GuruFocus had the pleasure of hosting another presentation with Jonathan Boyar.
Boyar is currently president of Boyar Research, an independent research boutique established in 1975 that counts some of the world's largest sovereign wealth funds, hedge funds, mutual funds and family offices as subscribers. He is also a principal of Boyar Asset Management, which has been managing money utilizing a value oriented strategy since 1983.
Boyar has been interviewed by Barron's, Welling on Wall Street and GuruFocus. He is a regular speaker at numerous value investing conferences. He is also a contributor to the latest edition of “Harriman's Book of Investing Rules: The Do's & Don'ts of the World's Best Investors.” He is a senior contributor to Forbes as well as the host of The World According to Boyar podcast.
Check out Boyar's full report on his stock selections here.
Watch the full stream here:
Key takeaways
Boyar kicked off his presentation with a brief explanation of the history of Boyar Research and Boyar Asset Management. He explained the origins of both entities under his father’s guidance and the strategy they employ for clients.
He explained that their investment philosophy is focused on taking a private equity approach to stock market investing. Any analysis of a potential investment is done through the lens of a potential acquirer. Additionally, the firm focuses on long-term investments and regularly holds investments for years at a time.
Boyar continued to dive deeper to explain that the analysis the team does for companies focuses on minimizing the downside risk of any investment. They do this by estimating cash flows under normal market conditions and utilizing any comparable transactions to inform their analysis.
He also emphasized that the team is largely sector and market cap agnostic. However, they generally avoid making investments into cyclical or commodity-oriented businesses and avoid things that require intense specialization to understand. Boyar also answered a question about biotech, where he explained how the sector and products offered within it are simply too complicated to get a good grasp on.
Stocks
Boyar highlighted three new stock examples during his presentation. The first company he examined was The Scotts Miracle Gro Co. (SMG, Financial), which he described as a great consumer franchise that is trading at a discount to its intrinsic value. It has pricing power within its industry and is therefore able to offset the effects of inflation.
His next example took a look at Qurate Retail Inc. (QRTEA, Financial), which he described as a traditional, cheap value stock. He explained that the company trades at a low price-earnings ratio due to misguided opinions on the business. Due to this mispricing, he sees the potential for a large upside at a low level of risk.
Boyar’s final stock example looked at Uber Technologies Inc. (UBER, Financial), which he explained most value investors have avoided because it is not a traditionally cheap stock. He explained the company maintains a strong network that gives them a strong moat in the industry. Additionally, he thinks that the perception of the business by investors is wrong, so it is set to do well in the future.
Questions
The first question that came in from the audience asked Boyar how he goes about valuing businesses and if there are any metrics that he likes to rely on. He started off his answer by explaining that he does not believe that there is a one-size-fits-all strategy for evaluating companies.
Instead, he likes to take a more customized approach where he looks at each business as an individual. Each potential investment has its own unique aspects that must be considered to develop an accurate estimation of its value. Sometimes comparable transactions are widely available and sometimes they are not, so Boyar believes it takes an almost artistic approach to find what works best in each situation.
Another question came in asking for Boyar’s thoughts on Warren Buffett (Trades, Portfolio) holding large amounts of cash over the last year without making any big purchases and whether or not he has been holding cash as well. Boyar’s response started off with his admission that Buffett’s recent strategy has surprised, but that he can understand the thought process.
He continued that he knows Buffett is operating under specific criteria for investments that may not currently be seen on company balance sheets. At the same time, he is well aware that the guru has said that cash is a terrible investment and holds big investments in the Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) portfolio for their performance. He concluded that the cash position is surprising, but that he is not counting Buffett out at any point in the near future.
