market folly

We're posting up notes from the Capitalize For Kids conference 2016.  Next up is Dan Farb of hedge fund Highfields Capital who pitched a long of Franklin Resources (BEN).


Dan Farb's Presentation at Capitalize For Kids Conference 2016

•    LONG Franklin Resources (BEN).  Has 2x the exposure to commodities and emerging markets relative to other asset managers.

•    An asset manager with $700 billion in assets.

•    Recently, stock and earnings have declined due to this exposure and currently trades at a discount.

•    Since 1987, has compounded capital over 16% per year (vs. 10% in S&P). Made two strong acquisitions, Templeton in early 90s and Mutual Shares in the mid-90s

•    Average U.S asset manager currently trades at 14x earnings, BEN trades at 12.7x earnings.

•    Expects AUM and fund performance to stabilize which should help grow earnings and potentially multiple expands.

•    Currently trades at $34/share but has $18/share in net cash and real estate (90% of cash is held offshore).

•    Johnson family owns 37% of the shares, aligning well with shareholders’ interests.


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