Value Investing Live Recap: David Marcus

Key questions and takeaways

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Graham Griffin
Feb 24, 2021
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GuruFocus had the pleasure of hosting a presentation with David Marcus, the co-founder, CEO and chief investment officer of Evermore Global Advisors LLC.

Marcus co-founded the firm in 2009. He is the portfolio manager of the Evermore Global Value Fund and their separate account portfolios.

Beginning his career in 1988 at Mutual Series Fund, where he was mentored by renowned value investor Michael Price (Trades, Portfolio), Marcus rose to manage the Mutual European Fund and co-manage the Mutual Shares and Mutual Discovery Funds, representing over $14 billion in assets. He also served as director of European investments for Franklin Mutual Advisers LLC.

In 2000, Marcus founded Marcstone Capital Management LP, a long-short Europe-focused equity manager, largely funded by Swedish financier Jan Stenbeck. After Stenbeck passed away in 2002, Marcus closed Marcstone, co-founded a family office for the Stenbeck family and advised on the restructuring of a number of the public and private companies the family controlled.

Marcus later founded and served as managing partner of MarCap Investors LP, which was seeded by Reservoir Capital.

He graduated from Northeastern University in 1988 with a B.S. in business administration and a concentration in finance.

Watch the full presentation here:

Key takeaways

Marcus kicked off his presentation with a brief look at his background in investing. He explained that he was extremely lucky to have started his investing career during a market crisis under the guidance of Michael Price (Trades, Portfolio).

After learning a great deal during his initial years in the industry, Marcus decided to explore outside of the U.S. and traveled to Europe. Overseas, he found many companies were family owned and he learned it was critical to understand how the main shareholder of a company thinks.

Through building an extensive network of families and investment banks, he was able to build a depth of knowledge of European markets. One of these connections would help him kick off his own endeavor into investing. Taking cues from all of his experiences, Marcus would eventually develop his own system to research and value companies.

He found that there were seemingly endless special situations in Europe that offer up great investment opportunities. These each have their own unique catalyst to drive the creation of value for shareholders. As well, a strong focus on managers has allowed Marcus and his firm to invest like the owners of these companies to find success over time.

The team takes what Marcus calls a "go anywhere" approach to investing, where no companies are off the table. Through their fact-based research, they are able to narrow down companies as if they were going to buy the entire company. They then narrow their search through proprietary screens that target keywords rather than looking at data.

Before jumping into specific stock examples, Marcus also laid out several tailwinds that he has seen in the European market. He explained that many of these have been amplified by the ongoing pandemic to levels that have not been previously seen. This unique situation has created one of the most compelling opportunities to buy companies that Marcus has witnessed since early 2009.

Stocks

Marcus jumped into the specifics of several companies to highlight some of the unique opportunities that he has found in Europe. The first example he looked at is the Swedish company Modern Times Group MTG AB (OSTO:MTG A). Rather than just hunker down during the pandemic, the company has acquired gaming assets that have allowed it to grow value tremendously while maintaining strong market share in the esports industry.

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Another long-term holding that Marcus used as an example was Vivendi SA (

XPAR:VIV, Financial). The France-based media conglomerate has its hands in numerous media assets like Universal Music Group, which are valuable within the company. As they spin off these assets, even more value is generated for shareholders and Marcus is excited for the future.

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Questions

The first question Marcus answered after his presentation asked him to explain how he goes about valuing a company. He explained that the key is to figure out what makes a business tick and how profitable it can be. Each company has to be valued a different way because they all operate on their own terms.

He likes to address each individual aspect of a company to triangulate how much it could be worth overall. This can be done by benchmarking based upon the different public listings that might be owned by a conglomerate. He adds up the individual parts of a business and factors debt against the value he arrives at. Along the way, he makes discounts where necessary and updates his valuation over time.

Another question asked Marcus about some of the other countries in Europe that have global leaders, but are seeing stock values resting at low levels. Marcus took Portugal as an example to answer this question, explaining that it has seen tough economic conditions over the last several years. He continued that there are many wonderful companies in these types of countries that have had their prices beaten down during tough times.

By searching in markets that have been stuck in unfavorable conditions investors can find great assets at cheap prices. These situations offer unique opportunities to watch these types of companies grow and expand to reach significantly better market valuations. Marcus explained that the key is to balance the risk of these investments and make sure these companies have a catalyst to draw out stronger values.

Disclosure: Author owns no stocks mentioned.

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