“The Annual Benjamin Graham Conference” was held on June 29th, 2016 at CFA Society New York and was co-sponsored by Kahn Brothers Group and Wiley. For those unable to attend this annual conference organized by volunteers from CFA Society New York’s Value Investing Thought Leadership Group, which was also available via livestream, we’d like to share brief takeaways from each keynote speech and panel.
The opening keynote from Thomas A. Russo of Gardner Russo & Gardner LLC highlighted the risk to the global economy of global trade winds shifting towards protectionism. Russo also focused on the potential impacts of e-commerce and the millennial generation on consumption.
Next, was the panel on Warren Buffett’s “Rule No. 1, is never lose money,” composed of John Andrew Levin of Levin Capital Strategies, L.P.; David Poppe of Ruane, Cunniff & Goldfarb, Inc.; and Seth Turkeltaub, CFA of Catapult Capital Management, affiliated with Millennium Management LLC, and moderated by Michael Oliver Weinberg, CFA. In Security Analysis there is a considerable allocation of text to utility analysis. There was unanimous consent by the panelists and the moderator that long-term the public utilities model is threatened by alternative energy, including solar and wind.
The panel on Margin of Safety with Jason Karp of Tourbillon Capital Partners, Leon Cooperman of Omega Advisors, Inc. and Brian Gillott of Jennison Associates LLC moderated by Elliot Trexler followed. Quality, dividend yield, safety were deemed factors that are dramatically over-priced due to market participants’ aversion to risk. Share repurchases should make sense, and be at low valuations, not high valuations, irrespective of their off-setting options related to dilution.
The panel on investment mistakes included Paul Lountzis of Lountzis Asset Management, LLC; Edwin Schloss of Walter & Edwin Schloss Associates; and A. Michael Lipper, CFA, of Lipper Advisory Services, Inc. was moderated by Vishal Mishra. Not unamusingly a conclusion was that big losses start with big profits, i.e. Valeant Pharmaceuticals International Inc. One must also understand what can go wrong and the downside.
John Bader of Halcyon Capital Management, LLC provided the afternoon keynote and his view was that risk arbitrage is interesting currently, also that that Brexit will create opportunities in value and distressed European securities.
The downside protection panel was made up of Miguel Fidalgo of Triarii Capital; John Spears of Tweedy, Browne Company LLC; and Steve Bregman of Horizon Kinetics LLC was moderated by Adam Barth of Gotham Asset Management. A primary take-away was that indexation has changed the clearing prices of stocks. The market has become bifurcated with index stocks, over-valued and non-index stocks under-valued.
Jim Grant’s concluding keynote was not to be missed. There have not been negative interest rates in 5,000 years of human history, and now for the first time they exist. There is nearly $12Tn of negative return securities that are perceived to be permanently safe. Grant shared a sarcastic joke on the improbability of Rome returning to its glory days, despite the incredible faith the bond market has in it.
This annual conference would not have come to fruition without Michael Oliver Weinberg, CFA, the Chair of the Value Investing Thought Leadership Group and the support of Daniel Dagen, CFA, the CEO of CFA Society New York, and Harumi Urata Thompson, CFA, the COO of CFA Society New York. Elliot Trexler and Vishal Mishra, vice chairs of the Value Investing Thought Leadership Group, were also integral. Patrick Holert, CFA, CAIA; Thomas Brigandi and Christopher Cutler, CFA’s support were also appreciated. And last but not least we could not have done it without all of the CFA Society New York members who sat through ten hours of content from the aforementioned panelists.
With a membership of nearly 9,000, CFA Society New York is the largest CFA® society in North America and a founding member of CFA Institute. Founded in 1937 by value investing pioneer Benjamin Graham, CFA Society New York is a leading forum for the financial services industry and a provider of professional education and career development. In addition to delivering more than 200 events annually for its members, investment professionals and the general public, CFA Society New York prepares hundreds of candidates to obtain the Chartered Financial Analyst® (CFA) designation. CFA Society New York is committed to promoting best practices and the highest ethical standards in finance.