We covered the 2015 Harbor Investment Conference hosted by Bill Ackman. Below are very informal notes from the entire conference, which included, Larry Robbins of Glenview Capital Management, Todd Sullivan of Rand Strategic Partners, Ray Dalio of Bridgewater Associates, Stephen Errico of Locust Wood Capital Advisors, Martin Franklin runs Platform Specialty Products, Ronald Weibye of Aperio Capital, Joshua Kaufman of Brenner West Capital presentations.
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Larry Robbins – Glenview Capital Management
- Mentioned Thermo Fisher Scientific, Flextronics International, Monsanto and McDonald’s. All known positions besides MCD. He mentioned MCD activism means there is no company that is too big for activism. He likes the moat around MON he likes the stock buyback by FLEX and he’d rather own the suppliers to the high fliers – TMO, FLEX than have the risk of owning a biotech name that may blow up.
- Robbins wasn’t excessively bullish but he seems to think it is business as usual they are buying stocks still. He says he always loses money when he shorts stock, so he likes to stay long.
Todd Sullivan – Rand Strategic Partners
- Howard Hughes he was beating this horse for about 30 minutes. Says that its recent sell off was correlating with OIL. They have a lot of exposure to the Houston market. He mentions that even in the worst case scenario a lay off upwards of 40,000 people in the energy sector in the Houston area wouldn’t hurt a vibrant and diversified economy. Says that those fears are overblown. He went on to talk about the Hawaii properties, south street seaport and some other properties. He thinks it could be 176. Ackman was asked if he would sell HHC and he said he likes it and won’t be selling it.
Stephen Errico – Locust Wood Capital Advisors
- Last year he was talking about Northstar Realty Finance this year he is talking about a spin out of it NorthStar Asset Management. NSAM is under followed. It is a general partnership He has a 28.60 target on this.
- Liberty Media he called this one returning to the mother ship. Says LMCA is the cleanest it has been in a while. He is very enthusiastic about their ownership stake in Sirius XM (57%) He called SIRI a creeping LBO. Says that if you buy LMCA you are getting SIRI at a discount. He compared it to DIRECTV.
- He had a chicken way to play oil, Tesoro Logistics and QEP Midstream Partners a smaller cap. TLLP owns all the pipes that go to and from Tesoro. He mentioned that TLLP has a tender offer for QEPM’s stock and thinks that they will probably sweeten the deal.
Martin Franklin – Built Jarden now runs Platform Specialty Products
- He talked a lot about building Jarden. He puts a big premium on salespeople and relationships. He usually looks to buy a company at no more than a 10 times multiple. He is very enthusiastic about the specialty chemical space. He has a bit of a Berkshire model where he keeps people in place to run their business. He talked a lot about collaboration and efficiencies. He looks for managers who are good allocators of capital. He was asked if he was going to raise capital by selling shares and he skirted around that idea, he is not happy with doing that at these prices.
Ronald Weibye – Aperio Capital
- This guy is making money in the mortgage backed market. He says keep an eye on FICO scores. Loan originations are up slightly as lenders are lending to people with lower FICO scores as of late. It’s small but the difference in the population of people between a 740 and 730 is big. It boosts refinancing and increases the likely hood of Pre payment. Buying mortgages at 45c on the dollar and getting paid back at par is the business he likes to be in.
Joshua Kaufman – Brenner West Capital
- MIC – it has 3 parts to it and he thinks this company should trade north of 100 pretty easily with a 5% dividend along the way . IMTT is their largest subsidiary and it is their biggest source of value. They have Bulk storage facilities in Bayonne and at the nexus of a lot of Pipelines (northeast pipelines) their moat is basically the permitting process for storing the things that they store. They have a consistent 96-97% occupancy rate.
- They can change the margin growth a little bit more now that they bought out the privately owned portion of IMTT that they didn’t own already. That was owned by the Coleman family. It was Josh’s opinion that they got a good deal on this piece. There was a stipulation in the deal with the Coleman family that IMTT couldn’t convert to an MLP or a REIT until 1 year after the close of the deal. This is due to come up in July. Their 2 other subsidiaries are Atlantic aviation and Hawaii gas. AA does logistics and fuel for the private Jet industry, not that sexy but it has recovered a lot from the low. Hawaii gas is well located and was mentioned as trying to get a permit for a LNG facility. MIC is an LLC and a lot of yield oriented investors can’t buy it expect that to change if they go to a C-corp
Ray Dalio – Bridgewater Associates
- Long short anything in the world. Very systematic approach using liquid investments and financial engineering.
- Ray Dalio talked a lot about making uncorrelated bets. He trades in over 120 markets to find non-correlated bets. He lets his quantitative machine drive the bus rarely does he interject. He thinks you can quantify anything. Bill Ackman actually asked him how he chose his wife… then went on to ask if she might be a robot. Worries about tail risk the safety net of the central bank isn’t there if what they are doing doesn’t work. Says bond yields in US are relatively high compared to the Eurozone
- Says if rates rise faster than expected all assets will fall.
- Doesn’t say we are in a bubble but inflated asset prices are certainly a side effect of a chase for spread.
Bill Ackman is a smart guy but I couldn’t help but think he seems uncomfortable. Certainly he has found a formula that works well for him. It seemed that he had a host of guests who have similar holdings or agree with what he is doing. Ray Dalio was perhaps the exception. A lot of what Ray Dalio was saying went over my head, I feel like I may not be the only one, but that is just my opinion. Clearly Ray Dalio is a deep thinker and seemingly ultra-paranoid. I think he said the word “worry” and or “worried” about 10- 15 times.
I found Larry Robbins spoke a mile a minute and has a lot to say, Stephen Ericco struck me as someone to follow, Martin Franklin good speaker, the guy clearly has his act together. He seems like a good person to follow (JAH, PAH) His story reminded me of the Teledyne and KLUGE with the way he handled his companies The younger guy from Brenner West I thought was another one to watch.