Value Investing Congress – Day 3

October 22, 2009 · Leave a Comment

5th Annual New York Value Investing Congress Day 1: Part 3

Julian Robertson, Founder, Tiger Management
Question and Answer Session

Investing legend Julian Robertson took questions for a half hour; an extremely pleasant surprise for this Congress.  Here are some of Robertson’s thoughts:

Concerns about the current state of affairs:

  • Big concern is that we are still spending more than we earn, which is not sustainable. 
  • Debt must be paid back, and we are not even thinking about that. 
  • More focused on borrowing more from the Chinese, and hoping they won’t decide they have better things to do with their money.

On Energy:

  • Although bullish on oil stocks, he is impressed by advances in solar energy. 
  • Believes that solar will continue to improve, wind power too, and this will ultimately help the environment and hurt oil companies.

On China:

  • Might be a bubble
  • Consumption not enough to pull the world out of recession

On Gold:

  • An anti-gold bug-”none has been used since it was discovered”

On Norway:

  • The most prosperous/sound country in the world

Companies he’s bullish on:

  • Visa, Mastercard, Ryanair, Intel

What He’s Learned/Best Advice:

  • Never be overconfident
  • Don’t get overly enthusiastic about your business

Lloyd Khaner, Khaner Capital
The Key to Turnarounds

First time presenter at the Value Investing Congress, Khaner, who has compounded 445.4% since 1991 (versus 295.2% for the S&P 500), looks for the following attributes in potential investments:

  • Unique management
  • Strong decision making ability
  • Avoid value traps
  • Debt/Equity less than 70%
  • Avoid dying industries
  • Franchise companies with manageable debt

Khaner is a big believer in the concept of “CEO family trees,”placing value on those that have been trained or worked under other successful CEO’s.

Khaner listed the signs of a successful turnaround, including:

  • Cutting unprofitable sales
  • Cutting headcount
  • New senior managers
  • Fix customer relationships
  • CEO sets plan within 3 months
  • Gross Margin up
  • SG&A down
  • Focus on Return on Capital
  • Restructure Debt-Push out maturities.

One of Khaner’s favorite ideas is Starbucks (SBUX):

  • Slowing new store openings
  • Improving service
  • Expects positive comps fiscal 2010
  • ROIC growth 100-200 bps next 3+ years
  • FCF $500-$750 million 3+ years

Categories: News
Tagged: julian robertson, new york, value investing congress, whitney tilson

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