It has been a busy week. While I have been looking through a number of companies, none seem cheap or interesting enough to make the cut for me to put it on this blog. Although I have been doing some work on Western Union, which I think is potential target for my portfolio, the work is going to take a few more days. Instead, let me divert your attention to the Ira Sohn Conference and Value Investor Conference that happened this week.
If you have not coming across this before, the Ira Sohn Conference is one of the biggest hedge fund conferences in the world. Industry legends such as Bill Ackman, David Einhorn and many others come to pitch stocks in order to raise funds for pediatric cancer research and care. If you are curious, Market Folly provides coverage of the event and a short summary of the pitches. On the other hand, the Value Investor Conference focuses on bringing together fund managers to pitch their best investment idea in celebration of Value Investing. Value Walk does some coverage of the event, with notes of each presentation. It is worth investing the time googling to find the presentations delivered during the conferences. I have learnt a lot going through these presentations, try to understand how industry leaders analyse businesses. For any budding investor, choosing a few favorite fund managers, tracking what they are holding in their portfolios, and reverse engineering why they are buying certain companies, is a very good way to learn tools of the trade. None to mention, this is a good source of idea generation, watching what smarter investors are buying.
This week has been an avalanche of ideas, especially after looking through the ideas pitched at both conferences and reviewing portfolio changes of a number of fund managers. In the next few weeks I hope to find time to investigate the following companies:
(i) Resolute Forest Products - a global forest products company.
(ii) Rosette Stone - a US based online language learning solutions vendor.
(iii) Netflix - Internet subscription based TV streaming vendor.
(iv) Clear Channel Outdoor - a global outdoor display advertising company.
(v) Virgin Media - UK provider of broadband internet, television, mobile telephone and fixed line services.
(vi) CTC Media - a Russia TV network operator.
On a side note, I have sold out Moodys and AutoNavi this week, bringing my portfolio cash level to 80%. There has been a lot of talk that the US market is overvalued, and corporate margins at a historical high. Brooklyn Investor talks more about this in detail on his blog. Even if you are an Asian investor and do not invest in US securities, it is worth tracking the US markets closely. Since the financial crisis, correlations between markets have been rather high. Professional investors/traders are always watching how other markets perform and take their lead from there. When the US market sells off, it is hard for Asia to escape unscathed. During the crisis, emerging market allocations were to first to be cut, resulting in deeper stock market corrections here compared to the US, despite having no direct relationship to the US housing debacle.
The strong performance of the US market this year has made me somewhat uncomfortable. There has been no meaningful correction and the momentum shows no signs of stopping. There is a sense of complacency in the air despite macro economic data from Europe still looking bad. Politicians are still not getting their act together. Spain hit an unemployment rate of 27%, which has certainly made me think twice about taking up position in Banco Santander. On a short term basis (3-6mths), I suspect the rally will still continue. However, long-term wise, I do think we are overdue for a correction. Unless I find a really compelling idea, keep cash on the sideline would provide some protection for the portfolio. In any case, one should always aim to have some dry powder, in case markets correct and valuations fall. To me, nothing is more annoying than watching valuations come down and not having the cash to invest.
If you have not coming across this before, the Ira Sohn Conference is one of the biggest hedge fund conferences in the world. Industry legends such as Bill Ackman, David Einhorn and many others come to pitch stocks in order to raise funds for pediatric cancer research and care. If you are curious, Market Folly provides coverage of the event and a short summary of the pitches. On the other hand, the Value Investor Conference focuses on bringing together fund managers to pitch their best investment idea in celebration of Value Investing. Value Walk does some coverage of the event, with notes of each presentation. It is worth investing the time googling to find the presentations delivered during the conferences. I have learnt a lot going through these presentations, try to understand how industry leaders analyse businesses. For any budding investor, choosing a few favorite fund managers, tracking what they are holding in their portfolios, and reverse engineering why they are buying certain companies, is a very good way to learn tools of the trade. None to mention, this is a good source of idea generation, watching what smarter investors are buying.
This week has been an avalanche of ideas, especially after looking through the ideas pitched at both conferences and reviewing portfolio changes of a number of fund managers. In the next few weeks I hope to find time to investigate the following companies:
(i) Resolute Forest Products - a global forest products company.
(ii) Rosette Stone - a US based online language learning solutions vendor.
(iii) Netflix - Internet subscription based TV streaming vendor.
(iv) Clear Channel Outdoor - a global outdoor display advertising company.
(v) Virgin Media - UK provider of broadband internet, television, mobile telephone and fixed line services.
(vi) CTC Media - a Russia TV network operator.
On a side note, I have sold out Moodys and AutoNavi this week, bringing my portfolio cash level to 80%. There has been a lot of talk that the US market is overvalued, and corporate margins at a historical high. Brooklyn Investor talks more about this in detail on his blog. Even if you are an Asian investor and do not invest in US securities, it is worth tracking the US markets closely. Since the financial crisis, correlations between markets have been rather high. Professional investors/traders are always watching how other markets perform and take their lead from there. When the US market sells off, it is hard for Asia to escape unscathed. During the crisis, emerging market allocations were to first to be cut, resulting in deeper stock market corrections here compared to the US, despite having no direct relationship to the US housing debacle.
The strong performance of the US market this year has made me somewhat uncomfortable. There has been no meaningful correction and the momentum shows no signs of stopping. There is a sense of complacency in the air despite macro economic data from Europe still looking bad. Politicians are still not getting their act together. Spain hit an unemployment rate of 27%, which has certainly made me think twice about taking up position in Banco Santander. On a short term basis (3-6mths), I suspect the rally will still continue. However, long-term wise, I do think we are overdue for a correction. Unless I find a really compelling idea, keep cash on the sideline would provide some protection for the portfolio. In any case, one should always aim to have some dry powder, in case markets correct and valuations fall. To me, nothing is more annoying than watching valuations come down and not having the cash to invest.
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