Cliff Remily: Ignore the Noise — Focus on Priorities – Long Subsea 7

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The 10th Annual New York Value Investing Congress takes place in New York on September 8th and September 9th 2014. ValueWalk will be providing coverage of the event- below is a summary of a presentation by Cliff Remily on ignore the noise and focus on priorities.

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Cliff Remily, CFA is the founder and managing partner of Northwest Priority Capital, an investment management company investing across global equity markets with an emphasis on value and income opportunities. The funds include both hedged and long-only versions. Prior to founding NWPC Cliff was managing director and global portfolio manager at Thornburg Investment Management and most recently, co-founder of the Global Equity Dividend strategies at PIMCO.

Cliff Remily on Ignore the Noise — Focus on Priorities

A global generalist.

Cliff Remily’s Long Idea – Subsea 7

A basic value idea in the energy industry. Subsea 7 SA (ADR) (OTCMKTS:SUBCY) (STO:SUBCO) is an engineering and construction (E&C) company serving offshore oil and gas producers. Trades at 8x P/E and 4.5x EV/EBITDA.

Though cyclical the industry is attractive and the valuation is very compelling today.The bear case centers on E&P capex spending. Barriers to entry are high and long-term contracts and relationships help protect revenue. This is a decent business in a decent industry.

Insiders own a good portion of the company.

Some headwinds include a potential tax being added to non-locally owned operators in Brazil. Downside of roughly 20% and upside of nearly 90% offers a 3:1 risk reward ratio.

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