Archive for September, 2012

Sponsored Content

More than 20 of the world’s most successful investors will come together on October 9-10* to share their insights and ideas online at the 2012 European Investing Summit 2012. Speakers include investors Charles de Vaulx (International Value Advisers), Jean-Marie Eveillard (First Eagle), Francisco Garcia Parames and Álvaro Guzmán de Lázaro Mateos (Bestinver), Howard Marks (Oaktree Capital Management), Tom Russo (Gardner, Russo & Gardner), Guy Spier (Aquamarine Capital), Amit Wadhwaney (Third Avenue Funds), and many more.

*You’ll enjoy two weeks of access to all online sessions, so if you’re busy on October 9-10, no problem.

REGISTER TODAY and SAVE 40%. Hurry, this discount today.


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A new Journal of Finance paper examines whether improvements in a company’s internal corporate governance create value for shareholders. In The Vote is Cast: The Effect of Corporate Governance on Shareholder Value Vicente Cuñat, Mireia Gine, and Maria Guadalupe analyze the market reaction to governance proposals that pass or fail by a small margin of votes in annual meetings to identify the  impact of shareholder sponsored changes to governance rules on shareholder values and management behavior. Cuñat et al find that passing a proposal leads to significant positive abnormal returns:

Adopting one governance proposal increases shareholder value by 2.8%. The market reaction is larger in firms with more antitakeover provisions, higher institutional ownership, stronger investor activism, and for proposals sponsored by institutions. In addition, we find that acquisitions and capital expenditures decline and long-term performance improves.

The authors also conclude that, besides establishing how much shareholder value is generated by increasing shareholder rights and improving corporate governance inside firms, shareholder activism can create significant value:

Improving democracy inside firms, so that shareholder proposals that fall short of the majority threshold pass, would be value-increasing. We are able to precisely quantify that value.

We find that institutional activists’ proposals have higher effects, with an abnormal return of 2.1% on the day of the vote and a further 2.2% over the following six days. For individual proponents, the cumulative effect after one week is just 1.1%, and it is not statistically different from zero.

Read the full paper here: The Vote is Cast: The Effect of Corporate Governance on Shareholder Value (February 17, 2010 version on SSRN)

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Amit Wadhwaney, Founding Manager of the Third Avenue International Value Fund, delivers a tour de force on global investing and discusses the following investment ideas, among others: AntarChile, Daiwa Securities, Handelsbanken, Mitsui Fudosan, Otsuka, Parmalat, Titan Cement, and Viterra:

Wadhwaney will speak at the upcoming European Investing Summit, the largest fully online value investing conference worldwide. For a very limited time, you can buy a ticket for 50% off here.

Read the 60-page transcript of the interview (.pdf).

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Barron’s has a great 2010 article, Backstage Power, on activist Alexander Roepers’s investment approach:

By the time he was 25, the Dutch polyglot—French and German in addition to English and his native language—was already elbow deep in such deals as the head of corporate development in the U.S. for another company. In four years, “I did an incredible number of deals,” including the due diligence and valuation, as well as the structuring or restructuring of companies. That process led to his investment style at Atlantic, which considers industries “that you and I can understand and we can explain to our moms and dads.”

That typically means packaging, aerospace, pumps and valves, industrial materials, specialty chemicals, information-technology services and food companies.

Roepers looks for stocks between $1 billion and $20 billion in market cap, with investment-grade balance sheets and low interest expense. He also seeks profitable companies with 10%-plus free-cash-flow yields, high barriers to entry and low insider ownership. His purchases sport enterprise value (market cap plus net debt) multiples of roughly five to six times future earnings before interest, taxes, depreciation and amortization, or Ebitda. The firm is especially interested in stocks where there’s potential for an earnings turnaround or corporate restructuring.


And his returns?

His flagship hedge vehicles, AJR fund and Cambrian U.S. fund, both still open to new investment and unleveraged, have easily beaten the Standard and Poor’s 500 index since inception. AJR has posted a 14% annualized total return from its start in 1993, compared with about 8% for the S&P 500. Long-only Cambrian U.S. has returned 21% a year since its 1992 beginning, versus the S&P 500’s 8.4% annualized gain in that time.

Reopers is speaking at this year’s New York Value Investing Congress on October 1st and 2nd, along with Bill Ackman, David Einhorn or Jeffrey W. Ubben of ValueAct (each of whom alone are worth the price of admission).

Discount: Register by September 7, 2012 and you’ll pay $3,295.That’s a total savings $1,400 from the $4,695 others will pay later to attend!  Click here to save $1,400 off the usual price of admission by clicking here and using discount code: N11GB2.

Here’s the list of managers presenting:

  • Bill AckmanPershing Square
  • David Einhorn, Greenlight Capital
  • Jeffrey W. Ubben, ValueAct Capital
  • Alexander Roepers, Atlantic Investment Management
  • Guy GottfriedRational Investment Group
  • Bob Robotti, Robotti & Company Advisors
  • Lloyd Khaner, Khaner Capital
  • Mick McGuire, Marcato Capital Management
  • John Mauldin, Millennium Wave Advisors
  • Barry Rosenstein, JANA Partners
  • Kian Ghazi, Hawkshaw Capital Management
  • Glenn TongueT2 Partners
  • Whitney TilsonT2 Partners

The discount for Greenbackd readers expires in seven days, so take advantage now. Click here to receive the discount.

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