Value Investing

Tom Russo: Global Value Equity Investing [Slides]

Tom Russo’s slides on Global Value Equity Investing – Richard Ivey School of Business

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Tom Russo: Musings on "Global Value" Equity Investing

  • Value Investing – 50 Cent Dollar Bills
    • Stanford Business and Law School, 1982
  • “Capacity to Reinvest”
    • 2008 market collapse
  • “Capacity to Suffer”
    • Berkshire Hathaway
    • Nestle – 35 year “planning horizon”
    • Pernod Ricard – credit default swap mayhem
    • SABMiller emerging market beer specialist
  • Invest for the long term
    • White space
    • Position capital globally
    • Currency gains
    • Circle of competence
    • Tax efficiency
    • Virtues of low expectations!
    • Concentrate – few great ideas
    • Market volatility is long-term investor friend

"Capacity to Suffer"

  • BERKSHIREHATHAWAY INC.
  • GEICO
  • Equity index put options
  • Extraordinarily cautious short-term deposits, fiscal year, 2007

"Capacity to Reinvest"

  • BERKSHIREHATHAWAY INC.
    • MidAmerican Energy Holdings Company
    • Burlington Northern Santa Fe Corporation
    • The Lubrizol Corporation
    • Bank of America Corporation
    • Berkshire Hathaway Subsidiary - e. g., Iscar Metalworking Companies

Tom Russo

Tom Russo

Tom Russo

Nestle "Capacity to Suffer"

  • Russian Ruble crisis (1998)
  • Nespresso
  • China and India
  • Alcon (1970’s through 2010)
  • Novartis payment/DiGiorno acquisition (2010)
  • 2011 Chinese acquisitions in confectionary (Hsu Fu Chi International) and beverage (Yinlu.)

Pernod Ricard "Capacity to Suffer"

  • China (early 2000’s)
  • Addressable market -- over 500 million cases local spirits
  • Absolut (2009) – global leader & premium vodka
  • India (2012)
  • Addressable market -- over 100 million cases of India made Scotch Whiskey currently consumed
  • Leading premium priced local Scotch Whiskey brand
  • Patrick Ricard – “Making Mistakes Today…”

Tom Russo

SABMiller "Capacity to Suffer"

  • China
  • 50% interest in Snow, China’s leading brewer
  • Sub-Saharan Africa
  • Addressable market – 400 million barrels beer consumption
  • “Double the price, halve the price, go farming”
  • Indian Market
  • Addressable market – current consumption 1 liter per capita
  • Recently completed Foster’s acquisition
  • Strategic partnership with Efes to coordinate Russian operations and expand together in Turkey, Efes’ home market

Tom Russo

Market Volatility is a Friend of the Long-term "Global Value" Investor

  1. Permits more effective reinvestment.
  2. Offers merger and acquisition opportunity.
  3. Enhances return from share repurchase.

Tom Russo

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