Value Investor Conference London

June 2013

Michael Price at the London Value Investor Conference
Michael Price is less well known in the UK but is very well known in the US Value investing community.  He started his career in 1975 as a research assistant at Heine Securities later known as Mutual Shares, by 1988 Michael was the sole owner of the company and he increased the value of assets under management to over $17 billion before selling the business to Franklin Resources Inc. for $670 million in 1996. Michael now manages his wealth through MFP Investors. Both Peter Cundill and Seth Klarman (who began his career working for Michael) have credited Michael with teaching them how to take the net-net concept one step further to value all of a company’s assets. We were delighted that Michael agreed to present at the conference this year and he was among the highest rated speakers on the day.

Joel Greenblatt : Apple, Google are ‘bargains’
Joel Greenblatt, author of the “Little Book that Beats the Market” (the investment strategy of which was analysed by David Harding at the London Value Investor Conference), talks about some of his stock picks, including Apple Inc. Greenblatt referred to Apple as as a “bargain hiding in plain sight” and said that short-termism prevents many people investing in a great franchise company like Apple because “people tend to avoid companies that are not expected to do quite as well in the next year or so.” Greenblatt also discusses some of his stock shorts, including J.C. Penney Co., and his view on Herbalife Ltd.

Charlie Munger Interview
Berkshire’s Vice Chairman, Charlie Munger talks to CNBC’s Becky Quick.  This nearly 40 minute interview covers a lot of ground.  He discusses the Heinz deal and refutes that it is a departure from Berkshire’s usual style of investing.  In addition, he comments on the likelihood of the US following Japan into a 20 year period of stagnation, the Cyprus banking crisis, his recommendations on dealing with the ballooning US Healthcare costs (take fewer tests!).  We liked “I think Berkshire does better because there are nasty fluctuations in the market…not that we wish for them”.

Rising GDP not always a boon for equities
This article looks at some recent research which shows a negative correlation between GDP growth and stock market returns. The reason that it usually given for this perverse relationship is that investors often over pay for growth. However this article goes on to present some additional research which looks at the role that poor capital allocation plays in destroying shareholder value in a growing economy. A cheap stock which is mis-allocating capital is not a cheap stock!

Vitaliy Katsenelson Article on ‘Sideways Markets’
Vitaliy’s Little Book of Sideways Markets, was published in 2010. In this book he made the case that there is a very high probability that we were (and still are) in the midst of a secular sideways market – a market that goes up and down, with a lot of cyclical volatility, but ends up going nowhere for a long time. In this recent article he relates these findings to the stock market valuations we are seeing today.

Quality Street – the latest fashion in equity investing
Perhaps Buffett is most famous for his success from long-term investments in high quality (or “wide moat”) companies like American Express and Coca Cola.   However, he has never strayed from the original Ben Graham approach of not over-paying for the assets he buys. Perhaps convinced by the long time period during which the share prices of such businesses have out-performed, we have noticed that a number of fund managers, who see themselves as part of the value investing camp, appear to have given up almost all discussion of price / value.  It seems that there is almost no price too high to pay for quality.  This article in the Economist explores this phenomenon.

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  • “It's very much the Rolls-Royce of the investor conference market” Paul Scott, Stockopedia
  • “Very good event with excellent quality of speakers. Well done!” Andrew Hardy, Momentum GIM
  • “Please make this an annual event, thought it was brilliant, learnt lots and the topics were well diversified. Very interesting day. Thank you” Mary Allen, Rothschild
  • “Very well organised and it was a treat for investors like us to hear some great speakers” Roli Saxena, Drona Capital
  • “A fantastic conference with lots of superb speakers and interesting discussions- well done!” Paul McNulty, Setanta Asset Management
  • “Great conference overall. Hard to complain – good job” Travis Moss, JP Morgan

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