I was only able to catch the first half of the 16th Annual Ira Sohn Investment Research Conference but below are some of my random observations and notes, they are presented unedited but you will love, I promise:The event took place at Lincoln centre/Time Warner centre. I walked over because it is the most beautiful day of the year in NYC.
When I got there they made me throw away my Jamba Juice (Strawberries Wild with Whey Protein). No big deal. I got to sit with the press and media in the VLS room. I loved it, not sure if the traditional journalists loved having me.
First guy up is from Sabretooth Capital Management (didn’t get the name but he is ex-Goldman and handsome.
His presentation is called Economic Death as a Special Situation. Yes, an upbeat open. Sabretooth Capital likes $MBIA – he says the shorts are overestimating its potential bankruptcy – “an asymmetric opportunity”
MBIA could have 100 to 200% upside with worst case 30% downside if it survives “economic death”
Big opportunity in Argentina, Energy E&P names are the best way to play the country’s transformation. Argentina is now importing energy for the first time, liberalization of energy will be the catalyst for investment in developing energy.
farmland > gold or shorting treasurys if inflation is your concern $$
Next up, Dinaker Singh of TPG-Axon
He likes a Norwegian oil company, Sprint (S) and a Chinese hog company Zhongping (HOGS)
HOGS will benefit from both top line growth and consolidation of pork producers in china
Sprint – very low valuation – they need to consolidate their two networks, starting now with next gen phones. customer service picking up, churn declining after 5 years. Signs of change, AT&T buying T-Mobile is a big win, Sprint will be bought. 40 to 70 per cent upside, utility-like defensiveness plus growth – US will have 3 competitors, Europe has 15. Acquisition very likely.
Jeff Aronson from Centerbridge $14 billion AUM
Likes CIT post-restructuring, book value is $45 while stock trades at $41 – company has a $2.1 billion deferred tax asset – equivalent to a $14 billion NOL they can use. CIT true intrinsic book value is $59 per share. As cost of borrowing for $CIT drops, there is built-in earnings growth that will become apparent, The Street very confused. The Street’s analysts have no clue how to value, EPS estimates all over the map.
$CIT has $12 billion cash on their balance sheet – they could buy a retail bank themselves or be bought by a bank looking for loan growth. $CIT as a target – large banks flush with cash & need loan growth – Wells Fargo, HSBC, US Bancorp and TD. Estimated potential buyout price $65 – “CIT is not only safe and cheap but multiple ways to win”
Jeff Aronson – “CIT is not only safe and cheap but multiple ways to win, catalysts and CEO John Thain motivated to create value”
Bob Howard, KKR – leading buildout of public equities investment vehicle.
2 long ideas
KKR’s Howard likes Wabco – $WBC, invented anti-lock braking systems. 3 trends in Wabco’s favour – cyclical recovery, tougher emissions standards, monster vehicle sales in asia – 30 to 50% upside for $WBC
Bob Howard’s next name is $HSNI – home shopping network parent, $1.8 bil mkt cap no leverage
Home Shopping growing double other retailing categories annually, but still only 1% market share
14.5 times earnings would be 20% upside
“40 to 90 per cent upside for $HSNI from revaluation to a potential M&A deal”
Here comes Phil Falcone, Harbinger – has awesome 80’s hair
His private wireless company called Lightsquared. He is buying spectrum, building 4G terrestrial network with a satellite overlay. Not a retail network, it is just “the pipe” – a wholesale business model selling to companies who consume wireless broadband.
OK, Falcone is now talking his oil name Crosstex XTXI, a financial structure with three subs. An MLP owns the assets, XTXI owns the MLP. Key driver – how well positioned is the MLP? How strong are the assets?
$2 billion dollars in energy assets held by Crosstex. 2100 miles of nat gas pipelines in Louisiana, collecting and treatment plants in Texas, etc. Falcone likes $XTXI vs the MLP shares of XTEX, asymmetric benefit of any improvement to the parent’s shares.
Jim Chanos – Kynikos Associates
Quick comparison of China to Japan 25 years ago.
Solar and Wind won’t work is his theme.
“Wind is 50% more expensive than nat gas, solar is 4 times more expensive than nat gas”
“When people talk about Green Jobs, keep your hand on your wallet”
Doesn’t like Denmark’s Ventas, a $6 billion wind generating co. Says accounting issues and declining demand.
Also doesn’t like FSLR and is short it. First Solar in big trouble, costs climbing, demand dropping, Euro subsidies going away, competing Chinese suppliers wrecking margins, FSLR has negative cash flow for 2011, executives leaving and dumping substantial amounts of their stock.
My time ended with Michael Price coming out to announce the winner of the stockpicking contest I told you guys about. They used my term I made up here “The American Idol of Stockpicking” – alas, no attribution but I am used to that. There were 100 application, 4 finalists invited up.
Winner is a Senior from Indiana University headed to JPMorgan this summer. Bridgepoint Education is the pick – BPI.
OK, gotta hop, thanks for reading!
FOR THE SECOND HALF:
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