Scott Miller presented his in-depth investment thesis on Fortress (NYSE: FIG) at Best Ideas 2016. Many investors, when looking at asset managers, underappreciate the balance sheet. Scott highlights two asset managers at compelling valuations when the balance sheet is factored in.
Fortress is an alternative asset manager that is 50+%-owned by insiders. More than half the value of the company is in cash and investments. There is another 15+% in earned but unrealized incentive fees. Despite the headlines of a closed macro hedge fund, the business grew in 2015 and has a very stable management fee revenue stream. The stub (factoring out cash, investments, and earned but unrealized incentive fees) trades at approximately 2x distributable earnings.
About the instructor:
Scott is the Founder of Greenhaven Road Capital, a boutique investment partnership that seeks out off the beaten path investments, modeled after the early Buffett partnerships. The firm is built on the belief that a focused investment manager can outperform an index by limiting fund capacity and by concentrating exposure on a few great ideas over a long time horizon. Experience as an owner-operator of businesses influence Greenhaven’s approach towards partially-owning companies rather than merely picking stocks. Prior to founding Greenhaven Road, Scott co-founded Acelero Learning, serving in a variety of roles over a decade from CFO to CTO, to Chief Strategy Officer to his current role of Board Member. Acelero Learning has grown from three people in an office “cube” in New York City to 1,100 employees serving 5,000 children across four states. Additionally, Scott managed a manufacturing business, with responsibility for hiring, firing, planning inventory, negotiating with suppliers and acquiring customers at a reasonable cost. Scott holds an MBA and a Masters in Education from Stanford University.
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