Value Invest

Digest

June 01
10:00 2016

Welcome to the 26th edition of Value Investor Digest

In this edition we feature the London Value Investor Conference overview video, a Barron’s article featuring six of the sixteen stock picks from the LVIC 2016, an Investment Week article on the rebirth of Value Investing, four audio interviews with conference speakers; plus an FT article critical of Microsoft’s recent acquisition of Linkedin.

Barron’s Article on the London Value Investor Conference
Jonathan Buck is Europe Editor of Barron’s. He wrote this article which touches on the comments made by Howard Marks at the conference on oil investments and social media stocks. The article also features some of the investment ideas presented at the conference including Ryanair, Ocado, Royal Bank of Scotland, Elekta, Perrigo and Easyjet.

Contrarian Investor: The Rebirth of Value Investing?
David Stevenson wrote about his curiousity as to why some regard value investing as distinctly contrarian. “What is not to like about a set of beliefs that emphasises the sense of buying a quality business at a decent price? The article discusses contrasting approaches taken to value investing among delegates at the conference and concludes by saying that at some point in the future “the investing masses, angry with wilting pension pots, will demand a revolution in stock analysis, emphasising capital discipline, corporate alignment and sustainably growing businesses over the long term.”

Four Podcast Interviews with London Value Investor Conference Speakers
David Stevenson attended the LVIC 2016 and sat down with four conference speakers for extended interviews after each of these speakers had made their presentations – these interviews were subsequently published in the Financial Times and Investment Week. If you attended the conference and listened to the speakers, these interviews serve as great follow ups to the presentations given on the day.

Perverse Incentives Lie Behind Microsoft’s Linkedin Purchase
This FT article on Microsoft’s recently announced acquisition of Linkedin is critical of CEO Satya Nadella for poor capital allocation discipline – but equally critical of the “lavish equity incentives that investors have heaped upon his plate…designed to encourage Mr Nadella to behave as if he’s running an Apple or a Facebook — tech companies that are at the forefront of consumer innovation. In fact, the business he is leading has more in common with HJ Heinz — the owner of a stable of familiar and highly cash-generative staple brands”. If the author of the article is correct then Nadella might not be first in line for a nomination for a Best CEO Capital Allocator award from LVIC delegates next year. The article concludes with a comment about the Warren Buffett approach to this subject – many conference presenters have spoken about capital allocation discipline in their presentations since the LVIC started in 2012 – for further reading on this here is a Metropolis Capital article written in 2012.

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