We recently posted some notes from the Great Investors Conference (GIBI) on the site and on twitter. Below readers can find more extensive (albeit informal) coverage on the event – the line up included – Michael Price, David Einhorn, Bill Ackman, Richard Perry, Bill Miller, T Boone Pickens and other famous investors.
See notes from GIBI 2013 here – Price, Einhorn, Ackman, Berkowitz, Pickens and others: Notes from GIBI Conference Also sign up for our free newsletter to get this coverage delivered straight to your inbox.
GIBI 2014 coverage below
Boone Pickens: Founder & CEO, BP Capital: Bullish on MRO & CLNE
Talked a little bit about activism, says that “Carl Icahn is about as smooth as a stucco bathtub.” Pickens credits his success to good direction and questionable timing. Last year’s picks: FANG up 40%, BAS up 40%, CLNE down 39%. CLNE has struggled. They have grown their stations. They have covered the interstates. Picking CLNE. I own over 20mm shares so there might be something here…maybe pride of ownership.
Is the drop in the price of oil now about supply? T Boone Pickens don’t think so though we drill too much. From 2005-2013 US Natural Gas Production increased by 35% & U.S. natural gas prices are 50% cheaper than international peers. While U.S. production has gone up, while the rest of the world’s production has remained flat. US is the only place that is growing oil production. Hats off to the industry. It has done a tremendous job finding oil. Pickens believes that natural gas prices will be flat and oil could come in a little.
Marathon Oil Corporation (NYSE:MRO) is his latest pick.
Stock: Est. 2015 EV/EBITDA Est. 2015 YoY L48 Production Growth
MRO 4.59x 28%
XOM 5.59x -2%
OXY 5.31x 4%
MRO has come home to the US and he likes that.
Clean Energy Fuels Corp (NASDAQ:CLNE): Pickens am a director of the company. Direction is right. This is another timing deal. BNSF is now testing their tenders. Now they can go across the country without refueling. They have to refuel twice with diesel.
We may see oil under $80, nat gas has so much to grow on the upside. Pickens believes that we will never see $10 nat gas in his lifetime and we might not see $8 either.
Bill Ackman, CEO, Pershing Square Capital Management: bullish on Federal National Mortgage Assctn Fnni Me (NYSE:FNMA) and Federal Home Loan Mortgage Corp (NYSE:FMCC)
Post-depression: 50% of all houses were in foreclosure. At the time the longest you could get was a 10 year mortgage. 30 year mortgage market made it more affordable for the working class. They had leveraged fixed income arbitrage issuing debt & buying business. 40 to 1. It proved to be the downfall. Lowest credit quality ever & forced into conservatorship. Gov’t had to inject capital $185B in capital. 10% coupon & 80% of the profits. Fannie & Freddie made mistakes. ’08-’11 they lost $ & housing started to stabilize & recover. $240B in reserves. 2012-2013 reporting huge gains. Richard Perry, Bruce Berkowitz and others sued the gov’t.
Bill Ackman says he owns 10% of FNMA & 10% of FMCC and is still very bullish. Ackman says that Pershing Square has been buying both up to the last 5 minutes. Private property cannot be taken by the government. Ackman says that the gov’t had inappropriately changed conservatorship. The gov’t took the assets. Read the gov’t ruling by the judge: the last paragraph. Fannie & Freddie is not a regulatory taking when the shareholders continue to profit. This is a taking of our constitution. 71 year old judge. We’ve bought 20% of the volume. We own the common vs. the preferred. The preferred is the residual claim. The common is just as good an investment. I believe we will ultimately win. There is an opportunity for settlement. We own 10%. 80% is owned by individual investors. Many want to join the lawsuit. Gov’t 80% + taxing power. There is no scenario that the entities are shot down. It’s good for America.
Pershing Square declined to comment to ValueWalk
Michael Price, Managing Member, MFP Investors: Two ideas (one old, and one new idea): New idea: bullish on FMC. Old idea: still bullish on Dolby Laboratories, Inc. (NYSE:DLB)
One comment on activism. Lee Cooperman was bullish on SD. Got rid of CEO, changed up the board. You have to be a little careful when following activists. There must be value there.
Old one: DLB: + on Dolby Labs. Kids of co. own 55% of the co. Co. earns $2/shr. + has $11/shr. in cash. 85% of their business is collection checks. Stock went from $60 to $30 when the CEO died. PC sales were going down. PC sales have recovered. They have new growth in Indian & China. $2.25/shr. in earnings. $11/shr. in cash. Spending $2/shr. on research. 55% of the business owned by sons. They are selling stock. $4B in market cap, $1B in cash. You could buy the company for $50/shr. DLB is a very undervalued stock. It’s attractive to private equity and Apple.
New Idea: FMC Corp. The co. spun out John Bean Technologies (JBT) & FTI. It morphed into a chemical business. Transitioning the co. top executive from Rohm and Haas. Very smart. Stock high $60s to $83. Co. announced a $1.8B acquisition & cancels splitting the co. Went from $83 to $56. 133MM shares. Announcing the $1.8B acquisition caused the stock to sell off $3.5B. So they decided to sell down some assets & pay down some of this debt. 2/3 of the business is food. 20% margins, revs. growing mid-teens. Health & nutrition business is in the right sweet spot. Street has overreacted to the company not splitting into two parts. Smart mgmt. Stock could earn $9-10/shr. in 3 years. Could trade $120-$130 range in 2-3 years.
Owns Fannie & Freddie prefs. Agrees with Bill Ackman’s argument.
Argentina should have a nice rally after the election.
Bill Miller, Chairman & CIO, LLM, LLC: Buy the homebuilders: likes the sector in general: mentions: KB Home (NYSE:KBH), Lennar Corporation (NYSE:LEN) & PulteGroup, Inc.(NYSE:PHM) Also really likes Intrexon Corp(NYSE:XON)
Look out long term and not focus on the short term.
3 ideas: 1st idea: stop trying to forecast the economy & forecasting the stock market. Most of your money should be in stocks. Index funds are fine. Stop market timing!!
2nd idea: Housing: “Housing is the business cycle” read it. Stock market is at all-time highs, yet the homebuilders are not. Buy the homebuilders: likes the sector in general: mentions: KBH, LEN & PHM. People say in general people are scared of owning homes (risk), restrictions are too high, Also likes William Lyon (WLH) trades at 5-6x earnings, homebuilders have a clear path to earnings growth.
3rd idea: Also really likes XON: Interexon. Co. has licensing deals, cash coming into cover all expenses. They are working on bacteria that eats methane. Isobutanall: $11/barrel. No one has any idea if it will work. The bet is on the CEO. He owns 2/3 of XON. Worst is lose ½ your $$$. $2B company. Co. has big upside.
Many, many others are not buying homebuilder stocks. I’m like