Market Psychology & Value Investors Sell Everything

Daniel Ferris – Altius Minerals; Arnaud Ajdler – Hill International

Daniel Ferris is the Editor of Extreme Value, a monthly investment advisory which focuses on the safest stocks in the market: great businesses trading at steep discounts. His strategy of finding safe, cheap, and profitable stocks has earned him a loyal following – as well as one of the most impressive track records in the industry.

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Daniel Ferris - Altius Minerals; Arnaud Ajdler - Hill International

Daniel Ferris spoke at the 9th Annual Value Investing Congress, also see Short Emerging, Long Developed Is A Hot Hedge Fund Trade: UBS. Below are notes from his presentation.

Highlights from Daniel Ferris’ presentation

Best royalty investment in world: Altius Minerals Corporation (TSE:ALS) (OTCMKTS:ATUSF)

Organically crested royalties

10-12 chances at 50x to 100x return

Kami 3% royalty

Buy until it hits $14 a share

Could pay dividends once KAMi royalty pays royalities.

Daniel Ferris the Best Royalty Investment in the World Today by scribdvw

Arnaud Ajdler

Arnaud Ajdler is the founder and managing partner of Engine Capital L.P., a value-oriented special situations fund. Prior he was a partner at Crescendo Partners since 2003. He is also teaches a course in value investing at the Columbia Business School and serves as the Chairman of the Board of Directors of Destination Maternity, Inc.

Arnaud Ajdler spoke at the 9th Annual Value Investing Congress, also see Event Driven, Long/Short Hedge Funds On Top In 2014. Below are notes from his presentation.

Highlights from Arnaud Ajdler’s presentation

Launched 9M back

Long/short value, Special situations, Activist

Focus on change and how value gap will close.

Time arb 2-3 years

Chairman of Destination maternity

Types of changes:


Capital allocation

Capital structure




Proxy fight, negotiated settlement, public letters, private letters, informal communication recent spinoff. Low free cash flow multiple. Owns it. Sent private letter to them.

Security selection

High fcf yield

Multiple ways to own:

  • operating margins are too low
  • Poor cap allocation
  • Lazy balance sheet
  • Conglomerate discount
  • Takeover candidate

Idea: Hill International Inc (NYSE:HIL)

Global project management firm with 4,100 professionals in 100 offices.

Run by Irv Richter and David (next CEO) combined 30%.

Passive investment.

Revenue CAGR 14% over Last 3 years

2014 sales guidance: $600M. Good visibility via backlog. 1 billion backlog.

Diversified by region and client. US government exposure is low at 16 percent.

Why they like it:

High barrier to entry

Expense for hills service is small component of total project

High revenue visibility from lt contracts

Low CAPEX but high working capital


Fast revenue growth plus leverage lead to faster bottom line growth

Stock 5.4

Market cap 220M

Ev 312m

Ebit 2013 29m

Ebit 2014e 40m. And 48.5 2015

7.8x ebit 2014 and 6.4x 2015

Goal is 10 percent margin. Will be 7.8% margin in 2015.


Median 9.8x ebitda vs hill is 6.2x 2014


Why it’s under valued:

1. Most analysts don’t use correct peers.

2. Libyan receivables. Thinks they will get paid the rest of $50M of $60M. May also resume work there.

3. Leverage. Broke covenants due to Libya receivable. Had to refi using expensive debt which is now choking company. Expects refi in 2014. Which is the major catalyst for stock.

Net debt to ebitda 2.4x

Expects delveraging using FCF.

Potential return 80%. Low end 50% return.

Low end of historical multiple.

33m FCF maintenance in 2015

10x 8.4$


Won’t sell the business as 30% owned by founder’s son

Too focused on mergers and acquisitions


Insiders are selling shares regularly.

Arnaud Ajdler Investing in Change by scribdvw


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