Spring 2015

We bought Bank of New York a few years ago because we believed it was under-earning in a few dimensions as a result of interest rates and operational expenses which had room for improvement. The company was re-segmenting…

Our view is that it continues to trade at a double discount, in the sense that if you do a sum of the parts comparison with the public price, that's a discount. Additionally, a number of the businesses it owns have been …

Oracle is the leading provider of relational databases, with a very dominant, stable market share position. Despite concerns about the threat from the cloud, the company has such scale economies in R&D that it was able t…

Hermès is trading at 35x 2015 consensus earnings estimates, which are projected to be an all-time high. Given the potential for a slowdown in the Chinese economy, which accounts for a significant portion of luxury sales,…

AIG is very cheap, trading at around $54 while its book value per share is $70. The company has the potential to be an above-average business due to its global scale, and it should at least trade at book value, providing…

Weight Watchers is a poor capital allocator, having issued $1.5 billion of debt to repurchase shares at $82 each, just as competition from free dieting apps began to rise. The stock now trades around $8, highlighting the…

Altice S.A. is positioned for significant upside due to its strong competitive advantages in the cable and telecom sectors across France and Portugal. With a target price of €180 representing nearly 80% upside, the compa…

The market misunderstands the potential for cost savings and synergies from migrating DSL subscribers to Altice's cable network, alongside significant operational expense cuts. The consolidation of the European telecom i…

Fiat Chrysler is undervalued due to the market's misunderstanding of its brand portfolio, particularly the value of Ferrari, which could be worth significantly more than the current market cap. With a strong management t…

The investment thesis for Fiat Chrysler is based on its potential for significant earnings growth driven by a five-year plan that includes globalizing the Jeep brand, developing premium brands like Alfa Romeo and Maserat…

HCA is presented as an attractive investment opportunity due to its position as the largest hospital operator in the US, with a strong market presence that allows for favorable negotiations with insurers and significant …

HCA is significantly undervalued, trading at approximately 8.5x EBITDA compared to healthcare REITs that trade between 16x and 25x EBITDA. By spinning off its real estate into a PropCo, HCA shareholders could unlock hidd…

Genuine Parts Company is mentioned as a long position, indicating a positive outlook on its performance.

We recommend investors buy Genuine Parts Company (GPC) with a two year price target of $127, representing a total return of 45%. The investment thesis is based on the strength of the automotive parts segment, a Reverse M…

We recommend a long position in Precision Castparts (PCP) with a two-year target price of $300, representing ~50% upside. PCP is the market leader in an industry with meaningful barriers to entry and has a history of bes…

We believe PCP is well positioned to continue to grow through M&A, driven by strong secular tailwinds in the commercial aerospace market. Despite concerns over slowing organic sales growth, we see limited risk of a sharp…

Rolf Heitmeyer believes that American Axle is undervalued due to its strong market position and potential for operational improvements.

Heitmeyer sees Bed Bath & Beyond as a turnaround opportunity, with significant asset value that is not reflected in its current stock price.

Heitmeyer considers Hermès a strong brand with pricing power and growth potential, making it a solid long-term investment.

National Oilwell Varco has a very strong market position and about $12 billion of backlog and net cash on the balance sheet. Despite challenging short-term fundamentals due to the price of oil dropping, the company is we…

CDK Global is undervalued due to market misperceptions, and its strong position in the automotive retail technology space provides a solid foundation for growth. The company has a robust cash flow and is well-positioned …

Groupe Bruxelles Lambert is undervalued compared to its intrinsic worth, with a strong portfolio of assets and a disciplined management approach. The company’s ability to buy back stock at a discount enhances its value p…

Oracle is a stable cash flow machine with a high retention rate on its maintenance contracts, making it less volatile than typical tech stocks. The company's management is aligned with shareholder interests through equit…

VimpelCom operates primarily outside of Russia and Ukraine, yet its stock has traded in correlation with the Russian index, creating an opportunity for investors. The fundamentals of the company remain strong despite the…

Investing in Pixar was based on the belief in its management and creative process, which consistently produced successful films despite skepticism about its business model. The company's strong intellectual property and …

Amazon is expected to improve transparency and focus on profitability, particularly in its retail and AWS segments. The company’s shift in strategy to care about share price and the potential for AWS to be spun off as a …

The multiple gap for CBS has narrowed compared to peer media companies, and while there are concerns about the television ecosystem, CBS still provides significant value to distributors. The stock is currently well-balan…

Facebook is not an expensive stock given its earnings potential, with estimates of over $3 per share next year. The company has significant assets like Instagram and WhatsApp that have not yet been monetized, presenting …

MercadoLibre has established itself as a dominant player in Latin American ecommerce, successfully navigating a complex landscape and achieving profitability. The stock was initially undervalued due to concerns over its …

Tencent is expected to trade in the teens next year with accelerating revenue growth, particularly from advertising, which has higher margins compared to mobile gaming. The monetization potential on Tencent's platform is…

Telecom Italia is well-positioned to benefit from the consolidation of the European and Brazilian telecom industries. With its significant ownership of TIM Participações, it is a strategic asset that could attract M&A in…

Telecom Italia's stock is currently priced at €1.08, but we believe it is worth at least €1.50 due to its potential for high-margin revenue growth and the value of its 67% stake in TIM Participações in Brazil, which will…

After initially being short on BlackBerry, we reversed our position and went long due to the impressive turnaround strategy presented by CEO John Chen, which we believed would gain investor confidence despite the company…

We regret not owning Altice or Numericable, as we were impressed by their management team and their aggressive consolidation strategy in Europe.

Investing in Surgutneftegas during the Russian voucher privatization program was a major opportunity, as we believed it was undervalued compared to its oil reserves, which were comparable to Mobil's but priced significan…

The Bank of Georgia was acquired during a time of political change and economic stabilization in Georgia, and it has since cleaned up its balance sheet and grown significantly, eventually listing on the London Stock Exch…

Uralkali was purchased at a very low price due to hidden profits, and the investor identified a potential structural supply deficit in potash, leading to a bullish outlook on the resource.

Lukoil has transitioned into a company that runs efficiently and pays big dividends, making it an attractive investment in the oil sector.

Gazprom Neft generates a lot of cash flow and pays a large dividend, with a strong management team that adds value and allows the company to remain independent from Gazprom.

MGM is trading at a significant valuation discount with a 20% levered free cash flow yield. The stock is expected to appreciate as the company continues to pay down debt and improve its balance sheet, with additional ups…

The gaming company was trading at 7x EV/EBITDA with a leverage of 5x EBITDA, indicating it is a levered equity. The free cash flow yield on the equity was attractive, and the high-yield markets seemed comfortable with th…

The MLP has a $10 billion market cap and its revenues are completely contracted, yet it trades at a 25% discount to NAV with a strong current dividend yield. This presents a significant upside potential, especially if oi…

The ski company is trading at a substantial discount to its peers and has a hidden real estate angle. It is valued around 7x EBITDA compared to its peers at 10-11x, generating a double-digit free cash flow yield and has …

The spinoff was trading at a 50% discount to intrinsic value and involved a well-respected CEO. The management was announcing value-enhancing catalysts, such as spinning off assets and returning cash to shareholders, mak…

We believe Bed Bath & Beyond is an exceptional business with a leading position in the housewares retail category and a return on invested capital consistently above 20%. The company has a strong cash flow and has return…

American Axle & Manufacturing is perceived as a boring provider of commoditized products, but we believe it has innovative products that are not getting credit in the market. The company has a strong customer base with l…

American International Group is improving its return on equity through share buybacks and increasing its asset to equity ratio. As the company's ROE mean-reverts to industry averages and the stock trades at a premium to …

AXL has a manageable debt load with net debt at 2.5x EBITDA and a strong free cash flow of about $200 million annually. The company is expected to diversify its customer base and reduce GM concentration below 50% of sale…

Vectrus is a defense contractor with sticky government contracts and a potential for margin expansion due to a fixed price structure on renewals. The company has a medium-term earnings power of $3 per share, and applying…

Investors Bancorp is a small regional bank that recently demutualized and is currently overcapitalized, leading to a depressed ROE. The stock trades at 1.1x tangible book value, while comps trade at over 1.5x. The bank i…

HCA is well-positioned to benefit from significant industry tailwinds, particularly from the growing Medicare eligible population, which is expected to increase at a CAGR of ~3.0% over the next 20 years. The company's st…

Precision Castparts is a market leader in providing mission-critical metal components to the aerospace market, with a strong competitive moat due to its entrenched position in customer ecosystems, dominant market share, …