Spain’s premier investor Francisco Garcia Parames is joining GuruFocus for an audience Q&A this week in advance of his talk next year at the 2019 GuruFocus Value Investing Conference.Â
To submit your question for Parames, post it in the “comments” area below, and he will return an answer shortly.
Background
Parames spent 25 years at Spain’s Bestinver before founding his own firm, Cobas Asset Management, in 2017. During his tenure overseeing the Bestinfond (Trades, Portfolio) at Bestinver, Parames delivered an annualized return of 15.68%, compared to the 8.45% return of the benchmark, making him Spain’s most successful investor.
Philosophy
Parames, a devotee of Ben Graham and Warren Buffett (Trades, Portfolio), implements the same principles at Cobas that guided his stock picking over his career. He seeks undervalued stocks with long-term outperformance potential, using market volatility to buy at lower prices. Moreover, many of his ideas are contrarian. “We buy what no one seems to want and sell what everyone wants to buy,” Cobas says.
One change he will make, though, is to invest in high-quality companies rather than just cheap companies.
“When you're young you want to achieve a quick, high return and you think you can get it with cheap companies, so you avoid quality companies that are more expensive,” he told Citywireselector. “Over time you realize these cheap companies are cheap because they are regular businesses and things can go wrong. You've fallen into a value trap.”
Publications
Parames has compiled his investing insights in a new book, “Investing for the Long Term,” published in June. Written in the form of an investing memoir, the book discusses his influences, risks and big decisions he has made over his career, in addition to giving investing advice and market insight.
Holdings
Cobas’ top holding is Switzerland’s Aryzta AG (XSWX:ARYN, Financial), a specialty food and baking company with a global presence. Parames shared some of his thesis on the company in an August shareholder letter:
“With Aryzta (XSWX:ARYN), we now have a company with an elevated debt level (1.8 billion euros, excluding the value of its subsidiary Picard) and an EBITDA that has shrunk from 600 million euros to 300 million euros expected, with the share price falling by over 84% from the maximum levels hit midway through 2014, nearly 90 Swiss francs per share, to bottom out this year under 15 Swiss francs per share. Similar to Smurfit Kappa, this stable and cash-generating business will gradually reduce its debt despite a financial situation that is hardly simple.”
His next largest holdings are Teekay Corp. (TK, Financial), International Seaways Inc. (INSW, Financial) and Israel Chemicals Ltd. (XTAE:ICL, Financial).
See his portfolio here, and read more about his thinking in his second-quarter shareholder letter here.
Don’t forget to ask your investing question in this comments section below!
