Value Invest London

November 2019

Welcome to the 43rd Edition of Value Investor Digest

In this special edition of Value Investor Digest we feature a video of “Mastering the Market Cycle” with Howard Marks of Oaktree Capital from the Value Invest New York conference last year, as well as a complimentary interview with Dan O’Keefe of Artisan Partners from Value Investor Insight and 12 other articles.

Howard Marks “Mastering the Market Cycle” Video from Value Invest New York

“So I’m writing this book about cycles and I’m pouring everything I know from 50 years in to this book on cycles and about two thirds of the way in I said to myself ‘hold it, why do we have cycles?’…I think the answer is that we have a trend line and we are progressing on the trend line and then people get optimistic and they depart from the trend line on the upside, I would call that ‘an excess’, and when the excess becomes sufficient it either collapses of its own weight or something else brings it down and it becomes a correction.” This session is a masterclass from Howard on market cycles. As a reminder, at the next Value Invest New York on December 3rd, Joel Greenblatt will be taking part in a similar type of session titled: “The Evolution of Value Investing” a Fireside Chat and Audience Q&A with Richard Pzena, Pzena Investment Management.


Value Investor Insight interview with Dan O’Keefe of Artisan Partners

Value Investor Insight has kindly offered VID readers access to this interview where Dan O’Keefe of Artisan Partners gives a detailed discussion of his investments in Booking Holdings, Citigroup, Samsung Electronics and NXP Semiconductors and others – plus his lack of enthusiasm for investing in the auto industry. Long-term VID readers will recall that Dan was a presenter at the inaugural London Value Investor Conference back in 2012, his stock pitches were Google (now Alphabet) and Aon. We are delighted he will be joining us again at the LVIC 2020. David Samra of Artisan Partners will also be speaking at Value Invest New York next month.

Professor Richard Thaler Oxford Union Q&A on Behavioural Economics

“I met these two psychologists, Daniel Kahneman and Amos Tversky – this is in the late 70s – and they were in the midst of their pioneering work. What they were showing is that when people make judgements they use simple rules of thumb and that’s fine, it’s good to use rules of thumb, but that the use of these rules of thumb lead to predictable mistakes – and that idea was my big a-ha moment”.

Django Davidson – Hosking Partners: The End of the Beginning or the Beginning of the End? Investment Opportunities Late in the Technology Cycle

“It is a pattern where investment returns are front loaded early in the cycle, ahead of a period of technological maturity where society emerges as the ultimate beneficiary – disruptive innovation triumphs, but late arrival investors often lose out. A simple observation lies at the heart of this: human psychology is hardwired to extrapolate current trends.”

Meet The Buffett Bot: Quant Fund Tries To Crack the ‘Value’ Code

“In a small basement office near Portman Square in London, wedged between the Grazing Goat pub and the Red Sun Chinese restaurant, a handful of eggheads are attempting to code a robotic Warren Buffett.”

Deutsche Bank: Why Do Elderly Germans Save?

“Saving money is near and dear to Germans. Their saving rate (saving relative to disposable income) is significantly higher than that of most of their European peers. For example, it was around 10% in 2017, i.e. almost twice and three times the euro area and EU averages respectively. Only Swedes saved more, while Spanish and British households actually had negative rates.”

Bill Gates on the David Rubenstein Show

“We were doing what was called Windows Mobile. We missed being the dominant mobile operating system by a very tiny amount. We were distracted during our anti-trust trial, we didn’t assign the best people to do the work – so it’s the biggest mistake I made in terms of something that was clearly within our skill set; we were clearly the company that should have achieved that.”

Heineken’s Charlene de Carvalho: A Self-Made Heiress

“Until her father’s passing, Charlene had no money to her name except a single share of Heineken stock—then worth 25.60 euros, or $32—that her father had given her. Now, as his only child and the sole heir to the Heineken fortune, she was inheriting about 100 million shares, equal to one-quarter of the company’s total stock outstanding.”

How Do You Like We Now?

“Well obviously there will be a Harvard Business School case study about WeWork, but what will it say? What is the lesson? It’s a good lesson, right? A lot of kids starting at Harvard Business School next fall will be hanging up posters of Adam Neumann in their dorm rooms. Neumann, the founder of WeWork, will walk away from this corporate bonfire with a billion dollars and a bunch of fancy houses.”

The Spectacular Rise and Fall of WeWork

Continuing the wework theme, this Bloomberg video covers the story of”when a company got too much money, too fast with no effective oversight on how to spend it.” Astoundingly, according to Business Insider, the below is a real slide from Softbank’s quarterly earnings deck last week…

AQR’s Asness Says it is Time to ‘Sin a Little’ in Value Stocks

“Recalling the old joke that a recession is when your neighbour loses his job but a depression is when you lose yours, Mr Asness said: ‘To us a recession is when the value factor performs poorly but we still do well, a depression is when we suffer with it. For most of the last 10 years of the value factor’s drawdown it’s been a recession. For the last almost two years it’s been a depression.'”

Sign-up for Value Investor Digest

* These fields are required. We will not share your contact details with anyone.

  • “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