We’re spending part of the next two days at the (warning: mute your computers before clicking) Value Investing Congress at the Marriott Marquis in Times Square listening to a bunch of mostly value-oriented managers talk about the secrets to their success. Among those slated to speak today are David Einhorn, Joel Greenblatt and Julian Robertson. We’ll be posting updates throughout the day whenever there’s something of note.
The Congress kicked off with a session by D3 Family Funds founder David Nierenberg who talked about some of his battle scars, including one with Brooks Automotive (BRKS) several years ago. The 13-D that details some of the problems is here. Nierenberg also talked about Move Inc. (MOVE) where after filing a 13-D in March 2008, he was invited by the company’s Chairman to talk about his concerns, which eventually led to a new CEO and Chairman.
In one recent situation, Nierenberg chose to use “the meek” — that’s his words, not mine — 13G when trying to effect change at Heartland Payment Systems (HPY). There’s a link to the 13G here. “Investing is not only about the numbers, it’s also about the people and the process. Selling is not the only option when confronted by the issues of performance and governance. A lot of times, the dogs we decide to take home are improvable,” Nierenberg said. Still, he said that parts of the corporate governance movement — again his words — feels like more of a “faith-based movement where people who advocate radical solutions often don’t think things through.”
If you’re also at the Congress, ping me and say hi.
Update 3:20 pm: Unfortunately, there’s no WiFi here in the conference room or I’d be updating more consistently. Instead, I have to go to a separate room and connect via Ethernet, which seems so 1998! But that doesn’t diminish the quality of some of the speakers. Here’s a brief run-down since this morning:
David Einhorn: Talked about how he missed the boat on MDC (MDC), which he felt strongly about two years ago, just before housing imploded and said that while it held up better than other homebuilders because it only fell 40% as opposed to 70%, he should have listened to Stanley Druckenmiller who spoke negatively at the same conference about MDC. “For years, I considered myself to be a bottom-up investor that didn’t need to focus on the big-picture.” Einhorn spent the rest of his time bashing the Fed and the Treasury for trying to take a stab at various financial reforms. Said it was somewhat similar to President Bush declaring “Mission Accomplished” in Iraq. “Trying to make a safer credit default swap is like trying to make safer asbestos,” he said. “The financial reforms are only designed to have a veneer of reform while continuing to serve the special interests.” My one quibble with Einhorn is that he spent most of the time sticking to prepared comments, which after awhile started to sound like a long drone. Einhorn’s speech, which is getting a fair amount of play across the web is available to download here.
Legendary hedge fund investor Julian Robertson took the opposite tack, with no prepared comments and just opened up the audience to questions which touched on a wide range of topics including China, individual stocks and what he’s doing with his days. “My big concern is that we’re still spending more than we’re earning and there comes a point when we’re going to have to pay it back and we’re not even thinking about that. We continue to borrow and the Chinese are the only ones who we’re able to do that from and there’s a lot of other things they can do with their money. They may come up with that conclusion as well.”
In response to another question about the many Tiger Cub funds, Robertson said he credited their success to honesty, being reasonably smart and very competitive. As for what he’s doing now, he says that he’s mostly seeding Tiger Cubs, which he enjoys doing, though it represents a “change of life”.
Image source: Marriott
