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Antonio Garufi on Thematic Value Investing and Covestro

November 7, 2018 in Audio, Conversations, Diary, Equities, Ideas, The Frankfurt Conversation 2018

Antonio Garufi, portfolio manager at Geneva-based Decalia Asset Management, joined the MOI Global community for The Frankfurt Conversation 2018, held at Jumeirah Frankfurt in November.

Antonio discussed the concept of thematic value investing and outlined his investment thesis on Covestro (Germany: 1COV).

Antonio Garufi is a portfolio manager and equity analyst at Decalia Asset Management, based in Geneva since 2017. Previously, he spent one year at Citigroup and three years at J.P. Morgan in London. He then went on the buyside at Astor Investment in Milan, where he was an analyst and co-manager of a thematic hedge fund. He graduated from Bocconi University in 2005, where he is currently a teaching assistant, has a Phd in Business Administration and attended the Value Investing Program at Columbia Business School. He graduated from the Strategic Financial Analysis program at Harvard Business School in 2018.

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Doubling Down on Appian

November 6, 2018 in Equities, Ideas, Information Technology, Letters

This article is excerpted from a letter by MOI Global instructor Michael Shearn, portfolio manager of Compound Money Fund, LP.

During the second quarter, we doubled our position in Appian (APPN) at an average cost basis of $26.50 per share. We believe the company’s growing customer adoption rate will accelerate future revenues.

There is strong demand for software development, but relatively few people who can develop software. Appian believes the solution is to multiply the effectiveness of software developers. Appian’s platform can accelerate software developers’ speed by up to 20 times, producing custom software in far less time.

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November 6, 2018 in Twitter

Aimia: A Low-Ball Bid, Cash and NOLs, and Capable Capital Allocators

November 5, 2018 in Equities, Ideas, Letters

This article is authored by MOI Global instructor Matthew Sweeney, founder and managing partner of Laughing Water Capital, based in New York.

Aimia is technically not a new holding as we first purchased shares some time ago, but it has not been previously introduced due to its formerly small size, and the thought that I might seek to purchase more shares. As it is now a mid-sized position, it merits discussion. Aimia is a collection of assets in the loyalty space, which I became familiar with last year when researching Points.com (PCOM), which was introduced in our H1’17 investor letter.

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James Simons Reflects on a Mathematician’s Career in Finance

November 5, 2018 in Curated, Equities, Full Video, Interviews, Quantitative, Timeless Selections, Transcripts

James Simons, the founder of Renaissance Technologies and arguably the world’s most successful quantitative investor, reflects on his career and provides a glimpse into how a passion for mathematics enabled him to amass one of the great fortunes in the field of investment management.

Greg Zuckerman profiled James Simons in his book, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution, published in 2019.

Simons also sat down for an interview with TED’s Chris Anderson in 2015.

Watch the 18-minute highlights video below or log in to access the full hour-long interview.

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Miguel de Juan sobre las FAANG

November 5, 2018 in Miscelánea, MOI Global en Español

NOTA DEL EDITOR: El siguiente comentario es extraído de la carta a los inversores de Argos Capital FI correspondiente al mes de septiembre de 2018.

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Respecto a las FAANG y su peso actual en los mercados vuelvo a incluiros otra cita, que viene a insistir en la falacia de pensar que estamos ante empresas sin problemas, ante empresas que dominarán el mundo y lo harán expandirse al tamaño de Júpiter, ante empresas donde siempre brillará el Sol del crecimiento continuo y brutal… ojito, porque esto ya ha pasado antes. No evidentemente con las mismas empresas pero sí esta misma sensación de “ahora sí… invirtiendo en esta o aquella empresa ya nunca más tendrás que preocuparte ni tendrás que pensar en el precio que pagas por ella porque siempre estará barata”.

Sin embargo, aunque no lo parezca el crecimiento continuo y por encima de la media histórica permanentemente (y no hablemos de MUY por encima de la media histórica) no ocurre; llega un momento en que el propio tamaño fuerza a que la compañía agote su ritmo de crecimiento y se amolde a situaciones de crecimiento más normales. Aquellos que trabajáis en banca privada conocéis la misma falacia: si cumplimos los objetivos de un año, al siguiente nos marcan unos nuevos basándose en lo logrado no en lo razonable… si un año damos un pelotazo, al siguiente nos vemos forzados a tener un pelotazo aún mayor para lograr alcanzar los objetivos del nuevo año… y cuanto más los superamos, mayor es la exigencia para el siguiente ejercicio. Mientras que la avaricia y la glotonería nunca quedan satisfechas, el límite a lo que es posible conseguir sí existe. Un crecimiento más terrícola y menos extraterrestre sigue siendo una buena cosa y no será tan extraño que sea lo que ocurra en estas empresas en un plazo de tiempo relativamente corto… en un futuro más lejano, seguro vuelven a tener tirones como Apple [AAPL] cuando Jobs la revolucionó tras haber estado a punto de quebrar. El problema, siempre, es olvidarnos cuánto pagamos por ese crecimiento… si es excesivo – que puede depender de muchas cosas- terminaremos sufriendo. Por ahora, disfrutad mientras dura que están de moda.
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Hill International: Activists, Forced Selling, and Low-Hanging Fruit

November 4, 2018 in Equities, Ideas, Letters

This article is authored by MOI Global instructor Matthew Sweeney, founder and managing partner of Laughing Water Capital, based in New York.

“The time other investors spend delving into the last unanswered detail may cost them the chance to buy in at prices so low that they offer a margin of safety despite the incomplete information.” –Seth Klarman

Hill International is a global provider of asset light construction management and consulting services, with 47% of 2017 revenue from the U.S., 35% from the Middle East, and the balance from EMEA, LatAm, APAC, and Africa. Unlike a general contractor that has to bear the cost of overruns, HILI generally operates on a cost+ basis, providing information and advice in order to avoid problems before they blossom.

With an activist campaign to remove the founding family from the C-suite already complete, a division sold to shore up the balance sheet and simplify the business, a cost cutting plan underway, and rampant M&A in the space at premium prices, there are a lot of moving pieces that could explain HILI’s mispricing. However, the most notable piece is that HILI – formerly HIL – was delisted from the NY Stock Exchange in August, which caused shares to tumble ~30% over night.

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EZCorp: Mr. Market Shortsighted in Convert Issuance-related Selloff

November 4, 2018 in Equities, Ideas, Letters

This article is authored by MOI Global instructor Matthew Sweeney, founder and managing partner of Laughing Water Capital, based in New York.

EZCorp, which should be familiar by now, continues to frustrate following the May 2018 issuance of convertible debt, which is potentially dilutive. To be clear there are other things not to like here, but as far as the sell off following the convert, I think the market is being overly shortsighted.

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A Better Way of Doing Business

November 2, 2018 in Letters

This article is excerpted from a letter by MOI Global instructor Michael Shearn, portfolio manager of Compound Money Fund, LP.

Sometimes the best questions are the hardest to answer. I was having lunch recently with a friend who works in the investment business. We started talking about one of my favorite topics: the benefits of investing in businesses with highly engaged employees. Ever the contrarian, my friend started listing successful businesses that do not meet my criteria for a great culture and yet are undeniably customer oriented – companies like Danaher, Colfax, and Middleby. Their cultures are often described as ruthless. Middleby, which is probably best known as the owner of high-end kitchen brands like Viking, is a highly decentralized business that relies on financial incentives to motivate its employees.

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