ValueWalk is at the NYSSA Annual Ben Graham Conference today. Below are notes from the speakers. Check back as we will have a lot more in the coming hours. These notes are from the following panel Opening Keynote: “Non-Consensus Investing” Rupal Bhansali, Chief Investment Officer, International & Global Equities, Ariel Investments, LLC
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Rupal Bhansali – informal notes from the speech
-no payoff if your view is consensus
-correct answers worth nothing in investing if your view is consensus and wrong answers are painful and expensive
-example of tires: consensus is low value commodity and non consensus view is that it is mission critical, high tech; there are no Chinese tire! Why are tires not manufactured in China.
-Michelin was low return not because of business but because of bad management
-consensus sees tires as another auto component company;
-tires are consumable and not based on new car sales
-Japan is proverbial submerging market but many high quality companies
-investors think gdp growth is prerequisite for good companies but exmaple of China shows that gdp growth doesn’t equal good investments
-consensus was crazy about emerging markets but they were expensive and non consensus bet on Japan was a 3x return
What wise people do in beginning fools do in the end
-what people like about consumer staples is they are a staple b/c they are recurring in nature; a value investor does not overppay
-microsoft is a staple; outlook, excle, powerpoint,, it is an enterprise staple and trades at a discount to other consumer staples
WSJ article in Oct. 2016 – they dying art of stock picking but most active managers were not active ; they were closet passive; too many mutual fund players were closet indexors;
Information that everyone else has is not worth having
-these headlines always reach a crescendo at the wrong time; every time value investors chose to fail and not cheat; every time have a bull market; passive does not care about valuations or have a moral compass
-what do people get most wrong in market? quality…conventional wisdom is find quality; past performance can change; brands dont’ look interesting; people don’t want brand but want a value proposition; kirkland is a brand even though it is not branded; COMPETITIVE ADVANTAGE IS OLD SCHOOL; YOU NEED COMPANIES TO HAVE DARWINIAN INNOVATION THAT KEEP EVOLVING;
-Avoiding losers is more important than picking the winners
Rupal Bhansali – END
UPDATED with next speaker – Aswath Damodaran – Professor of Finance at NYU
-Valuation is not a science but a craft; you learn valuation by doing but not by reading about it in books;
-85% of all intangible assets is goodwill which is a plug asset;
-balance sheet records the past and very rule driven but a valuation mindset is forward looking
-we can’t think about value as assets in place
-simple way to check valuation is to see if assumptions of growth, risk, and reinvestment make sense
-need to separate words price and value; value is cash flows, growth, and risk; price is supply and demand and who knows what that is; we need to stop using the two terms interchangeably
-you need faith that price will reflect your value; proof means you can’t prove it; i
