2018 Value Investing Conference Notes

Jan Humme’s notes from the Ben Graham Centre’s 2018 Value Investing Conference.

Also check out our Sohn Conference notes right here. We will also be adding much more extensive coverage of the event in coming days for Premium readers in particular.

Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Also Baupost letter

Klarman On

Bitcoin

 the danger of Chinese leverage

Discipline while value investing in bubby times

Value investing is not dead

Radicalization of politics

Dangerous FAANG valuations

Q1 hedge fund letters, conference, scoops etc

Jan Hummel

Jan Hummel, Paradigm Capital - The future of active value investing

  • How do we create an edge
  • Imperfect space
  • Deep fundamental research
  • Concentrated portfolio
  • Hedging
  • Specialization is key
  • How do we start our journey towards specialization
  • Investments à asset classes à equitiesà Europe
  • A focus on publicly listed companies in europe offers close to 10 k to analyze but 7% generate 80% economic impact
  • Size and geography
  • Small cap, ciro cap
  • Market cap 100 to350 mill
  • Narrow and screen out 90% of companies
  • Value premium – lottery preference, ugliness aversion, overconfidence/uncertainty
  • Imperfect space to deep fundamental research
  • 5 pillars business quality blance sheet capital allocation corporate governance relative value
  • Value investing process
  • NPV approach
  • Ignore info
  • Method of combining info
  • Sensitivity analysis is based on difficult to forecast parameters
  • Basic elemetns of value
  • Strategic dimension
  • Growth infranchise only ROCE > Cost of capital
  • Franchise value current competitive advantage
  • Free entry no competitive advantage
  • Reliability deimension
  • Asset value, tanglible,blance sheet based, no extrapolation
  • Earneings power value, current
  • Management cost efficiency, expansion of it only invested when expected return of capital employed is greater than cost of capital, when you invest in high cash flow and high return and how is distribution to capital to owners, management on human resource strategy (recruiting people when market and industry in difficult time, perfect time to pick the top people for your company)
  • Understanding the concept of cost of capital and return on capital is an essential step in operating a business as well as being a good investor
  • Value implications of barriers to entry
  • Organic growth, cost reducing tech, new investments, growth option
  • Efficiency
  • 90% do not have or maintain a competitive advantage
  • Risk management
  • Not variance, but rather permanent impairment of capital

Q&A

Continues here



About the Author

Sheeraz Raza
Sheeraz is our COO (Chief - Operations), his primary duty is curating and editing of ValueWalk. He is main reason behind the rapid growth of the business. Sheeraz previously ran a taxation firm. He is an expert in technology, he has over 5.5 years of design, development and roll-out experience for SEO and SEM. - Email: sraza(at)valuewalk.com