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.
- 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.
- Might be a bubble
- Consumption not enough to pull the world out of recession
- An anti-gold bug-”none has been used since it was discovered”
- 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