Value Investing Congress: Last Year’s Hottest Ideas

To know what to expect from next week’s Value Investing Congress, we take a look back at the top value investment ideas from last year’s conference.
My two days at the Value Investing Congress in New York last year felt a little bit like speed dating.
I heard a lot of people talk in a short amount of time, each one telling me about themselves and what they like. Most of them I liked back. Others – not so much. By the end my head was spinning, but I felt as if I was coming away with one or two potentially meaningful relationships . . . er . . .investments.
This year should be no different. While I will not be at the conference in person next Monday and Tuesday, my boss Ian Wyatt will. And he will be chronicling the entire event, which is so exclusive that it’s closed to the mainstream financial media. It’s an event value investors from all over the country shell out thousands of dollars to attend in the hopes of hearing a presentation on the next Netflix (Nasdaq: NFLX), Howard Hughes (NYSE: HHC) or United Rentals (NYSE: URI).
At last year’s Value Investing Congress, I listened to 27 speeches over the course of two days. Many of them were outside-the-box investment ideas from some of the premier value investors in the world. There was also a presentation about Bitcoin from Cameron and Tyler Winklevoss (yes, THOSE Winklevoss twins).
This year promises to be more of the same … mercifully, minus the Winklevii. In a market that is already at all-time highs and for months has been roundly deemed overbought, it’s getting exceedingly difficult to find undervalued stocks. Rarely has a Value Investing Congress been more, well, valuable.
To give you a feel for what to expect from this year’s event, here is a look at some of the highlights from last year’s Value Investing Congress:
The most convincing presentation over my two days at the Value Investing Congress was the very last one. It was worth the wait. Whitney Tilson dismantled K12 (NYSE: LRN), the creator of national online charter schools, in 82 scathing slides. The Kase Capital Management hedge fund manager and co-organizer of the Value Investing Congress slammed K12 for, among other things, fudging student test scores, dismal academic results, woeful graduation rates and even tax evasion.
“The entire business model is illegitimate,” Tilson said bluntly.
Tilson announced that he was short-selling K12. The stock has since fallen 47% in the year since.
Another powerful presentation was delivered by Indian investor Rahul Saraogi, who made the contrarian case for investing in his native country. Eloquent, witty and passionate, yet realistic about India’s past challenges, Saraogi made a pretty compelling argument for the India opportunity.
Saraogi says that India’s economy should outpace the likes of Europe, Japan, China and Brazil over the next 20 years. And he called the country’s currency problems an opportunity.
“India doesn’t have a currency crisis,” Saraogi insisted. “It has a confidence crisis.”
Sure enough, India’s benchmark Sensex index, a measure of the 30 leading shares in the Bombay Stock Exchange, hit a record high above 27,000 points earlier this week. The country’s economy expanded by 5.7% in the first quarter.
Meanwhile, one activist hedge fund manager felt that fixing a broken company is as simple as replacing a few of its board members. That’s what Jeffrey Smith of Starboard Value talked about in his speech, “Using Board Dynamics to Enhance Returns.”
Smith’s firm specializes in improving underperforming companies by strategically replacing board members who are “friends with the chairman.” Instead, his firm aims to stock companies’ boards with industry experts who are focused on delivering returns to the shareholders.
Starboard’s strategy recently helped one small-cap company quadruple its margins, cut its debt by two-thirds, and completely reshape the business’ focus all within two years. Smith’s approach is aggressive – but effective.
On a pure results basis, no presenter at last year’s Value Investing Congress has performed better than Atlantic Investment Management’s Alexander Roepers. The 21-year veteran only buys six or seven stocks a year, but the minimalist strategy works. Roepers has earned his clients an astonishing compounded annual return of 19.2%.
His picks at last year’s VIC have performed even better. Roepers particularly liked energy service giant Baker Hughes (NYSE: BHI) and Harman International (NYSE: HAR), a U.S. company that creates parts for car speakers. Those two stocks are up 37% and 70%, respectively, since his presentation.
Roepers, Smith and Tilson will all be presenting again at this year’s Value Investing Congress, among at least 15 other speakers. Ian Wyatt will be there to report on every single one of them. To gain direct access to Ian’s live reports from the conference next Monday and Tuesday, Sept. 8-9, click here to learn more.
We hope to see you next week – from one of the world’s most exclusive value investment conferences!

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