As promised recently we are updating/cleaning the investor resource pages on a regular basis. This week we’ve updated the resource pages of:

• Robert Rodriguez
• Tom Russo
• Joel Greenblatt
• Michael Price

And today, we’ve completed the renovation of David Einhorn’s resource page.

We do not post all the investor updates on Twitter, Facebook etc. The best way to find new/updated etc profile pages,  without missing any ….is by signing up for our free daily newsletter!

Below is a partial excerpt from both pages followed by link to each full page, which can also be found under Value Investors tab on the top of the page.

David Einhorn

http://www.valuewalk.com/david-einhorn-resource-page-bio-current-portfolio-quotes-videos/

Investing Philosophy

Einhorn states that his process is the opposite of most value investors. Most value investors look for stocks  at low multiples of earnings book value, free cash flow etc. and then try to figure out why they are cheap, and if the current market price is below the intrinsic value.

Einhorn takes a very different approach. He starts by asking why a security might be mis-priced; once he has a theory, he sees if the security is in fact miss-priced. Einhorn will never invest in a security if he believes that he does not have a large analytical edge over the person on the opposite side of the trade.

Some investors compare themselves to an index (usually the S&P 500). Therefore, if the S&P goes down 20%, but they are down 10% they are “happy”.

Einhorn does not use this method of investing; he is an absolute return investor. This means that Einhorn expects to make money regardless of market conditions. The goal of Einhorn’s Hedge Fund is to make money, or at least to preserve capital.

See full page here.

The post David Einhorn Resource Page Updated appeared first on ValueWalk.

Greenlight Capital has been betting more money against ARM Holdings, which is one of the strongest players among smartphone chipmakers. David Einhorn’s hedge fund has been betting on ARM Holding’s fall for some time now, but only recently increased its short position from 0.7% of ARM’s outstanding shares to nearly 1%.

ARM Holdings down 15%

Greenlight first disclosed its position against ARM holdings in the middle of last year. The only other bet against ARM disclosed to the UK’s FCA is that of QVT Financial. Shares of ARM Holdings have fallen 15% in 2014. In the technology sector, Greenlight has long positions in Apple, Micron and Marvell. Among these, Micron Technology and Marvell Tech manufacture semiconductor-based devices and are among Greenlight’s top five longs.

The semiconductor industry has long been the target of hedge funds. Companies such as Imagination Technologies Group, Soitec, Infineon Technologies and ASM International have been shorted by several hedge funds in the past. The German company Aixtron is currently a popular short among hedge funds. Pennant Capital, Oxford Asset Management, Marshall Wace, AQR Capital and Columbus Circle Investors all have short positions in the company. Aixtron makes products that contain silicon or organic semiconductor materials.

Chart via Novus Research – data as of end of Nov 2014

Major player in mobile sector, competition from Intel

ARM Holdings is the dominant player for mobile chips for the tablet and smartphone industry. ARM has also diversified its product base as its rival, Intel, is working hard to build its reputation in the mobile hardware sector. There have been reports of Intel poaching customers from ARM Holdings, specifically in China. One of Intel’s most loyal clients is Amazon, which prefers Intel’s technology for its cloud services.

ARM Holdings derives over half of its revenue from systems for the smartphones and tablets. The company has also recently started developing server and networking systems, where it is collaborating with Hewlett-Packard and Microsoft.

ARM Holdings has an established relationship with Apple, where it has made processors for iPads and iPhones. Virtually every chip in a handset or tablet these days is manufactured by the Cambridge-based company. ARM Holdings owns numerous patents and licenses on chip designs. Companies like Apple, Samsung, Qualcomm, Nvidia license these designs and then customize them according to their own needs.

There have been fears that the demand for smartphones has reached a saturation point which will negatively affect the profits of all the companies involved. Moreover, consumers are increasingly choosing to buy average mobile sets compared to high-end devices, which makes for less royalty revenue for such companies.

An analyst report from Bernstein Research notes that ARM is collecting less royalty revenue when its total market share is considered. The report further said that market expectations regarding the company have normalized to some extent and the stock will likely receive a boost from increased adoption of ARM’s v8. However, the Bernstein analysts believe that the long term prospects of the company are less sanguine given ARM’s growing competition in the mobile sector.

The post Greenlight Capital Bets Against Leading Chipmaker, ARM Holdings appeared first on ValueWalk.

Below is a copy of Greenlight Capital’s Q4 2014 letter to investors, a copy of which was obtained by ValueWalk. Check back soon for further analysis. The full PDF can be viewed at the very end of the text

Also see Apple, Micron, Sune Propel Greenlight To 9% Return In 2014

Dear Partner:

The Greenlight Capital funds (the “Partnerships”) returned 5.6%,1 net of fees and expenses, in the fourth quarter of 2014, bringing the full year net return to 8.0%. Since inception in May 1996, Greenlight Capital, L.P. has returned 2,416% cumulatively or 18.9% annualized, both net of fees and expenses.

The long, short and macro portfolios contributed 3.3%, 4.5% and 0.1% of alpha respectively to the gross annual return of the Partnerships; market beta added an additional 3.7%. Though the S&P 500 returned more than 13% for the year, most other developed markets performed much worse, especially on a dollar basis. While the overall environment was reasonably favorable and we would have both liked and expected to do better, we judge our full year result to be fair.

The recent collapse in oil has become a topic of much debate. Lower oil prices are generally good for the U.S. economy, because for consumers the lower price has the impact of a tax cut; it leaves more money available for other purchases. However, when the price falls so much that it leads to job losses in the energy industry, it leaves the overall impact more ambiguous. While GDP and earnings growth should remain strong through the first quarter of 2015, which has an easy comparison against last year’s bad weather, the bar will be higher later this year.

At last year’s Sohn Investment Conference, Stan Druckenmiller introduced Zachary Schreiber as a rising star. Zach lived up to the praise with a compelling presentation predicting a sharp fall in WTI oil prices, leading us to review our exposure. In mid-June we sold enough WTI oil futures to offset the subsequent declines in our positions in Anadarko, BP, McDermott, and National Oilwell Varco, all of which we effectively exited at their higher June prices.

Greenlight Capital’s significant winners

The fourth quarter was a good quarter for the Partnerships. Longs, shorts and macro were all profitable, and the gains were broad-based. The significant winners were:

• Apple (AAPL): The shares advanced from $100.75 to $110.38. The new phones appear to be selling at record levels. Earnings per share have grown 20% for the last couple quarters and are likely to accelerate in the near term. AAPL shares remain inexpensive at 14x 2015 estimates and less than 12x net of cash.
• U.S. Steel (X) short: The shares fell from $39.17 to $26.74. As we suspected, management engineered a perception of a steel shortage that caused customers to panic and the price to soar. This quarter, that reversed and the position turned profitable for the year. While the sell-side analysts rushed to raise estimates on the way up, they have been much slower to revisit them on the way down. The shares appear superficially cheap compared to 2015 estimated EPS of $3.10, but given the current outlook for steel, we suspect the company will have difficulty showing any profits this year.
• Yen put options: The yen fell from ¥109.64 to ¥119.68 per dollar. The Bank of Japan announced an even more aggressive program of quantitative easing (debt monetization). Japan has government debt that is unlikely to ever be repaid through future tax collections and it is becoming clear that the response is to try to print its way out of the problem. It will be interesting to see if Japan can succeed without significant hardship – other than manageable currency weakness – because Japan may prove to be a portent for other overly indebted sovereigns. As we believe that the best case for Japan is a weak currency, we continue to hold yen put options.
• Industrial Short A: This manufacturer is sensitive to the energy sector. The decline in oil prices helped drive the shares down about 40%.
• Crude oil futures short: As described above, WTI oil fell from about $91 to $53 per barrel.

We had just one significant loser during the quarter. Civeo (CVEO) shares collapsed from $11.61 to $4.11. This was driven by tanking oil prices further reducing expectations for 2015. We did not hedge CVEO’s exposure to oil, because we viewed it as a real estate company and underestimated its sensitivity to commodity prices.

We made several new long investments during the quarter.

Citizens Financial Group (CFG) went public at the end of the third quarter. The Royal Bank of Scotland (RBS) sold 25% of its stake in the IPO and has plans to divest its remaining stake by the end of 2016. While CFG is overcapitalized and currently generates a low ROE relative to peers, it plans to improve its ROE over the next two years  through a combination of loan and fee income growth, cost reductions, capital return and a partial normalization of interest rates. We purchased CFG at $22.01, a discount to tangible book value and a significant valuation discount to its banking peers. Over time, we believe the eventual exit of RBS and improvement in CFG’s ROE will drive improvement in the stock’s valuation. CFG management received stock incentives at the time of the IPO, aligning their interests with shareholders. CFG shares ended the quarter at $24.86.

ISS A/S (Denmark: ISS) is a new long position that has been a long time coming. We initially tried to buy the stock in a proposed 2011 IPO that was postponed for three years. ISS is a Danish-based global outsourcer of labor-intensive services, employing over 500,000 people primarily in cleaning, catering, security and property maintenance. ISS is an extremely stable business that grows revenue a few percent nearly every year with modest margin expansion. We view this very high quality business as being comparable to Aramark, which trades at around 20x EPS. We established our position at an average price of 162.73 DKK, which is less than 12x 2015 estimated earnings. ISS finished the year at 178.10 DKK.

We established a position in Keysight Technologies (KEYS), a maker of electronic test and measurement equipment. The business was spun out of Agilent (A) in November2014. We believe Agilent treated KEYS as a cash flow source to fund other businesses.

We expect that as an independent company starting with an almost unlevered balance sheet, KEYS will have the flexibility to invest in unexploited growth initiatives and make better R&D and capital allocation decisions. We believe the Street doesn’t fully appreciate KEYS’ prospects. We purchased our position at an average price of $30.54, or about 12x near-term EPS, which doesn’t yet benefit from the investment spend. The shares ended the quarter at $33.77.

In mid-October, AbbVie withdrew its takeover offer for Shire (SHPG) in response to increased uncertainty and political backlash around controversial “tax inversion” transactions. Merger arbitrage funds rushed to unwind positions, causing SHPG shares to fall to levels below where it traded prior to the bid. This occurred despite improvement in the fundamental and legal outlook for SHPG’s product portfolio and the likely receipt of a large break-up fee from AbbVie for terminating the deal. At the same time, arbitrage spreads on other M&A deals – particularly those structured as tax inversions – widened considerably. We subsequently purchased a small-sized stake in SHPG at an average price of $174.35 and a small-sized stake in the Covidien/Medtronic arbitrage at an average spread of $8.79. After positive quarterly earnings and an investor day, SHPG shares recovered and we exited the position at an average price of $211.65. Medtronic reaffirmed its commitment to buy Covidien and the deal spread narrowed, ending the year at $1.93.

Last, we established a new position in Time Warner (TWX). Since 2009, TWX has refocused its business into a collection of high quality assets including basic cable networks (Turner and CNN), a movie studio (Warner Brothers), and the world’s most valuable premium cable network (HBO). In July, Rupert Murdoch launched an opportunistic take-over bid and the shares soared. The TWX board refused to engage, Murdoch walked away and the stock returned to pre-takeover levels. We purchased a position in TWX at an average price of $72.72, believing that management would have to respond forcefully to fend off another advance. In particular, we believed that TWX had an opportunity to more aggressively monetize HBO and to reduce costs across the entire company. Management subsequently announced that HBO would be offered as a standalone streaming product in the U.S., along with various other initiatives that have led to an increase in earnings estimates and a rally in the shares, which ended the year at $85.42.

In November, Biofuel completed its acquisition of JBGL Capital and changed its name to Green Brick Partners (GRBK). We own 49% of the company. David is the new Chairman of the Board and Harry Brandler will also serve as a director. With this transaction, we figured out how to salvage value from the defunct Biofuel public shell, while also creating an attractive platform to accelerate JBGL’s growth in real estate development, homebuilding, and builder financing. While this is a small position, we are pleased that the shares advanced from $1.12 to $8.20 during the year.

After 14 years, we finally exited our position in Einstein Noah Restaurant Group (BAGL). We initially invested in this entity in 2001 through what we thought would be a passive investment in preferred stock. Unfortunately, the former management failed to execute and by 2003 the company was on the brink of insolvency. In response, we converted our preferred stock into nearly all of the common stock, replaced management and most of the board, back-stopped a high-yield financing and guided the company to a better strategic direction. Ultimately, BAGL’s results improved and our efforts were rewarded. In November, JAB Holdings bought the company for $20.25 per share. Over our holding
period, we made over 5x our money or 18% a year. That’s a lot of dough. This is particularly gratifying as we nearly lost our entire original investment. With BAGL gone, St. Joe (shorted in December 2005) is now our longest standing material investment. In addition to BAGL and the energy names already mentioned, we have several other portfolio exits to report:

We purchased Cigna (CI) at the height of the Obamacare scare in mid-2012 at $45.77. Ultimately, Obamacare didn’t injure the business. Earnings grew, the multiple expanded and we exited at an average of $81.67.

We purchased Osram Licht AG (Germany: OSR) when it was spun out from Siemens in 2013 at €25.25. It had all the spin-off dynamics we like to see and the shares touched €50 just nine months after the spin. Despite overstaying our welcome by a bit, we still had a good result, exiting at an average price of €35.66.

We closed our short in Cliffs Natural Resources (CLF). This was part of our iron ore short thesis. Ultimately, iron ore prices fell as we anticipated they would and CLF stock followed from $29.37, where we shorted it, to $11.28, where we covered it.

Turning to operations, we concluded our capital opening in December. We were well oversubscribed. We thank everyone for supporting us, and welcome our many new partners.

Claire Davis left us at the end of 2014 to pursue other interests and spend more time with her family. We wish her success on her future endeavors. Garrett Jones will be relocating to New York, and we will close our Dallas office.

Our London office manager Kim Thompson and her partner Richard Cutler welcomed their first baby in November, Bertram Ellis McQueen Cutler. The British have a flair for names, but we just call him Bertie.

At quarter-end, the largest disclosed long positions in the Partnerships were Apple, Consol Energy, gold, Marvell Technology, Micron Technology and SunEdison. The Partnerships had an average exposure of 96% long and 66% short.

“When the train of history hits a curve, the intellectuals fall off.” – Karl Marx

Best Regards,

Greenlight Capital, Inc.

The post Greenlight Capital Q4 2014 Letter To Investors appeared first on ValueWalk.

Capitalist David Einhorn, founder and president of Greenlight Capital, must like Karl Marx. At the conclusion of his fourth quarter investment letter, where he announced somewhat yawn inspiring 8 percent 2014 performance after delivering the bulk of that performance – +5.61 percent – in the fourth quarter alone, Einhorn quoted Marx without any seeming context.

“When the train of history hits a curve, the intellectuals fall off.” – Karl Marx

And so ended an investment letter, leaving one to wonder its meaning?

David Einhorn discusses the recent collapse in oil prices

Was their meaning in Einhorn’s discussion of “the recent collapse in oil” and the train of history hitting a curve?  Einhorn went on to laud the drop in oil as “generally good for the U.S. economy” because consumers have more money to spend. Perhaps this is where “intellectuals fall off,” as many economic prognosticators have claimed the drop in oil might not be an economic positive.

In the letter, Einhorn discussed how Zachary Schreiber, a Stan Druckenmiller protégée, lived up to his “rising star” billing by predicting the sharp drop in WTI oil prices in July. This led Greenlight to hedge its risk exposure  in oil related names such as Anadarko, BP, McDermott and National Oilwell Varco by selling oil futures. As a result of the hedging, the drop in oil and related reduction in value in these oil names did not impact the portfolio to the same negative extent.

David Einhorn’s new long position: Citizens Financial Group, Keysight Technologies and Time Warner

The fund established several new long positions, including Citizens Financial Group, which Greenlight said they purchased at a discount to tangible book value and now expects the company to increase return on equity relative to peers through cost reductions and fee income growth.

Another stock the firm likes because it is undervalued is Keysight Technologies. Keys is a recent spin out from Agilent, which Greenlight said was using it as a cash cow to fund other business units.  Now an independent company, it will have the flexibility to invest and manage research and development in a fashion to best optimize a return, the letter said.

Greenlight also established a new position in Time Warner, thinking the firm would likely have to fend off another takeover target at some point. On a value basis, the strategy was that Time Warner’s HBO subsidiary – the “most valuable” of all premium networks – could be better leveraged. Soon after Time Warner announced that HBO would “go over the wall” and offer its programming as a streaming option over the Internet. This could be construed as a train hitting a curve for cable properties with intellectuals falling off, but such comparisons are difficult if tenuous to make.

See the full letter here.

The post Einhorn Cryptically Quotes Karl Marx In Letter To Investors appeared first on ValueWalk.

At its annual board meeting yesterday, Robin Hood, New York City’s largest poverty-fighting organization, elected David Einhorn as Chair of its Board of Directors. Mr. Einhorn, Co-founder and President of Greenlight Capital, succeeds Barry Sternlicht, Chairman and CEO of Starwood Capital Group.  Mr. Sternlicht will continue to serve on several Robin Hood committees, including the Development, Executive and Housing Committees.

Mr. Sternlicht has served on Robin Hood’s board since 2009—the last two as Chair—and during that time, Robin Hood raised a record amount of money to help fund hundreds of front-line poverty fighting organizations throughout the five boroughs. Robin Hood donors contributed $175 million in 2014, the largest amount raised by Robin Hood in a single year, with the exception of the appeal for Sandy Relief in 2012.

“All of us in the Robin Hood community are so grateful for Barry’s stewardship and tenacity during his tenure as Robin Hood’s Board Chair,” said David Saltzman, Robin Hood’s executive director.  “Barry’s passion, smarts and dedication to helping others inspires us. We are extremely fortunate to have his ongoing guidance on several committees as we continue to help millions of New Yorkers gain the education and skills they need to lift themselves out of poverty.”

David Einhorn’s career at Robin Hood

David Einhorn joined Robin Hood’s Board of Directors in 2010, having previously served on its Leadership Council and as Vice Chair of the Board for the past two years.  He was instrumental in conceiving and organizing the Robin Hood Investors Conference, launched in 2013, which brought together dozens of the biggest names in finance, technology, retail and energy to debate, share ideas, and provide insight on navigating volatile markets.  “Thanks to David’s vision and leadership, this year’s Investors Conference raised more than $6 million to support hundreds of the most effective poverty-fighting programs throughout New York City, making it our second-largest annual fund-raising event,” said Mr. Saltzman. “We’re eager to have David bring his forward-thinking enthusiasm to the entire organization as Chair, which will only make Robin Hood stronger.”

During David Einhorn’s tenure on the Robin Hood Board, he also chaired the Finance Committee and will continue the course that Mr. Sternlicht set for finding innovative ways to fight poverty—such as the Immigrant Justice Corps, the Robin Hood College Success Prize, and other long-term programs designed to serve as national models of social change.  In addition, Mr. Einhorn will focus on expanding Robin Hood’s day-to-day mission of helping countless New Yorkers gain access to the services they need to lead more secure and productive lives for themselves and their families. David Einhorn also serves on the boards of City Year and the Michael J. Fox Foundation for Parkinson’s Research, and is Founder and Trustee of the Einhorn Family Charitable Trust, whose mission is to help people get along better.

David Einhorn honored to be succeeding Barry

“I’m honored to be succeeding Barry as Chair of Robin Hood’s Board of Directors,” said David Einhorn.  “I’m confident that with Robin Hood’s distinguished and engaged board members, as well as its tireless staff, we will achieve great success in the years to come, all to benefit our neighbors in need.”

The Board also elected two new Vice Chairs:  Anne Dinning, Managing Director and Executive Committee Member, D. E. Shaw Group; and Larry Robbins, Founder, Portfolio Manager and CEO of Glenview Capital Management.  In addition, three new Board members were announced:  Cecily Carson, President and Trustee of The Carson Family Charitable Trust and a founding member of Robin Hood’s Leadership Council; Katie Couric, Emmy award-winning journalist, best-selling author and Global Anchor for Yahoo News; and Alex Navab, Partner & Head of Americas Private Equity for KKR and also a founding member of Robin Hood’s Leadership Council.

Robin Hood also announced that Deborah Winshel will resign from her current role as President and Chief Operating Officer to join BlackRock as a Managing Director reporting to Chairman and CEO Laurence D. Fink.

“We are incredibly thankful for Deborah’s leadership and service over the past four years,” said Mr. Sternlicht.  “Deborah leaves Robin Hood much better than she found it – more organized, more effective and with greater overall visibility for Robin Hood’s work.  She helped to build a strong leadership team, while broadening and deepening bench strength across the organization.  She also championed innovation in Robin Hood’s core poverty-fighting programs, such as The Immigrant Justice Corps, of which she was a founding board member.  In addition, her work with senior leadership on the Robin Hood Sandy Relief Fund ensured that resources were deployed thoughtfully, strategically, and most importantly – quickly – to those in greatest need.  We thank her for her vision and relentless focus on helping countless New Yorkers and wish her all the best in her new venture.”

See the complete list of Robin Hood Board members.

The post David Einhorn Elected as Chair of Robin Hood Board of Directors appeared first on ValueWalk.

Dan Loeb and David Einhorn are off to rough start for the year, as we noted earlier.

Loeb down 2.3% in January, Einhorn minus 2.8% – Greenlight Q4 here http://t.co/FlIdQtaGS3 $$

— ValueWalk (@valuewalk) January 31, 2015

Since we got Loeb’s stat sheet we decided to post on the site. Stay tuned for Loeb Q4 letter any day…

UPDATE: 2/3/2015 Ackman returns 0.6% in January – stat sheet below

 Also see Dan Loeb Not Long UPS, Likes Ackman, 3G

David Einhorn returns

Net Monthly Returns:

January 2015: (2.8)%

Net Quarterly Returns:

As of 31-January-2015, the largest disclosed long positions in the investment portfolio are Apple, Consol Energy, gold, Marvell Technology, Micron Technology and SunEdison; our investment portfolio is approximately 104% long and 73% short.  All exposure information is calculated on a delta adjusted basis and excludes credit default swaps, interest rate swaps, sovereign debt, currencies, commodities, and derivatives on any of these instruments.

Dan Loeb ?2.3%

The post Loeb And Einhorn Off To Rough Start In 2014 appeared first on ValueWalk.

When to Sell a Stock by Vishal Khandelwal, Safal Niveshak

Barbara Streisand, an American singer and actress found a new occupation for herself in 1999, during the heydays of the dot com bubble. She became a stock picker.

What’s more, she started managing funds of her close friend Donna Karan, a leading US fashion designer, of the DKNY fame.

Times were so good then, that in just five months of intense trading, Streisand turned Karan’s investment of US$ 1 million to US$ 1.8 million.

Now, for all her dabblings in the risky territory of stock trading, Streisand admitted that the volatility made her nervous.

As she confessed then to a friend, “I can’t stand to see red in my profit-or-loss column. I’m Taurus the bull, so I react to red. If I see red, I sell my stocks quickly.”

Well, for a die-hard fan of Streisand or a stock trader, this rule of selling stocks – whenever they are in the red – may sound like a gospel truth. In fact, some of the smartest and most successful traders would agree to the fact about cutting their losses as soon as possible.

But if you are a long-term investor, selling a stock as soon as you see red can be a dangerous activity. Why dangerous? Simply because you lose out on the opportunity of benefiting from any compounding that that stock can achieve over the next 5-10 years, in case the underlying business has such potential.

“But When Should I Sell My Stocks?”

This is one of the most frequently asked questions I’ve received over the past few months, and is surely a sign that surging stock prices is making a lot of investors edgy.

Now, isn’t it ironical that we all invest in stocks to see their prices rise, and when they actually rise, we get nervous and itchy to cash out?

So, a lot of people, even long term investors who would buy a business promising to hold on for “at least 10 years”, would sell as soon as the stock multiplies 2-3x.

I have been a star at such “price-based selling” in the past. So I would sell stocks as soon as they multiplied 2-3x or if they did not move for 2-3 years. All this while, the only thing I looked at was the price of the stock and what it had done in the past.

Another irony here – when we buy businesses, we are forward looking, and when we sell, we are backward looking.

The lesson I’ve learned from several such episodes of either selling too early or selling due to not seeing action is that I now do not make my sell decisions based on my cost price. In other words, my cost price does not matter when I’m looking to make any sell decisions.

What matters is my expectation from the business over the next 10 years or so. If the expectation is still good, even after the rise in stock price in the past, I continue to hold on.

This is what I’ve learned from what Warren Buffett has said repeatedly…

We never buy something with a price target in mind. We never buy something at 30 saying if it goes to 40 we‘ll sell it or 50 or 60 or 100. We just don‘t do it that way. Anymore than when we buy a private business like See’s Candy for $25 million. We don‘t ever say if we ever get an offer of $50 million for this business we will sell it. That is not the way to look at a business.

The way to look at a business is this going to keep producing more and more money over time? And if the answer to that is yes, you don‘t need to ask any more questions.

Not selling stocks just because the prices have moved up is probably something Buffett learned from Philip Fisher, who had these three simple rules of selling stocks –

1. Wrong Facts: There are times after a stock is purchased that you realize the facts do not support the supposed rosy reasons of the original purchase. If the purchase thesis was initially built on a shaky foundation, then the shares should be sold. More money is lost by people who’ve held on to bad, losing businesses hoping to get their money back some day.
2. Changing Facts: The facts of the original purchase may have been deemed correct, but facts can change negatively over the passage of time. Management deterioration and/or the exhaustion of growth opportunities are a few reasons why a stock should be sold according to Fisher. You must avoid the commitment bias here.
3. Scarcity of Cash: If there is a shortage of cash available, and if a unique opportunity presents itself, then Fisher advises the sale of other stocks to fund the purchase.

If you re-read what Fisher had to say about selling stocks, and combine it with Buffett’s thoughts above, you’ll know that both these men are not talking about stock prices at all while deciding to sell stocks.

They are only talking about evaluating businesses at regular intervals and whether they will remain good for years to come, and then deciding what to do with the stock – to sell or hold.

As far as evaluating the business is concerned, my friend and value investor Ankur Jain writes this on his blog post on when to sell…

We should be asking questions to ourselves about the companies we own before considering selling the stocks.

Is the competitive advantage of the business better than before? Any deterioration in the bargaining power of the business? How are the growth prospects? Any foolish diversification attempted by the management? Can the business continue to scale up and deploy large amounts of capital at attractive rates of return? Change in the competitive landscape? Is it a better, larger and a stronger company now than when I bought the stock?

If the answers to these questions are largely in favour of the company in question, we know that the company is on the right track.

“But What If My Stock Gets Overvalued?”

This is another common question I’m getting these days. Philip Fisher answered this beautifully in his book Common Stocks and Uncommon Profits…

…another line of reasoning so often used to cause well-intentioned but unsophisticated investors to miss huge future profits is the argument that an outstanding stock has become overpriced and therefore should be sold. What is more logical than this? If a stock is overpriced, why not sell it rather than keep it?

Before reaching hasty conclusions, let us look a little bit below the surface. Just what is overpriced? What are we trying to accomplish? Any really good stock will sell and should sell at a higher ratio to current earnings than a stock with a stable rather than an expanding earning power. After all, this probability of participating in continued growth is obviously worth something. When we say that the stock is overpriced, we may mean that it is selling at an even higher ratio in relation to this expected earning power than we believe it should be.

All of this is trying to measure something with a greater degree of preciseness than is possible. The investor cannot pinpoint just how much per share a particular company will earn two years from now or whether a sizable increase in average earnings is likely to occur a few years from now.

He can at best just this within such general and non-mathematical limits as “about the same,” “up moderately,” “up a lot,” or “up tremendously.”

…how can anyone say with even moderate precision just what is overpriced for an outstanding company with an unusually rapid growth rate? If the growth rate is so good that in another ten years the company might well have quadrupled, is it really of such great concern whether at the moment the stock might or might not be 35 percent overpriced?

That which really matters is not to disturb a position that is going to be worth a great deal more later. If for a while the stock loses, say 35 percent of its current market quotation, is this really such a serious matter? Again, isn’t the maintaining of our position rather than the possibility of temporarily losing a small part of our capital gain the matter which is really important?

If the job has been correctly done when a common stock is purchased, the time to sell it is – almost never.

“So, Should I Never Sell My Stocks?”

Well, you should never sell your stocks while looking at the stock price. Instead, look at the business and then decide whether you would want to be its owner starting that day.

In other words, treat each day you own a stock as the first day of owning that stock. And you should decide to keep owning it, or sell it, depending on what you expect from the business starting that very day and for the next 10 years.

But again, please do not sell a stock just because…

• It has gone up 2x since your buying price; or
• It has surged 20%
  

  The post Value Investing: When to Sell a Stock appeared first on ValueWalk.

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Greenlight Capital reported that its equity portfolio has a market value of around $7.52 billion in the fourth quarter based on its 13F filing with the Securities and Exchange Commission (SEC).

David Einhorn is the co-founder and president of Greenlight Capital. During the quarter, the hedge fund delivered 5.6% returns (net of fees and expenses) to investors as its long, short and macro positions were profitable.

Greenlight Capital new stock positions

During the quarter, Greenlight Capital acquired 3,795,700 shares of Time Warner with approximately $324.22 million market value, as reported earlier by ValueWalk. The hedge fund noted that Time Warner “refocused its business in to a collection of high-quality assets” including basic cable networks (CNN and Turner), a premium and most valuble cable network (HBO) and Warner Brothers movie studio. Greenlight Capital believes that Time Warner can monetize HBO aggressively and reduce costs across the entire company.

Over the past 52-weeks, the shares of Time Warner traded between $59.91 and $88.13 per share. The stock closed $83.17 on February 13. The company gained more than 28% in stock value over the past year. Greenlight Capital bought its stake in the company at an average price of $72.72 per share.

Greenlight Capital bought 4,464,846 shares of Keysight Technologies, an electronic test and measurement equipment manufacturer. The company was divested out Agilent Technologies last year. The hedge fund’s stake in Keysight Technologies has a market value of approximately $150.77 million.

Greenlight Capital believed that Keysight Technologies has flexibility to invest in untapped growth initiatives, make better R&D as well as decisions in capital allocations. According to the hedge fund, the Street does not fully appreciate the prospects of the company.

The shares of Keysight Technologies closed $36.49 per share, up by almost 1% on February 13. Greenlight Capital acquired its stake in the company at an average price pf $30.54 per share.

During the quarter, Greenlight Capital also acquired 2,025,000 shares of Yahoo for approximately $102.28 million. The stock price of Yahoo rose more than 1% to $44.42 per share on February 13. The company gained more than 16% in stock value over the past year.

The search company recently filed a cybersquatting complaint against three adult dating websites with the World Intellectual Property. The search company alleged that the three adult dating websites (TumblrSexDating.nl, TumlrSexDating.nl and FlickrDating.nl) are exploiting its brands. Yahoo owns Flickr and Tumblr.

Greenlight Capital reduced positions

Greenlight Capital reduced its stockholding in Apple by 566,500 shares to 8,605,542 shares. The stock is still the largest position of the hedge fund, which accounts 12.62% of its portfolio. Its stake in the tech giant has a market value of around $949.88 million at the time of its 13F filing.

Apple is among the winning stock positions of Greenlight Capital during the quarter. The hedge fund noted that the latest iPhones were selling at record levels, and the stock remains “inexpensive at 14×2015 estimates and less than 12x net of cash.”

The shares of Apple closed to a new all-time high at $127.08 per share on February 13. Carl Icahn stated that the current stock value of Apple is $216 per share, and he expects a huge increase in the company’s stock buyback program.  Apple has approximately $740 billion market capitalization.

Greenlight Capital also reduced its position in Marvell Technology Group by 1,650,707 shares to 24,732,881 shares. Its stake in the company has a market value of around $358.62 million, which accounts 4.7% of its equity portfolio. The company is the fifth largest stockholding of the hedge fund.

Marvell Technology closed $16.59 per share on February 13. The stock gained more than 8% over the past year.

The post Greenlight Capital Buys Time Warner, Yahoo; Cuts Apple, Marvell appeared first on ValueWalk.

David Einhorn’s Greenlight Capital had an okay year as long tech positions helped shield against short positions which went sour. Much of this has been discussed in Greenlight’s Q4 letter as ValueWalk previously reported, but David Einhorn filled in some details this morning on his reinsurer’s conference call. Below are the remarks, followed by the audio.

David Einhorn – Chariman

The Greenlight Reinvestment portfolio returned 5.3% in the fourth quarter, bringing the 2014 full year return to 8.7%. During the quarter, the portfolio profit from long, short and macro positions, leading there way were Apple, our short positions in U.S. deal in an undisclosed industrial company and the Japanese yen. Our long position in Civeo was the only significant looser in the quarter as the real estate company proved to be more sensitive to plummeting oil prices than we expected. For the full year Apple which was 41% and micron which was 61% were the significant winners in our long portfolio which return 71.8% for the year. The short portfolio went up less than the market but lost 4.2% for the year.

In the fourth quarter we exited our energy positions in [Anadarko BP], Mcdermott and National Oilwell Varco. We hedged our underlying exposure to oil mid-year by shorting crude oil futures. This protected us from the sharp falloff in oil prices. Our current exposure to energy primarily consists of CONSOL Energy and SunEdison, neither of which is in the oil business. We ended the year conservatively position with 39% net exposure which is 15% less net long than a year ago. The positives we see in 2015 include falling unemployment, lower oil and other commodity prices that should boost consumer spending in the short term. And the first quarter will be an easy comparison for corporate earnings given last year’s first quarter was negatively affected by harsh weather. The negatives we see include stretched valuations and earnings headwinds later this year including the strong dollar which reduces the translated earnings of foreign subsidiaries.

From a macro perspective we are worried that emergency policies are now falling. We continue to maintain our macro overlay with positions in gold short Japanese yen and Chinese RMB and short French sovereign debt. 2014 has been a year of significant infrastructure build-out at Greenlight Re. Throughout the year we have organized a middle office team to help enhance our systems and data tracking. We’ve added three senior members to staff who are now fully integrated and have further enhanced our underwriting actuarial capabilities. I just returned from our board meeting and reviewed our business activity for the beginning of 2015 and our pipeline appeared strong. We’re finding creative ways to right new business despite the continued soft reinsurance environment; I’m pleased with the team’s progress.

David Einhorn

The post David Einhorn Dodges Big Oil Drop; Still Short Yen, RMB, French Sovereigns appeared first on ValueWalk.

A number of hedge funds boosted stakes in Cheniere Energy in the fourth quarter of 2014. Viking Global, managed by Andraes Halvorsen, doubled its stake in Cheniere by adding 4.5 million shares during the period, bringing the position up among its top ten holdings. Other hedge funds who piled up their holdings in the natural gas explorer were Baupost Group, Lone Pine Capital, Steadfast Capital and Blue Ridge Capital.

Baupost grabs more energy stocks

Despite the slump in oil prices, investors continued to bet on energy stocks, especially focusing on natural gas explorers and companies working in the oil and gas service industry. Seth Klarman’s Baupost Group also added to its positions in a number of energy stocks, unfazed by the decline in oil price. Cheniere Energy, which is the fund’s top position according to 13f filings, was increased by 2.6 million shares to 13.8 million shares. The quarterly update only shows a fraction of Baupost Group’s $28.5 billion hedge fund. Other energy companies that the fund bought in the fourth quarter were Antero Rescources, PBF Energy, Bellatrix Exploration, Alon USA Partners and Kosmos Energy.

In the annual letter seen by Bloomberg, Klarman said that they deployed more capital in the oil and gas sector just as the energy decline worsened.

A couple of hedge funds also increased holdings in Anadarko Petroleum, a U.S-based oil and gas explorer. Jonathan Jacobson’s Highfields Capital bought another 3 million shares of Anadarko in the final quarter of 2014, pushing up its total ownership in the company to over 4 million shares. Paul Singer’s Elliott Associates also bought more shares of the company, and now holds 4.6 million shares of Anadarko.

Einhorn buys CONSOL, Loeb snaps up Phillips 66

David Eihorn’s Greenlight Capital bought more shares of CONSOL Energy, which is now among the hedge fund’s top five holdings according to public filings. Greenlight bought 8.3 million shares of the coal and natural gas producer, bringing the total stake up to 13.25 million shares at the end of last year. At the same time, Einhorn exited its holding in BP plc, the British oil major, as it sold two million shares of the company.

Dan Loeb’s Third Point initiated a major new position in Phillips 66 by buying six million shares of the company. Phillips 66 is in the business of providing refining facilities and manufacturing fuels and lubricants.

Jeff Ubben jumps aboard the Halliburton and Baker Hughes merger

Lee Cooperman’s Omega Advisors and Jeff Ubben’s ValueAct were also sizing up energy stocks in the past quarter. Omega bought over two million shares of Laredo Petroleum and less than a million shares of Sanchez Energy, according to filings with the SEC. Ubben, known for his silent activism, bought major stakes in two companies where there is a potential for merger. ValueAct bought nearly 15 million shares of Baker Hughes and 20.8 million shares of Halliburton in the fourth quarter. Shareholders will vote on Baker Hughes and Halliburton merger in March of this year.

Lee Ainslie’s Maverick Capital also bought 2.9 million shares of Halliburton in the past quarter whereas Farallon Capital initiated a position in Baker Hughes with 3.5 million shares.

Discovery Capital and Bruce Berkowitz‘ Fairholme Capital bought new positions in Canadian Natural Resource. Eton Park Capital also established a new position in EQT Corp in the last quarter of 2014.

The post Hedge Funds Bet More On Energy Stocks In 4Q 2014 appeared first on ValueWalk.

David Einhorn’s Greenlight Capital has revealed details a new short position. This time it is U.K.-based plastic and polymer manufacturer Victrex. According to the latest filings made with the U.K’s Financial Conduct Authority, Greenlight is shorting 1.1% of Victrex’s shares.

Other companies Einhorn is betting against in the U.K are ARM Holdings, a chip maker, and Daily Mail and General Trust, a major news and entertainment company. Greenlight Capital was down 2.4% in January but then rose 3.8% in February.

Greenlight – Victrex falls on news from competitor Solvay

Greenlight initially disclosed a short in the polymer maker on Feb. 26. A few days before the disclosure, Victrex sustained a slump in its share price as its competitor Solvay said it will be bumping up its production capacity. Shares of Victrex have fallen 8% since the announcement from Solvay.

Both Victrex and Solvay are specialty plastics makers, one of which is the PEEK polymer, which is used in automobiles, oil fields and the aerospace industry. Solvay, a Belgian chemicals company, said it will be expanding its PEEK capacity by 1,500 tons. The company’s current capacity is 750 tons, whereas Victrex has a total PEEK capacity of 4,250 tons.

Superior R&D services at Victrex

In a recent research note from Morgan Stanley, Paul Walsh said Victrex has proven in the past that it can take on competition, but this development is somewhat different. Solvay is increasing PEEK production in addition to its previous plan to ramp up production at its Panoli plant in India. The Morgan Stanley analyst said that, overall, Solavy would be boosting its capacity two-fold, but its replacement costs are projected to be much lower than those of Victrex. The analyst further said that even though there is no near term cause for concern for Victrex, it is certain that this industry is rapidly attracting new investments. Morgan Stanley maintained its Equal-weight rating on the stock.

Deutsche Bank analysts said in a separate note that they are of the opinion that Victrex has more high-end applications of its products and a superior R&D capacity for the auto, aerospace, and oil and gas industry. DB said that its peers, Solvay and Evonik, make raw material for smartphones and medical devices, which require lower-end performance. The note further said that despite the increase in Solvay’s production capacity, it will be difficult to penetrate the industry that Victrex caters to. Deutsche Bank has a price target of GBP 2350, whereas the stock currently trades at GBP 1910.

The post Greenlight Capital Discloses Short In Victrex appeared first on ValueWalk.

Why Mentoring Is So Important…Lessons From Benjamin Graham by Lukas Neely, Endlessrise Investor

“Tell me and I forget, teach me and I may remember, involve me and I learn.” –  Benjamin Franklin

Whenever I think about the missing link between a promising investor and a successful one, I always seem to come back to mentoring.

Giving advice to people on why they should look in certain areas, focus on certain things that matter most, or even staying away from certain things; is often overlooked in our society today. Whether it’s taking a new analyst to breakfast or lunch or showing him/her how to practice the art of business valuation (and it is an art), these type things are vital to both the mentor and mentee in terms of them both growing as an individual and investor.

No matter how far you’ve come or how little you have, never fail to tap into the knowledge of those who have been successful (or unsuccessful) or see differently than you do. Everyone needs a philosophy and a code to live by, but as humans, we sometimes have a difficult time wanting to use someone else’s philosophy or code.

I’ll admit — I had a tough time with it too. It takes openness and nerve to seek out others (even if you think you know everything as I did). However, it’s been my experience that the most successful individuals (and investors), are secure enough to admit that they don’t know everything. They are always in search of greater knowledge and insight through their mentor-mentee relationships.

“If I have seen further, it is by standing on the shoulder of giants.”

Sir Isacc Newton

If you look at all great athletes — they’ve all had great coaches and mentors to help them along the way. Even Warren Buffett had a mentor in Benjamin Graham. At the young age of 19, Buffett read the Intelligent Investor written by Benjamin Graham — and his life was changed forever after. He applied to Columbia Business School to study under Graham, and they eventually developed a lifelong relationship in the process. Although Buffett’s philosophy to investing has evolved somewhat, Graham’s early mentorship to Buffett helped shape his philosophy and understanding of value investing. The importance of mentoring cannot be understated enough.

“When the student is ready the teacher shall appear.”

The Buddha

Mentoring was extremely important for me personally — Without it, I would not be where I am today. So I am forever indebted to this person.

For far too many nights, I remember laying in my tiny apartment wondering how I was ever going to be successful at investing. Would I ever have a real understanding of these businesses? Would I ever be able to grasp investing?

Then one day in my early 20’s, I saw a man on TV talking about value investing. His rhetoric and aptitude for investing was beyond anything I had heard before. He was passionate about investing and seemed to speak my language. I kept thinking to myself, “I want to learn everything that this guy knows. It just makes sense.”

His name is Whitney Tilson, Portfolio Manager of Kase Capital (formerly T2 Parners).

Although I am usually quite skeptical of personalities on television or the internet, Whitney truly comes from the heart. He is an incredible investor and educator, but he’s an even better person. And I saw it first-hand.

That night I convinced the Investment Fund I was working for at the time to give me time off to attend the Value Investing Congress, and the advanced value investing class with Whitney in NYC. I was in my early 20’s and didn’t have a great deal of money at the time as a young analyst, so I told them all I needed was the conference ticket and plane ticket, and I would find a place to stay (I would figure that out when I got there — thankfully I did).

They agreed, and I was able to see Whitney in person (and other incredible value investors). I got to ask him all kinds of questions, which helped clear things up. It helped me focus on the components that mattered most to investing success.

The advanced session walked through each investment he had made, and why certain decisions were executed. It opened my eyes to investing. More importantly, it made me realize that I wanted to do this for for the rest of my life. And it also made me realize I wanted to help other people too.

I can say without any hesitation, that this one seminar and advance training changed my life, and put me on the path to value investing.

In the years that followed, I listened and read materials from the greats. From Benjamin Graham and Warren Buffett, to Peter Lynch and Charlie Munger, to Seth Klarman to Leon Cooperman to Mohnish Pabrai to Guy Spier to Bill Ackman and David Einhorn. I did anything I could to improve my investing process and philosophy. And because of these incredible human beings, I was able to gain the insight and wisdom to not only help me invest better, but also be able to show others how to invest better as well. And I will be forever grateful.

These investors have helped so many people throughout the world to better understand investing. So I suppose it’s a common story. But it got me thinking (i know it’s scary for me to be thinking) — Without that mentor-mentee relationship would I be where I am today? It’s an interesting question, and one I cannot answer. I’d like to say I would’ve figured it out eventually, but who knows. All I know — Whitney was able to help guide me in the right direction in developing my philosophy of value investing.

The point is this whole process started with Whitney being a mentor to me and guiding me on the right path.

It pains me to say it, but I initially sought out this knowledge and developed these mental models for selfish reasons. When I was creating and developing these Mental Models in mid-2009, they were initially made to help myself, and educate potential investors in my future fund about my process of selecting and investing in stocks.

As I finalized the process and mental models, I asked friends and family to look at them and let me know what they thought? Would they invest in the fund? They said, “not only would they invest in the fund, but they learned more about investing through the content and material than they have their entire lives.”

This ultimately opened my eyes to the possibilities of helping others invest better. They said, “You should offer this to everyone, not just potential fund investors.” It was at this point when I thought I could be a mentor to people too. I thought everyone should have these philosophies and the mental models associated with value investing. It helped me, so I knew it could help others too.

Ultimately, the potential to touch millions of people’s life’s and impact them and their families in a positive way was too much to pass up. After years of putting these processes and mental models together, I quit my “cush” job at the investment fund, and decided to write a book about everything I had learned from these incredible investors while professionally managing money. The book is being released on March 30th: Value Investing: A Value Investor’s Journey Through The Unknown…

It was a difficult endeavor to get off the ground, but it was worth it in the end. Seeing people’s life’s changed forever is worth ALL of the trials and tribulations it took to get here.

BOTTOM LINE: Our society has discounted the value of mentorship and proven processes (or systems) and mental models. We need more mentor-mentee relationships in the world.  As Sir Issac Newton said, “if I have seen further it is by standing on the shoulder’s of giants.”

Thanks Whitney!

If you are a seasoned investment professional in a position to share your skills, give something back by becoming a mentor yourself. If you are just getting into the business or trying to get your foot in the door, I encourage you to try to find a mentor. Please send me stories of your mentoring relationships and the impact it’s had your life. I know it has for me and countless others.

I look forward to hearing about your journey!

Grab your copy of Lukas’s book today on Amazon while it’s available for its pre-release discount (till March 22nd):

CLICK HERE TO GET YOUR COPY TODAY

“Finally! Lukas Neely lays out the path to mastery of value investing in an incredibly understandable, easy-to-read and enjoyable way. This book will benefit dyed-in-the-wool value investors and newcomers alike. Highly recommended!”
- John Mihaljevic, Manual of Ideas

50% of book proceeds go to the Non-Profit Family Resource Center in Lukas’ home town (US Virgin Islands). The Family Resource Center is an essential organization in the Virgin Islands. They help serve as the bridge to help families, that have been through severe hardship, get back on track in their lives.

So please share and get the word out there. It truly is going to a great cause!

The post Why Mentoring Is So Important…Lessons From Benjamin Graham appeared first on ValueWalk.

Bill Ackman, David Einhorn, and Jeffrey Gundlach are among the distinguished investors that will speak at the upcoming 20th Annual Sohn Investment Conference. Taking place May 4, 2015 at Lincoln Center in New York City, the conference will once again rally the global financial community to support the fight against pediatric cancer.

The fantastic line up was just announced this morning, and as usual we will be covering the event - so please stay tuned!

World’s Leading Investors To Unveil New Ideas At 20th Annual Sohn Investment Conference

Conference to also feature rising stars in 2^nd Annual Next Wave Sohn program

New York, NY – March 17, 2015 – The Sohn Conference Foundation today announced the speaker lineup for its 20th Annual Sohn Investment Conference, in partnership with Bloomberg, to be held on May 4, 2015 at Lincoln Center in New York City. Recognized as the world’s original and premier investment event, the Sohn Investment Conference has for 20 years harnessed the energy and resources of the investment community to support the fight against pediatric cancer, with more than $50 million raised to date.

“For 20 years, each conference has built on the success of the previous, and this spring’s event is no different; such a milestone requires an all-star speaker lineup,” said Douglas Hirsch, Co-Chair of the Sohn Conference Foundation. “We’re thrilled to once again convene the world’s leading investors for a day of exciting investment ideas and market insights, all to benefit the organizations working tirelessly to end childhood cancer.”
“The Sohn Conference Foundation has a long-standing history of convening the most influential minds in the industry,” said Justin B. Smith, Chief Executive Officer of Bloomberg Media Group. “Bloomberg is honored to partner with Sohn and to share the important insights from the conference across our global digital, television, radio, and print platforms.”

The speaker lineup for the 20^th Annual Sohn Investment Conference:

• William Ackman, CEO and Portfolio Manager, Pershing Square Capital Management, L.P.
• Ian Bremmer, President and Founder, Eurasia Group, Ltd.
• Magnus Carlsen, World’s #1-Ranked Chess Player
• Leon Cooperman, Chairman and CEO, Omega Advisors, Inc.
• David Einhorn, Founder and President, Greenlight Capital, Inc.
• Mala Gaonkar, Co-Portfolio Manager, Lone Pine Capital LLC
• Jeffrey Gundlach, CEO and CIO, DoubleLine Capital LP
• Keith Meister, Founder and Managing Partner, Corvex Management LP
• Larry Robbins, Founder, Portfolio Manager, and CEO, Glenview Capital Management LLC
• Barry Rosenstein, Founder and Managing Partner, JANA Partners LLC
• David Tepper, Founder, Appaloosa Management, L.P.
• Jay Walker, Chairman, Walker Digital, LLC

To complement the afternoon’s premier program, this year’s conference will again feature Next Wave Sohn, showcasing the investing world’s rising stars and co-chaired by Graham Duncan of East Rock Capital and David Z. Solomon of Goldman Sachs. Next Wave Sohn will mirror the high-energy, securities-focused presentation format that characterizes the conference. All Sohn Conference attendees are invited to RSVP for the program at no additional cost when they register for the conference. A limited number of tickets to attend Next Wave Sohn in isolation will also be available. Demand for last year’s Next Wave Sohn exceeded venue capacity to such an extent that the upcoming program will relocate to Alice Tully Hall.

The speaker lineup for Next Wave Sohn:

• Snehal Amin, Managing Partner and Portfolio Manager, The WindAcre Partnership LLC
• Didric Cederholm, CIO, Lion Point Capital, L.P.
• Alex Denner, CIO and Founding Partner, Sarissa Capital Management LP
• Daniel Dreyfus, Partner, 3G Capital, Inc.
• David Zorub, Portfolio Manager, BlueMountain Capital Management, LLC

For more information about the Sohn Investment Conference, visit http://www.sohnconference.org.

ABOUT THE SOHN CONFERENCE FOUNDATION

The Sohn Conference Foundation is dedicated to the treatment and cure of pediatric cancer. The Foundation supports cutting-edge medical research, state-of-the-art research equipment, and innovative programs to ensure that children with cancer survive and thrive. The Foundation raises its funds through premier investment conferences and special events, including its renowned annual New York Sohn Investment Conference.

Founded in 1995, the Conference honors the memory of Ira Sohn, a successful trader on Wall Street who lost his battle with cancer at age 29. The Foundation has expanded its reach to include the Sohn London Conference, Sohn San Francisco Conference, Sohn Canada Conference, and Sohn Hong Kong Conference. To date, the Foundation has raised more than $50 million. More information on the upcoming 20th Annual Sohn Investment Conference is available at www.sohnconference.org.

ABOUT BLOOMBERG

Bloomberg connects influential decision makers to a dynamic network of information, people and ideas. Our strength – quickly and accurately delivering data, news and analytics through innovative technology – is at the core of everything we do. With more than 15,500 employees in 192 locations, we deliver business and financial information, news and insight around the world.

The post Sohn Investment Conference To Feature Ackman, Einhorn & Others appeared first on ValueWalk.

Greenlight Capital is busy churning out good returns this year, but the hedge fund’s manager David Einhorn recently took time to speak at the Hackley School in New York.

Hackley School is a member of the Ivy Preparatory School League and is among the elite prep schools in New York state. According to a transcript of the speech seen by ValueWalk, the successful hedge fund manager talked about “helping people get along better”, which is also the mission of Einhorn Family Charitable Trust, where both Einhorn and his wife are trustees. During the talk, Einhorn said that empathizing with the issues that are not our own allows people to get along better. He said that such traits are necessary for a society to exist peacefully.

Greenlight Capital is up 0.9% for the year, with a 3.8% gain in February.

Einhorn on the fruits of steady progress

Einhorn also mentioned his own teenage years, saying that he lacked clear ambition at that stage of his life. He said that even through college his strategy was ‘strategic procrastination‘ or ‘incremental decision-making‘. He added that he was not a fan of making decisions beforehand and that has proved to be a successful strategy for him,

“I’m a big believer in not making decisions before they need to be made. Circumstances change, people change, facts change, and options change. Why commit early when you can have the benefit of deciding later with more information?”

Speaking of his professional career development, the hedge fund manager said that his experience working with an investment bank felt more like hazing than real work. While acknowledging that he learned some finance skills there, his first attempt at a job really only helped him realize he did not wish to work at such a place again. Einhorn said that this commitment led him to inculcate a culture of respect and cooperation at Greenlight Capital, a company value he has stuck with for the last 19 years. He said that there were really no big changes or defining moments in the history of Greenlight’s success, it was rather the fruit of incremental, gradual and largely invisible progress.

Much like the steady improvement at his hedge fund, Einhorn said that there has also been a gradual abolition of racial, ethnic and gender biases in the U.S. However, there is still a long way to go, as new biases arise from previous unresolved ones.

On parallels between Greenlight and Einhorn Family Charitable Trust

Einhorn said that at EFCT they attempt to give to causes that align with their mission. Like investing in stocks where Greenlight relies on rigorous research and revisits its thesis when facts shift, with charity, the trust likes to invest where there are achievable targets and where the organization is run by able management. Speaking of acting on actionable goals, Einhorn said,

“We’re in the fire prevention business. To take advantage of the momentum of society’s progress, we need to identify opportunities that are ripe for change, where our contributions can make a difference.”

Einhorn said he values a caring culture at the workplace and tries to make it possible for his employees to leave for home at 6 PM. He also noted he has made it a practice to hire only nice people who appreciate the goodness in others. The hedge fund manager emphasized that traits like kindness, empathy and compassion are learned and are not inherent. He said that parents can inculcate these traits in their children who will then pass them on to future generations. EFCT aims to spread a culture of empathy in society, a trait which is underrated because emotions are harder to measure and are typically seen as less important.

Einhorn mentioned projects like City Year, which aims to lower dropout rates in schools by building collaboration between young adults and at-risk students. City Year is an AmeriCorps program, and is one of the projects to which EFCT donates. Interfaith Youth Core is another project where the trust invests. IFYC attempts to improve young people’s understanding of different religions in order to promote interfaith tolerance.

EFCT’s largest grant so far has been to Cornell Engaged. This program offers courses that ensure that every student at Cornell is involved in public service and plays a role as an active citizen.

Einhorn closed his speech by stressing the need for compassion,

“Every time you are part of a group, you can influence that group, whether it’s your social circle, a club or sports team, or even your family. If you have a year to have a life-changing experience, you can give it to City Year or one of our other partners. And if you someday find yourself running a company, if you make it a policy to only hire nice people then schools will be more incentivized to graduate students who are not only capable but are also kind.”

Jonathan Gasthalter, a spokesman for Greenlight with Sard Verbinnen & Co., declined to comment on the speech

Readers can view the full text below

Bruce C. Forbes Lecture, Hackley School

“Helping People Get Along Better”

David Einhorn

March 12, 2015

I’d like to thank Headmaster Johnson for inviting me to speak today. As an investor, I typically get asked to share ideas about how to make money, so it’s exciting to be able to share my thinking about how to give it away.

Almost four hundred years ago, Thomas Hobbes wrote that the natural state of man is for life to be “solitary, poor, nasty, brutish and short.” (And no, he wasn’t talking about Game of Thrones.)

When you think about the causes that people give money to — from curing diseases or supporting educational institutions to fighting poverty or supporting the arts — successful philanthropy helps make life less solitary, less poor, less nasty, less brutish and less short. My wife Cheryl and I are the Trustees of the Einhorn Family Charitable Trust. EFCT started in 2002 with a staff of none and now employs seven people. Back then I knew a fair bit about investing but very little about philanthropy, so in the early days we were mostly reactive. There were some organizations we already believed in — like Robin Hood, which fights poverty in New York City — but much of our giving was in response to people coming to us and asking. It wasn’t until we hired Jenn Hoos Rothberg to be our Executive Director in 2007 that we developed a more proactive approach: What do we want to accomplish? And how can we best use our resources to succeed? We started thinking less about giving, and more about finding ways to invest in the changes we want to see in the world.

The area that appeals to me is “helping people get along better,” so that became our mission. It sounds simple, doesn’t it? Helping people get along better sounds like the kind of thing you’d see on a poster in a third grade classroom. But as a mission, it starts to seem a little crazy.

Stop and think for a moment about what that might mean. “Helping people get along better.” Which people?

Do we mean whites and blacks?

Jews and Muslims?

Democrats and Republicans?

Yankees fans and Red Sox fans?

Katy Perry and Taylor Swift?

Kanye and… anyone?

The answer is yes. We mean all those people. (Okay, it’s fine for normal people to wish a pox on both the Yankees and Red Sox.)

We mean parents and children, employers and employees, seven-year-olds on the playground, and my kids when they’re fighting over the remote.

Conflict is at the root of so many problems. In our day-to-day lives, it includes bullying, harassment, and the large and small abuses that happen in our homes, schools and workplaces. All these things are stressful. When we’re surrounded by conflict, our environment doesn’t feel safe and the world doesn’t seem like a very nice place.

The global consequences of people not getting along are much worse: Oppression, violence, and war. A friend likes to say that all wars are fought between the good guys and the good guys, which is a clever way of saying that no one thinks of himself as the bad guy. It’s all a matter of perspective. What’s difficult is to understand why the person on the other side is doing what he’s doing. Being able to consider the world through someone else’s eyes is the essence of empathy, and that’s what it’s going to take for us to really get along.

And while helping people get along better is our mission at EFCT, it’s just a means to an end — a more peaceful world. We aren’t about helping people get along better just because getting along is nice. Making sure people have the skills to engage and work well with one another is what’s necessary to solve our most difficult social problems. What does getting along better even look like? In practice:

It means exhibiting kindness.

It means helping others.

It means appreciating differences.

It means seeking common ground.

It means actively

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Bill Ackman’s Pershing Square Holdings had a difficult March, as what might be called negative alpha – outperforming stocks to the downside – erased nearly half his year to date gains while the stock market clings to the thinnest of year to date gains, up 0.98 percent as of last check. The overall selling in the stock market during March was also a period when the closely followed activist liquidated his “mystery short” and other major hedge fund managers, such as David Einhorn’s Greenlight Capital, found difficulty as well.

Performance-Report-March-2015-PSH

PSH-CFTC-Statement-3.31.15

2015-03-March-Monthly-Report-TPOI

Ackman’s Pershing Square gains $1 billion in AUM year to date as HLF roller coaster takes a turn

After gaining over $1 billion in assets under since the start of the year, Pershing Square had started the year with a bang – up 6.8 percent as of February at a time when the general stock market was down. Then in March, Ackman and the legal punches leveled against him might have given Herbalife some enhanced life and taken punch out of Ackman’s performance.  Herbalife, which Ackman sold short, rocketed 40 percent higher on the month.  Ackman’s Herbalife misery was comforted by gains in holdings Fannie Mae, Freddie Mac and Howard Hughes. Overall Pershing Square lost 3.1 percent in March and is now up 3.5 percent year to date.

Herbalife issues took their toll on performance in March

Ackman exits mystery short in down market

Ackman made a big portfolio move in March, liquidating his “mystery short” and is now only short Herbalife.

ValueWalk’s Publisher Jacob Wolinsky had engaged in some rather strategic mathematics to determine the identity of the much whispered mystery short topic. In February he and a quant developed a formula consisting of returns profiles of various stocks, Pershing Square’s net asset value, long short exposure to put forth a short list of potential candidates. The Wolinsky used his fundamental hedge fund and put a discretionary strategic overlay on each of the stocks to logically determine a probability model. This modeling resulted in five top probability candidates being:

• Actavis
• NRG Energy
• Wal-Mart
• Zoetis
• Best Buy

At the time Wolinsky had run through theoretical logic on each stock to make a determine the highest probability was NRG Energy. His partial logic:

Why NRG? Well, NRG was up 4.2% in November and then down 13.8% and 8.4% in December & January respectively. Pretty much nails it on the necessary performance numbers. Then on top of that, add in the fact that Pershing recently appointed Stephen Fraidin (Kirkland & Ellis) as Pershing Square’s Vice Chairman. Guess what firm served as adviser to NRG in countless transactions (and has 35 lawyers working for the company)? That’s right, Kirkland & Ellis. It gets better though. Guess what firm is Pershing’s go-to firm for all things M&A? Kirkland & Ellis. Too many lawyers at the firm to list. Guess who was right there next to Bill Ackman in his Valeant / Allergan fight? K&E!

While NRG Energy is a likely play, Wolinsky was pressured to make his prediction without much of a performance sample. Rumors began to circulate that Ackman might be preparing to sell his mystery short weeks ago, so the guess was published. With Ackman in fact exiting the short basis the March performance report, Wolinsky’s need to publish before the short was proven accurate, but with additional data into the formula and a strategic overlay now in place, the more probable short was Activas, he said in an email Friday morning.

Einhorn loses ground in March

David Einhorn’s Greenlight Capital was set back 1.8 percent in March and, like Ackman, managed to generate negative alpha on the month.  Unlike activist brother Ackman, gold bug Einhorn is down on the year. Someone might do well to tell him gold’s value is in question in a debt crisis and, to a lesser extent, a deflationary environment.

The post Ackman Liquidates Mystery Short, Down In March With Einhorn appeared first on ValueWalk.

David Einhorn: The Fed’s Jelly Donut Policy by David Einhorn, Huffington Post

A Jelly Donut is a yummy mid-afternoon energy boost.

Two Jelly Donuts are an indulgent breakfast.

Three Jelly Donuts may induce a tummy ache.

Six Jelly Donuts — that’s an eating disorder.

Twelve Jelly Donuts is fraternity pledge hazing.

My point is that you can have too much of a good thing and overdoses are destructive. Chairman Bernanke is presently force-feeding us what seems like the 36th Jelly Donut of easy money and wondering why it isn’t giving us energy or making us feel better. Instead of a robust recovery, the economy continues to be sluggish. Last year, when asked why his measures weren’t working, he suggested it was “bad luck.”

I don’t think luck has anything to do with it. The blame lies in his misunderstanding of human nature. The textbooks presume that easier money will always result in a stronger economy, but that’s a bad assumption. Here is a good example of how a real family responds to monetary policy.

Consider my neighbors, Homer, Marge, and their three adult children, Bart, Lisa and Maggie. Homer has retired from the nuclear plant, and he and Marge live off savings and Homer’s pension. Bart is in a bit of trouble with too much credit card debt and an underwater mortgage. Lisa has been putting away her salary and has enough for a downpayment on her first home. Maggie owns her own business and is ready to expand.

When interest rates are high, Homer and Marge park their savings in CDs or Money Market accounts and get a decent return. There is no incentive for them to take much risk with their money. Bart gets into trouble very quickly and defaults on his loans. Lisa decides she can’t afford a mortgage until rates fall. And Maggie, who’s been helping out Bart with some of his expenses, believes that she’d make money if she grew the business, but possibly not enough to service the debt she’d be undertaking.

When interest rates are low, everything changes. Homer and Marge are getting only a little interest on their savings, and are struggling to live off Homer’s pension. They need to rethink their finances. Bart can manage to keep up the minimum payments on his credit cards and stay in his house. Lisa can get a cheap mortgage, and Maggie doesn’t need to make such optimistic assumptions in order to expand her business.

Everyone agrees that low interest rates are a good way to stimulate a stalled economy. The Fed takes this logic a step further. It believes that if low interest rates are good, then zero-interest rates must be even better. As a brief emergency measure, such drastic behavior is reasonable and can even be necessary. In 2008, Chairman Bernanke had near unanimous support for his decision to drop rates to near zero. At the peak of the crisis, it made sense. But that was four long years and many jelly donuts ago. In the 2012 economy, a zero rate policy not only adds no benefit, it’s actually harmful. Just ask the Simpsons.

When Homer was approaching 65, he and Marge met with a financial planner to figure out if they had enough money saved for retirement. They assumed they’d live to be 90, and could count on receiving a fixed amount from Homer’s pension and social security checks. Marge, the cautious one, has not forgotten that stock market meltdown better known as the bursting of the tech bubble. She didn’t want to take any investment risk and was content to have just enough for regular haircuts for herself, a bowling and beer budget for Homer, and visits with the children. They were told that, with nominal interest rates at 3%, they could safely retire with $200,000.

See full article via Huffington Post

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According to billionaire hedge fund manager David Einhorn, the problem with the U.S. economy is too many jelly donuts. Well, ok, not really, but Einhorn uses jelly donuts as an analogy for the Fed’s actions in maintaining an extremely low interest rate environment since the financial crisis.

Image: Bloomberg TV

Einhorn argues that the Fed fundamentally misunderstands the psyche of the American consumer in making assumptions about why 0% interest rates will eventually energize the U.S. economy.

Einhorn’s jelly donut analogy

Greenlight Capital’s Einhorn makes his point by discussing the pros and cons of jelly donuts. “My point is that you can have too much of a good thing and overdoses are destructive. Chairman Bernanke is presently force-feeding us what seems like the 36th Jelly Donut of easy money and wondering why it isn’t giving us energy or making us feel better. Instead of a robust recovery, the economy continues to be sluggish. Last year, when asked why his measures weren’t working, he suggested it was “bad luck.”

I don’t think luck has anything to do with it. The blame lies in his misunderstanding of human nature.”

Fear and greed

According to Einhorn, it’s all about greed and fear. He argues the Fed’s basic philosophy is “Just set interest rates to zero indefinitely. Then no one can afford not to invest in the market.”

He says this kind of misguided thinking unfortunately continues to persist in Bernanke, at the Fed and among “other government ivory tower thinkers.” Einhorn argues their policies do not take into account the key component of capitalism and free markets, that is, greed. He takes it farther in arguing that since these policy makers “do not understand greed, they also do not understand fear, which presents a double whammy for making bad policy decisions.”

The problem with the Fed’s theory is that people don’t make risky investments when they are afraid. Many people are afraid of the stock market, and they will remain afraid no matter how low rates go or how long the Fed keeps them down. That means only the rich are getting richer on the Fed-induced booming stock market, and the average Joe and grandma and grandpa getting ready to retire are getting less than 1% interest on their “safe investments”, meaning they have less to spend now and in the future.

The post Einhorn Says Too Much Easy Money Is Holding Back U.S. Economy appeared first on ValueWalk.

The Sohn Conference Foundation is dedicated to supporting innovative initiatives to cure and treat pediatric cancer. Identifying specific areas of need, the Foundation funds groundbreaking research, state-of-the-art technology, and programs to target cures and improve patient care.

ValueWalk will be covering the 20th IRA Sohn Conference 2015 produced in partnership with Bloomberg LINK – sign up for our free newsletter to ensure you do not miss our coverage. You can also find coverage via Twitter, Facebook, Linkedin, or RSS. Also see the 2014 IRA Sohn coverage here. ValueWalk has the full list of speakers as reported first earlier on twitter.

We just got the Sohn line up for Monday… pic.twitter.com/UYgJOUqzya

— ValueWalk (@valuewalk) April 30, 2015

IRA Sohn Conference 2015 Agenda

12:00     Opening Remarks: Doug Hirsch, Co-Chair, Sohn Conference Foundation

12:05     David Einhorn, Founder and President, Greenlight Capital, Inc.

12:20     Barry Rosenstein, Founder and Managing Partner, JANA Partners LLC

12:35     Keith Meister, Founder and Managing Partner, Corvex Management LP

12:50     Jay Walker, Executive Chairman, Patent Properties Inc.

1:05        Leon Cooperman, Chairman and CEO, Omega Advisors, Inc.

1:20        Intermission

2:10        Larry Robbins, Founder, Portfolio Manager, and CEO, Glenview Capital Management LLC

2:25        Trevor Reilly, New York Jets Linebacker – Sohn Courage Award

2:40        Mala Gaonkar, Co-Portfolio Manager, Lone Pine Capital LLC

2:55        Sohn Investment Idea Contest

3:10        Jeffrey Gundlach, CEO and CIO, DoubleLine Capital LP

3:25        Intermission

4:20        David Tepper, Founder, Appaloosa Management, L.P.

4:35        20 Years of Sohn

4:45        Magnus Carlsen, World’s #1-Ranked Chess Player

5:05        Ian Bremmer, President and Founder, Eurasia Group, Ltd.

5:20        William Ackman, CEO and Portfolio Manager, Pershing Square Capital Management, L.P.

5:35        Closing Remarks: Dan Nir, Co-Chair, Sohn Conference Foundation

The post IRA Sohn Conference 2015 Line-Up Schedule appeared first on ValueWalk.

Einhorn is Chairman of the Board of Greenlight Capital Re, Ltd, founder of Greenlight Capital. founder of Greenlight Masters, and serves on the boards of Hillel: The Foundation for Jewish Campus Life, The Michael J. Fox Foundation for Parkinson’s Research, and the Robin Hood Foundation.

David Einhorn graduated summa cum laude with distinction in all subjects from Cornell University, where he earned a B.A. in Government, from the College of Arts and Sciences. Want to know more about his early life and time at Cornell? Check out this transcript which ValueWalk obtained from a recent speech to students.

David Einhorn is the first speaker at the Sohn 2015 Conference, which is interesting since in prior years he was last or near last. We do not know if there is any specific reason but see below to hear what he has to say.

David Einhorn live coverage begins below (note everything is in EST and PM).

12:05 David Einhorn is talking about frackers – it is a boom and bust industry and in the 80s it busted. Enter the frackers. Frackers pushes chemical, water and sand and use horizontal methods to get oil in the rock in three places there have been found lots of oil. Fracking is expensive with buying the land and drilling etc. So the frackers took there story to Wall Street. Frackers have spent $80 billion more than they made.

12:10 Even with oil at $100 a barrel they could not make money – they just borrowed more money – at this price they lost $20 billion. Some frackers made up metrics like EBITDAX – and investing for growth in this area is fiction. Here the CapEx goes towards getting out one barrel at a time. Wall Street claims Capex funds growth and depreciation is non cash, but Einhorn believes the real reason is because it does not fit their investment story.

12:13 The industry only wants us to look at the cash that comes out of the business. A business which burns cash and doesn’t grow is not worth anything. Einhorn specifically talks about PXD one of the largest frackers. Pioneers has a $26 B market cap and EV of around that and should earn more next year. Einhorn does the math for Pioneer Natural Reserves and notes that natural gas and NGLs both trade at much less than WTI.

Einhorn said some energy companies have “negative development economics” and criticized the oil fracking industry’s cash burn rates and dependence on alternate accounting methods. Einhorn said frackers and bankers were ignoring depletion because it did not convey the story they wanted to tell. Einhorn said Pioneer specifically “earns a positive margin, but it’s not a positive value.”

Pioneer’s reserves are worth a lot less than stated since oil has tanked since the estimates were done. PXD has exciting story but it has little to do with financials. PXD has not adjusted any of its estimates despite the drop in oil. The bulls counter that PXD has new technology which makes historic performance irrelevant.

Einhorn says that few analysts consider current cost and use multiples of EBITDAX. However, Einhorn assumes that all the BOE exists and other conservative assumptions and discounted at WACC the number is a negative and gives the company a PT of $78 a share while the shares currently trade at $167.

12:30 The best way to bet on frackers is to buy oil because the value of the frackers depends on the long end of the curve – the alternative is to end spending – either way the frackers are doomed.

Reserves have cost about 28 dollars they net about 36 dollars per barrel. They lose about 12 dollars a barrel

Einhorn thinks prices will recover to about 68 a barrel ( future strip price)

People are paying 27 billion for the company that is too much

Pioneer needs to update its price

Should be 20.68 BOE

The problem with exploiting your best prospects is that it leaves you with some less exciting items.

DCF assumptions hypothetical

11 billipn BOE exists

all costs retained

capex is 20.66 BOE

Big picture, Fracking for OIL 75% of revenues are spent on capex

The post David Einhorn At 2015 Ira Sohn Conference Presentation appeared first on ValueWalk.

David Einhorn, Greenlight Capital, Inc. Founder and President, digs into the economics behind Pioneer Natural’s business. The video can be found below – see the notes from Einhorn’s presentation here.

David Einhorn: Pioneer Natural Is The ‘Motherfracker’

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