assets

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Brian Zied Long Outerwall Presentation: Capitalize For Kids Sohn Canada

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Brian Zied of Charter Bridge Capital who pitched long Outerwall (OUTR).


Brian Zied's Sohn Canada Presentation

Runs a L/S Equity Strategy with a focus on consumer. Presented three case studies:  1) The Home Depot: $125B hardware store that built a culture that benefited consumers,  2) Cigarettes: why do people still smoke?  Smoking is a social decision, the experience of smoking a cigarette –gives a break in their day, 3) Netflix: why it didn’t kill cable, consumers just watched more TV (both online and off) –benefited both


Pitched LONG Outerwall (OUTR), a provider of automated retail solutions, known for their Redbox service. It has 44,000 kiosks around the US, which represent 85% of revenues and 20% operating margins. Over the past 5 years, has grown revenues at 18% CAGR, EBITDA at 21% CAGR, yet has 34% short interest outstanding. Currently trades at 4x 2015 EBITDA or about 20% 2015 FCF. Negative market sentiment due to their core business of DVD becoming irrelevant by VoD and Amazon/iTunes. However, Redbox has grown from 25% market share to 34% market share from 2011 to 2014, incredible given negative sentiment.

Stated that consumers use multiple rental services, 16% of all users surveyed indicated they use both Redbox/VoD and 45% of consumers preferred Redbox outright over video on demand or other services. Will likely continue to increase share from DVD by mail and brick and mortar (local convenience stores). This can perhaps lead to pricing power if they are able to continue to expand kiosks and win share. Believes new studio agreements are likely to provide more flexibility with similar economics, adding to the underling characteristics of the business of stable to growing revenues and margins (highlighting that volatility from movie success).

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Jeff Hales' Presentation on Corby Spirit & Wine: Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Jeff Hales of Alignvest Capital who pitched long Corby Spirit & Wine.


Jeff Hales' Sohn Canada Presentation

Co-runs a Long Short equity strategy with a focus in Canada. Mentioned the Canadian investment market has a less competitive business environment than the US (and other markets), allowing for more competitive advantages.

Pitched LONG Corby Spirit and Wine, a leading marketer of spirits and importer of wines, represents 25% of the top 25 top selling spirit brands. Currently has net cash, generating high ROIC for many years (along with FCF) and has owned brands (Wiser’s) and agency brands (distribution). Given their ROIC, Canadian spirits franchise is a great business.

Some potential catalysts exist which make this story interesting. It recently sent up an agreement to use Pernod Ricard to launch JP Wisers into the US (much bigger market than Canada). It was able to do so given their already strong relationship with Pernod (owns ~48% of commons). The whiskey market is seeing secular growth, seeing the fastest growth since 1960’s, about 2 or 3x other spirits. Average M&A multiple is around 18x EBITDA (50% upside). If Corby’s traded on pare with industry average of 16x EBITDA, price target around $31. Although, industry comps can mislead given the large players involved, while Corby’s is still a sub-billion dollar business.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Jacob Doft's Presentation on Intercontinental Exchange: Capitalize For Kids Sohn Canada

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Jacob Doft of Highline Capital who pitched long Intercontinental Exchange (ICE).


Jacob Doft's Sohn Canada Presentation

Runs a $2.5B firm with an equity L/S mandate. Started the firm when he was 25 years old and focuses on companies undergoing fundamental/industry change. The firm has 30 employees and was founded in 1995.

Pitched LONG Intercontinental Exchange (ICE), a trading exchange where 40% of revs come from non-transaction recurring revenue, selling services like data and access. With regards to trading, 15% of revenues are from Interest rates futures. All exchanges are leveraged to volumes and this one is no different. Potential catalysts include LIBOR opportunity, OTC clearing opportunity, cost cuts, selective pricing. Hugh upside if volume gets back to normal level – we’ll likely need to see risk-free rate increase. Thinks Jeff Sprecher is a great CEO and ready to lead the business through the upcoming predicted change. Valuation regarding different scenarios; flat volume — 30% upside, up volume - 50% ; using 2016 ICE consensus 15.2x EPS; Recovery assumption case 11.2x.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Steven Shapiro Long Co-operative Bank at Capitalize For Kids Sohn Canada

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Steven Shapiro of Goldentree who pitched long Co-operative Bank in London (LON:CPBB)


Steven Shapiro's Sohn Canada Presentation

Pitched LONG Co-operative Bank, trades in London. It’s the 7th largest bank in the UK (on deposits), thinks it can double in 12-24 months. Currently trades at half book value and has completed two rights offerings in the few years (to raise much needed capital).

Some risks include balance sheet correlation with UK real estate market, potential large pension liability outstanding, and payment protection insurance issue. Has recently worked to reduce non-core assets, the bank’s portion of the pension deficit is small. Now comfortable with payment protection issue. Significant franchise value as it is a recognized brand in the UK. Currently trades at the rights offering price and it a well-capitalized bank (Basel 3 compliant). Co-op is currently operating at much lower levels than peers, particular with high liquidity ratio.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Evan Vanderveer Long Keck Seng Investments & Fleetwood Corp at Capitalize For Kids Sohn Canada

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Evan Vanderveer of Vanshap Capital who pitched a long of Keck Seng Investments and long Fleetwood Corp.


Evan Vanderveer's Sohn Canada Presentation

Co-runs $45m AUM with a focus on global deep value investing.

Pitched LONG Keck Seng Investments, a real estate company, with property holdings around the world. Currently, a HKD $3B market cap and owns assets such as W hotel in San Francisco (15% cap rate purchase), Owns 7 different residential and 3 commercial buildings in Macau and is in the process of buying the Sofitel Hotel in New York (paying 5% cap rate). It is low levered world class real estate property, trades at ~70% of tangible book, ~10% FCF at these levels. About 30% of estimated NAV using market rates. Even if they decrease the value of the assets by 40%, you get a double from the current stock price.

Some potential catalysts include turning the W Hotel into a REIT, continuing to divest Macau real estate, initiating capital returns to shareholders. The company has very large insider ownership, which makes it quite illiquid. The company has doubled FCF per share last 3 years while continuing to make smart acquisitions.


Next, pitched LONG Fleetwood Corporation, an Australian manufactured accommodation company (Makes RV's and such). Brand names are Camec, Coromal/Windsor and it’s currently trading ~70% of tangible book value and 8x 2015 EPS. Believes it has significant underlying earnings power, and half the current is associated with government backed cash flow stream from Osprey (subsidized housing).

EBIT has come way down for a few reasons, causing Net Debt-EBITDA to creep up to 2-3x. Camec has been hurt by foreign price competition, particularly from China and Asia in general. They have also worked to restructure Coromal/Windsor brands. If the company can reap the benefits of a recovery and some cost cutting, can reach 0.45 EPS in 2015, price target at $4.5. (~65% upside from closing prices).

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Michael Thompson's Presentation on Golar LNG: Capitalize For Kids Sohn Canada

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Michael Thompson of BHR Capital who pitched Golar LNG (GLNG) as a long.


Michael Thompson's Sohn Canada Presentation

Pitched LONG Golar LNG (GLNG). Has an upstream, midstream and downstream business. Management used to run Seadrill and were real money makers. Thinks the base case for the Legacy Golar business is worth north of $30.

However, MLP (FLNG) is where the real upside potential exists; FLNG #1 $20, FLNG #2 $5, FLNG#3 $0 (to be conservative). Valuation is using current spot day rates, assumes no growth in the legacy business, no benefit from existing MLP, which he admitted is very unlikely to happen.

Overall, believes the business could be worth $90, if all 3 vessels were contracted out. Recently, Golar’s share price has suffered due to the selloff in commodities, allowing for the opportunity.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Shawn Foley's 2 Stock Picks at Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Shawn Foley of Avenue Capital Group who pitched long YRC Worldwide (YRCW) and long Meritor (MTOR).


Shawn Foley's Sohn Canada Presentation

Manages the Avenue Capital US Strategy, distressed debt with US leveraged finance focus with firm wide AUM of $14B.

Pitched LONG YRC Worldwide (YRCW), a asset-light trucking company with recent troubles. Waiting for the story to play out.

Next, pitched LONG Meritor (MTOR) – only a quick overview. 

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Jody Lanasa's 2 Investment Ideas at Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Jody Lanasa of Serengeti Asset Management who pitched long Fortress Investment Group (FIG) as well as long Kodak.


Jody Lanasa's Sohn Canada Presentation

$1.6B in assets, utilizes an opportunistic value investing strategy.

Pitched LONG Fortress Investment Group (FIG). A global asset management firm with ~$65B AUM ($5B is permanent capital). Does about $940M in revenue and has grown assets by 11% a year since being public. Currently trades at 6x earnings, a 14% dividend yield, which he believes is sustainable. Without considering the FIG segment (has not maximized incentive fees recently), believes the company it’s worth $10, including, is valued at $12.69.

Next, pitched LONG Kodak. Revenues have suffered recently and they had to file for bankruptcy. During the restructuring, they exited the legacy businesses (the cameras and traditional printers). Today, they have over 7000 patents, with a cumulative cost of $5B to develop. The company has than $1B in debt (< 1x Net Debt-EBITDA) and unfunded pension liability. Believes investors are NOT giving them credit or appreciation for monetizing $10/share in cash of “hidden” assets (property, run-off businesses). In addition, they have a couple fast growing revenue generating business such as creating touch screens 30-50% cheaper than other competitors for tablets, phones, etc. Price target $59 (226% upside) within 12 months.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Chuck Akre at Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Chuck Akre of Akre Capital Management who presented four case studies.


Chuck Akre's Sohn Canada Presentation

He presented four case studies of companies who have a successful capital allocation record and high returns on tangible capital.  Quickly outlined Danaher (DHR), Colfax (CFX), and Berkshire Hathaway (BRK.A), however no specific recommendations were given.  It should be pointed out, however, that CFX has seen quite the drastic sell-off recently and it has been one of Akre's top holdings for some time.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Aaron Cowen's Long Burger King & Liberty Global: Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Aaron Cowen of Suvretta Capital who pitched long Burger King Worldwide (BKW) and long Liberty Global (LBTYA / LBTYK).


Aaron Cowen's Sohn Canada Presentation

Pitched LONG Burger King Worldwide (BKW). Believes the stock has bond like features and can generate $2/share FCF. Mentioned Tim Horton’s deal was a huge “game changer”, especially considering the backers, 3G Capital. Can cut lots of costs within Tim Horton’s and turn it into a more profitability franchiser (similar to early days at BK following 3G deal). Thinks there is a possibility for another deal, a pizza chain perhaps.

Next, pitched LONG Liberty Global (LBTYA / LBTYK). An amazing compounder with legendary management team and board (John Malone). Experiencing topline growth and has the German asset upside. Should trade at a 7.5 yield, resulting in a price target of $60.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.