1 / 0

General Body Meeting 9/22

General Body Meeting 9/22. Today’s agenda. Investment ideas to add to conviction list Real Estate Consumer Goods Financials Macro Review of Brinks. American Campus Communities: ACC.

zarifa
Download Presentation

General Body Meeting 9/22

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. General Body Meeting 9/22

  2. Today’s agenda Investment ideas to add to conviction list Real Estate Consumer Goods Financials Macro Review of Brinks
  3. American Campus Communities: ACC Thesis: given uncertain economic outlook, student housing REITs sustain strong demand and growth compared to “typical” REITs One of the nation’s largest developer, owner and manager of high-quality student housing communities; regionally-diversified portfolio Flipped a $5.3 million loss in 09 to a $937,000 YoY gain in 2Q 10
  4. American Campus Communities: ACC Recent transactions: $357.5 million equity raise (Aug 20) $200 million acquisition of joint Fidelity Real Estate Group (Sep 8) Trading: Price (as of 9/21): $30.62 52wk range: $23.62 - $31.34
  5. Digital Realty Trust: DLR Owns, acquires, and manages technology related properties. Leader in industry in terms of total space and diversification Projected heavy annual increase in data usage Good for Dell, HP, IBM and such Also good for DLR for leasing the land
  6. Recently acquired rival 365 Main It has acquired 8 properties in the past year Large stock price increase Revenue growth Q2 increased 28% 95% occupancy rate Better debt levels than their competitors
  7. Archer Daniels Midland Company (ADM) One of the world’s largest providers of agricultural commodities ADM processes crops and produces food and biofuels Market Cap: $21 billion
  8. Investment Thesis Rapidly increasing global demand for food and fuel caused by strong emerging markets growth ADM has a strong diversified market position as a leader in wheat, corn, oilseed and cocoa production Strong balance sheet and cash flow enable potential future acquisitions Low valuations metrics point to cheap price P/E: 10.9, EV/EBITDA: 6.2
  9. Recent Catalysts Russian wheat shortage pushing up agricultural commodity prices Upcoming UN Food and Agriculture Organization meeting on 9/24 to discuss possibility of global food crisis EPA considering raising ethanol blend rate
  10. Risks Drop in commodity prices Widespread drought and other weather events that cause crop supply shortages Drop in demand for biofuels (fall in price of gas) Government policy
  11. Agrium Inc. (AGU) Major producer of phosphate, potash and nitrogen crop fertilizers Also distributes directly to farmers through local farm centers
  12. Investment Thesis AGU is a different play on the increasing global demand for food Vertically integrated company that produces and distributes fertilizer as opposed to major competitors Diverse geographic base especially in South America is vital to future growth Strong cash flow allows for future acquisitions Low P/E valuation of 19 vs. 30 for POT and MOS Takeover target
  13. Recent Trends Farmers in China and around the world are demanding more fertilizer to increase crop yields which pushes up price Diminishing arable land is causing a push for fertilizer use Rising world population and increasing demand for crops and biofuels is positive for the fertilizer industry
  14. Risks Possible government litigation concerning health issues related to fertilizer use Trend towards organic food Currency risk Fall in commodity prices Increase in ammonia and sulfur prices (ingredients)
  15. Macro-economy No big movements in markets No double dip or V-shaped recovery Due to sustained high unemployment Take time to de-leverage (households, firms, nations) Credit markets aren’t at pre-crash levels Play this in 2 ways
  16. Macro-economy Buy High Dividend Stocks Get the yield from dividend Also, tend to be safer (offer some downside protection) Examples: Eli Lily (pharmaceuticals) Pengrowth Energy Trust (Canadian oil and natural gas) Proctor and Gamble, J & J (Consumers)
  17. Macro-economy Long defensive stocks and short cyclical stocks Margins aren’t that big and get killed on downswing Earn solid gains with steady or decreasing market Lose potential big gains on market upswings Example: Long: Pepsi, J & J, Wal-Mart Short: FedEx, Alcoa, Ford, Morgan Stanley
  18. Macro-economy FedEx
  19. Macro-economy Ford
  20. Macro-economy Morgan Stanley
  21. Macro-economy Long the RMB US accused the Chinese government of artificially devaluing Keeps Chinese exports cheap relative to USD Created massive trade deficit between US and China China will capitulate and gradually allow RMB to appreciate Potential trade war?
  22. Macro-economy Artificial devaluing
  23. Macro-economy Did we miss it? Some appreciation but general response to weaker USD and not due to specific pressure
  24. Brinks Update Original Thesis: A series of unfortunate events, caused in part by Brink’s sale of its home security division, created an undervalued company. Long term opportunity Sale of home security division in 2008 Changes margins, revenue, operating income Also, economic turmoil has contributed to mispricing What happened? In short the slumping economy continued to hurt Brinks
  25. Quick Overview Armored Car (Secure Transportation) Cash in transit services ATM servicing Global Services Long-range transportation of valuables Cash Logistics Airport security Supply chain management Secure data solutions
  26. What went wrong? Continued political and monetary instability in Venezuela Slumping worldwide economy 80% of operating income is international Time horizon was 12 – 18 months
More Related