market folly

We're posting up notes from the Invest For Kids Chicago conference 2015.  Next up is Rupal Bhansali of Ariel Investments who pitched longs of GlaxoSmithKline and Baidu (BIDU).


Rupal Bhansali's Invest For Kids Chicago Presentation

•    GSK – UK Pharma company with three pillars to the franchise – (1) respiratory franchise with 50% market share, growth industry. Very hard to enter respiratory biz.
 •    Advair was a victim of its own success. Believes Advair bear case has already played out. •    Competition for blockbuster drug, Advair is priced in.
•    2) Vaccines – market leader in business with high barriers to entry. Margin upside from purchasing Novartis vaccines biz. Vaccines one of the highest barriers to entry biz in the world. Only 4-5 manufacturers of vaccines.
•    Consumer – strong brands such as Flonase, Aquafresh, Theraflu and new mgmt. team with a mandate to double the margins. New mgmt. team from L’Oreal.
•    Internet penetration of 48% vs 75% - 80% in developed mkt.
•    Trades at 16x fwd. EPS and 6% div yield. Margins set to improve to high 20%/30% ROIC.


•    Second idea is Baidu (BIDU).
•    Baidu = Google + Expedia + YouTube + Opentable + Groupon.
 •    Internet penetration of 48% vs 75% - 80% in developed mkt.
•    “Silicon Valley of China”
•    Down 33% over past year due to a profit warning.
•    Back to $200, might have some hiccups and could have better entry point
•    3rd inning in 9 inning game. So still good capital appreciation over lt time view.
•    Not a family ran business, more like a corporate Anglo-Saxon business. CEO went to Stanford.
•    Conservative as they spend through the P&L investments made in core biz versus capitalizing.


Check out the rest of the presentations from Invest For Kids Chicago 2015.