Value Invest

May 2018

Welcome to the 34th edition of Value Investor Digest

The Berkshire Hathaway Annual Shareholders Meeting will take place tomorrow (click here to set a calendar reminder) and so we have several articles to bring you related to that event, including a link to the live stream which can be accessed below. In addition, this edition has six other featured items including an article from Invesco Perpetual’s Stephen Anness titled The Impact of Electric Vehicles on Oil Demand, a Barron’s cover article with nine investment ideas from veteran fund managers, a Boyar Value Group article on “orphaned” stocks and a Boyar podcast interview with Home Depot’s Frank Blake; a WSJ article on “cheap” stocks in Russia, a CNBC video with Buffett in which he comments on the threat to the car insurers from driverless cars; plus several articles which pay tribute to Third Avenue’s legendary Value Investor Marty Whitman, who died last month aged 93.

Berkshire Hathaway Annual Shareholders Meeting – Live Stream

The annual meeting will be streamed live on Yahoo Finance on Saturday from 10am ET (3pm BST). For anyone unable to travel to Omaha for the meeting the streaming of the event has been a welcome development. Over 1 million live viewers are expected to tune in from around the world to listen to Buffett and Munger’s wit, wisdom and insights. They normally take questions from journalists, analysts and shareholders in the audience for around five hours. If you can’t watch live then you can also watch on demand at the same link for 30 days after the event.
(Click here to set a calendar reminder)

Invesco Perpetual: The Impact of Electric Vehicles on Oil Demand

Stephen Anness will be giving a presentation at the London Value Investor Conference later this month titled The Death of Oil Has Been Greatly Exaggerated. In this article, Stephen looks at one specific area of oil consumption where he believes many investors “under-appreciate the dynamics of global oil demand…out of the 95mb/d of global demand for oil, only 19mb/d, or c.20%, is actually for passenger cars…EVs are hugely topical and it is easy (and lazy) to directly extrapolate their impact on the global demand for oil.”

Barron’s: The Past Decade Has Not Been Kind to Value Investing But Veteran Value Managers are Still Finding Bargains

This excellent Barron’s cover article analyses the performance of Value over the past ten years and then identifies nine stocks recently purchased by the following veteran Value Managers, along with a summary of their rationale for buying each stock: Charles De Vaulx, Amit Wadhwaney, David Winters, Andrew Wellington, Ross Glotzbach, Sarah Kettere, Bill Nygren, John Rogers and Abhay Deshpande.

Investing In Orphaned Stocks – plus a Boyar Podcast with Home Depot’s ex-CEO Frank Blake

This Boyar Value Group interview in Seeking Alpha explores the investment opportunities in “orphaned” stocks. Explaining what constitutes an oprhaned stock, Jon Boyar said “An ‘orphaned’ stock is a stock that analysts and investors have for the most part disregarded. A stock can become “orphaned” via a variety of ways. A stock may not be included in one of the major S&P indices (S&P 500, S&P 600, etc.) and therefore cannot be bought by index funds as well as “closet” indexers, which tend to focus on stocks included in the major indices to ensure that their performance doesn’t deviate greatly from their respective benchmark. Some of the reasons why companies may be ineligible for index inclusion include companies that are listed in the U.S., but maintain headquarters outside of the U.S., companies with super-voting share class structures and tracking stocks.These so-called “index orphans” are not limited to small companies.”

In addition, here is a Podcast with Jonathan Boyar who will speak at the London Value Investor Conference this month. Jonathan interviews the ex-CEO of Home Depot, Frank Blake who comments on what investors should look for in a turnaround situation, the publicly-traded retailers that he admires and also where he believes we are in the U.S. housing cycle.

Russia’s Cheap Stocks Show What ‘Value’ Misses

Trading at six times forward earnings, this WSJ article by James Mackintosh covers the main issues investors should consider when assessing whether there is a value opportunity investing in the Russian market. The author mentions that GMO is among those adding to their holdings of Russian stocks, and includes a quote from GMO’s head of EM equities: “We’ve always said you make more money when things go from truly awful to merely bad than when they go from good to great”.

Buffett: Driverless Cars Will Dramatically Reduce Insurance Premiums

In a prior edition of Value Investor Digest we featured Buffett’s 1951 article The Security I Like Best on GEICO, an auto insurance company which Berkshire now owns outright (before Buffett started buying GEICO, Ben Graham was on the Board and had owned stock for many years). Although Buffett has said he thinks driverless cars are a long way off, in this Yahoo Finance video he comments that “Driverless cars will reduce — perhaps dramatically — the need for auto insurance if they’re safer…If driverless cars are successful and people don’t hack into ’em, that will reduce auto insurance premiums — and perhaps drastically reduce them.”

Remembering Third Avenue’s Marty Whitman

Several articles below remember famed Value Investor Marty Whitman, who died aged 93 on 16th April 2018.
Morningstar: Remembering Famed Value Investor Marty Whitman
Barron’s: Third Avenue’s Marty Whitman Dies at 93
Wall Street Journal: Martin Whitman Invested in Troubled Companies Others Shunned
Value Walk: Martin Whitman: A Value Pioneer Passes Away
Institutional Investor: Martin Whitman, Founder of Third Avenue, Dies at 93

 

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Speakers: 14th May 2019

The speaker line-up will be announced in November 2018

  • “It’s very much the Rolls-Royce of the investor conference market”
    Paul Scott, Stockopedia
  • “The people in that room were a more powerful cadre of the powerhouse of investment than has been gathered for a very long time”
    Jonathan Ruffer, Ruffer LLP
  • “It’s kind of like Glastonbury isn’t it, for the Value Investing community”
    Nick Train, Lindsell Train
  • “What I like about it is that it is a practitioners conference and it’s an opportunity to come and hear from your peers about the work that they are doing and how they see value investing”
    Hassan Elmasry, Independent Franchise Partners
  • “I think people really look forward to it and enjoy it. There’s a good bunch of people here who have travelled a reasonable way – the speaker after me was from Hong Kong and there’s a big Canadian crew and a big US crew – people come from around the world to see this”
    Nate Dalton, Affiliated Managers Group
  • “If somebody’s already been through that process of seeing what the conference is about and then is willing to pay their money for the effort of coming here, that’s a great filtering process.”
    Gary Channon, Phoenix Asset Management
  • “The conference has become a part of the furniture of the London scene. You can discover that is what lies inside you – that you are innately a value investor.”
    Richard Oldfield, Oldfield Partners
  • “I do speak at a fair number of conferences to investor bases, this one is really quite a good list – some very, very good investors present and some very interesting speakers”
    Jon Moulton, Better Capital
  • “Definitely worth it and I know a number of people who have ‘ummed and arred’ about coming along and I’m sure that they will be regretting that they didn’t come today – and it’s only going to get better as far as I can see”
    Tim Green, Private Investor
  • “Having sat through the whole day as I wanted to come and hear all of the speakers – I’ve been really impressed by the quality”
    Anthony Bolton, Fidelity
  • “I’ve got a bunch of business cards to add to my collection and some folks I’ve been looking forward to meeting, plus some firms I didn’t even know existed but sound really interesting and I’m looking forward to building on that relationship base”
    Mason Morfit, ValueAct Capital
  • “You couldn’t find that anywhere else really, where you’re speaking to the principals who have been voted on to the Board [of Microsoft] to effect change”
    David Shapiro, Willis Towers Watson
  • “What I was impressed with is, because the subject is very similar, value investing, they found a variety of ways of attacking the same subject. I was also very impressed, having done this in another location, of seeing them stay on target time-wise so that it moves along at a great pace and I think the audience is greatly rewarded by that discipline”
    Don Yacktman, Yacktman Asset Management
  • “Very well organised and it was a treat for investors like us to hear some great speakers”
    Roli Saxena, Drona Capital
  • “I came last year and I liked it so much that I have been looking forward to today ever since”
    Dominique Levy, Sonian Capital
  • “We’e got a very sophisticated audience who are used to value investing – I think this is a good audience”
    David Samra, Artisan Partners
  • “The profile of the speakers is one of the main reasons that I came”
    Niels Borgen, Private Investor
  • “When you look at the ideas speakers have put forward in previous years and how they have performed over the last few years, they’ve done very well – if that performance continues it would be quite remarkable. It does show that you can pick up some good ideas at a conference of this sort”
    Jonathan Mills, Metropolis Capital
  • “I came last year as well and I thought that it was the most outstanding event that I have been to”
    Leon Boros, Equity Strategies