Dinakar Singh is the founding partner of TPG-Axon Capital. TPG-Axon invests across global markets and asset classes. The firm was founded by Singh in late 2004, in partnership with Texas Pacific Group. He was previously a partner at Goldman Sachs (GS), where he was co-head of the Principal Strategies department. During his 14 years at Goldman Sachs, he served on a number of the firm’s key leadership committees. He serves on the Yale University Investment Committee. He is the founder, with his wife, of the Spinal Muscular Atrophy Foundation.
From his talk:
Three ideas to make money.
We are in an extraordinary period which is like the Asian crisis, it was shock and awe. The government intervened and stopped the panic and things started to calm. People thought, what comes after? They were the best 4-5 years of stock picking. I think we are there now.
Valuations and margins have gone up a lot. Now, the stimulus is fading we are going to see what comes after. There is not much room for valuations or margins to go up.
You need Orkla ASA (OSL:ORK, Financial) to find a few pockets of restructuring.
Orkla is a Norwegian company. Norway has become one of the envies of the world. The management got cocky and the stock tanked. Previous management is out, now we have an overcapitalized company. The company might be restructured, real actions might be coming.
You add up the sum of the parts and it is $85 as opposed to the current price at $49. This is conservative valuations that you could get today. The company will split into several pieces and will start using cash on its balance sheet. This will likely be the catalyst.
Five percent dividend yield 1x book, great economy.
Zhongin (HOGS, Financial) is a controversial stock. First the macro. We know Asia extremely well. In the past six months, they have underperformed 15-35% compared to the U.S. This has never happened on no news.
What has happened is China and America diverged. China's good companies were 20-25x earnings, but China is down 10-20%, while PEs in the U.S. have gone up. Now the PE ratios between the U.S. and China are closer. The market is now putting a growth economy at a discount.
Macro is great, but we need micro.
Zhongin (HOGS) is a big pork player, and has declined a lot over the past six months. China is making the industries consolidate.
This stock was a high flier, and the fact that it is U.S. listed makes people scared. Right now it is trading around 7-8x earnings. If anything goes right it goes well. It will also be trading at 4-5x earnings based on growth, so you have growth factor besides the current margin of safety.
The margins are good, and the consolidation is getting more and more efficient. China wants to please the agricultural center so they likely would allow the company to raise prices.
Sprint (S, Financial) is one of my favorite restructuring companies. The merger with Nextel seemed smart at the time, but the smart phone came along and their model became outdated very quickly.
After years of being beaten, things are starting to go their way. Valuation is low and so are margins. The process of consolidating is starting. The data, coverage, customer service are all getting better. AT&T/ T-Mobile is a huge win for Sprint. It has low margins if margins pick up a small drop (even below T and VZ’s) there is 40-70% upside. The U.S. will only have three competitors over the past few years. This is not catching the knife; the knife has already dropped.
T-Mobile is their worst competitor. Now AT&T (T, Financial) is taking that away from them. There is a decent amount of chance...
It shifted a lot of balance of power. Sprint might be No. 3 in a great industry with a great valuation. And in the next few months we might have more consolidation. Sprint might be bought out, which is not best case but still is something to consider.
Their next generation network will cost a lot of money, they might screw up, but still it has a good chance to become a big player.
Sprint also has a great smart phone already. There is a good chance they will get the iPhone, and a few years forward, Sprint will be a real No. 3. It will have real customer basis. If their valuation picks up modestly and same with margins, you can easily double your money.
This is really an extraordinary time. Stimulus is disappearing; we think stocks like these will be winners.
Disclosure: None
http://www.valuewalk.com/
From his talk:
Three ideas to make money.
We are in an extraordinary period which is like the Asian crisis, it was shock and awe. The government intervened and stopped the panic and things started to calm. People thought, what comes after? They were the best 4-5 years of stock picking. I think we are there now.
Valuations and margins have gone up a lot. Now, the stimulus is fading we are going to see what comes after. There is not much room for valuations or margins to go up.
You need Orkla ASA (OSL:ORK, Financial) to find a few pockets of restructuring.
Orkla is a Norwegian company. Norway has become one of the envies of the world. The management got cocky and the stock tanked. Previous management is out, now we have an overcapitalized company. The company might be restructured, real actions might be coming.
You add up the sum of the parts and it is $85 as opposed to the current price at $49. This is conservative valuations that you could get today. The company will split into several pieces and will start using cash on its balance sheet. This will likely be the catalyst.
Five percent dividend yield 1x book, great economy.
Zhongin (HOGS, Financial) is a controversial stock. First the macro. We know Asia extremely well. In the past six months, they have underperformed 15-35% compared to the U.S. This has never happened on no news.
What has happened is China and America diverged. China's good companies were 20-25x earnings, but China is down 10-20%, while PEs in the U.S. have gone up. Now the PE ratios between the U.S. and China are closer. The market is now putting a growth economy at a discount.
Macro is great, but we need micro.
Zhongin (HOGS) is a big pork player, and has declined a lot over the past six months. China is making the industries consolidate.
This stock was a high flier, and the fact that it is U.S. listed makes people scared. Right now it is trading around 7-8x earnings. If anything goes right it goes well. It will also be trading at 4-5x earnings based on growth, so you have growth factor besides the current margin of safety.
The margins are good, and the consolidation is getting more and more efficient. China wants to please the agricultural center so they likely would allow the company to raise prices.
Sprint (S, Financial) is one of my favorite restructuring companies. The merger with Nextel seemed smart at the time, but the smart phone came along and their model became outdated very quickly.
After years of being beaten, things are starting to go their way. Valuation is low and so are margins. The process of consolidating is starting. The data, coverage, customer service are all getting better. AT&T/ T-Mobile is a huge win for Sprint. It has low margins if margins pick up a small drop (even below T and VZ’s) there is 40-70% upside. The U.S. will only have three competitors over the past few years. This is not catching the knife; the knife has already dropped.
T-Mobile is their worst competitor. Now AT&T (T, Financial) is taking that away from them. There is a decent amount of chance...
It shifted a lot of balance of power. Sprint might be No. 3 in a great industry with a great valuation. And in the next few months we might have more consolidation. Sprint might be bought out, which is not best case but still is something to consider.
Their next generation network will cost a lot of money, they might screw up, but still it has a good chance to become a big player.
Sprint also has a great smart phone already. There is a good chance they will get the iPhone, and a few years forward, Sprint will be a real No. 3. It will have real customer basis. If their valuation picks up modestly and same with margins, you can easily double your money.
This is really an extraordinary time. Stimulus is disappearing; we think stocks like these will be winners.
Disclosure: None
http://www.valuewalk.com/
