Chris Mayer is the editor of Capital & Crisis. Chris’ topic today is People Not Personnel, The Case for Owner-Operators from the 9th Annual Value Investing Congress.
Chris Mayer a value investor, is the Managing Editor of Agora Financial, which provides independent financial advice with over 1 million readers across its publications. As mentioned above, Chris is also the editor and founder of Capital & Crisis, a newsletter focused on global value investing. The letter which was started in 2004, now claims over 20,000 paid subscribers. In 2006, Mayer started a new publication called Mayer’s Special Situations. The publication focuses on small cap value stocks as well as special situations.
Six options to find content: Value Investing Congress
Chris Mayer live coverage
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The Case for Owner-Operators “…Entrepreneurial instinct equates with sizable equity ownership…”
Wealth Index (from Horizon Kinetics) –looks at companies with insiders who own large ownership and the index Horizon created has outperformed the S&P by 2.7% per year for 20 years (Horizon created a fund based on the index call the virtus wealth masters fund run by Matt Houk)
Examples Chris Mayer owns, Howard Hughes Corp, Covanta, Kennedy Wilson, Retail Opportunity Inv. Corp
(9:00am EST) 2 NEW ideas
He loves little banks and has made good money on them, as a previous banker at one time in his life, he feels he has an edge
He likes Thrift conversions, when a mutual company goes public. They have loads of cash and a defined path to use it.
Charter Financial (NYSE:CHFN)
went through second step conversion on 4/9/13, raised $143M with market cap of $233M
P/TBV= 85% NPLs?Assets= 1.09%
NFBK is another potential idea, along with BNCL….he prefers to build a basket of these things, set them aside in your low risk portfolio for 2-3 years. You must be patient, these are not home runs over night, but eventually the banks buy back stock and pay special dividends.
Pulse Seismic (TSX:PSD) —Canadian owner of seismic maps
One of the best businesses he has ever seen. leveraged to Natural gas
Seismic Library is a great asset. They can lease them over and over again, no maintenance costs, hard to replicate. Cost of library is over $2B
Pulse is a cash machine, but does not screen well due to pass through costs which understate earnings, but cash flow is solid
$0.47 per share of FCF on a C$4.00 stock
Did a large acquisition in 2010
Catalysts: Potential to ship out of British Columbia, Interesting wrinkle–the data is not transferable
Pulse had their best year ever and nat gas prices were very low last year
$10.5M in buybacks in 2012, paid dividend and reduced debt
Trding for less than 10x FCF…..downside is the unpredictability of data sales (so it can be lumpy….)