I am currently attending the 6th Annual New York Value Investing Congress. Flew in yesterday which was its own nightmare. It is always fun to try and fly in and out of LaGuardia. Either way I always thoroughly enjoy this conference and today has not been an exception. Tomorrow is when the two big dogs I really want to hear speak give their presentation – Kyle Bass and David Einhorn.
One of the more interesting morning sessions was John Burbank of Passport Capital. His presentation was entitled the Math of Democracy. He discussed how he has gone from apolitical to maxing out his limit for political contributions which is $115,000 a year. He says that the United States now must be studied as an emerging market and analyzing Washington is pertinent. You need feet on the ground in Washington. Investors need to be visiting Washington and engage in the political process. Essentially, since we have become an emerging market you have to look at the domestic investment landscape in 2 year cycles. Bottom up investing is now not possible anymore.
His view is that the Republicans will take over the House and the Senate will be a toss up. As a result it will be gridlock for the next two years. This carries risk if spending slows down. After the gridlock - he thinks 2012 could be a watershed moment. He encouraged all in the crowd to become active politically and started running through the numbers on how easy it is to impact elections. If as few as slightly over 20,000 people in the United States maxed out there contributions possibility it would double amount of money that went to political campaigns and those people would drastically shift the outcome of an election.. He thinks we are either going the Argentina road or the Germany road and the next two elections will determine that outcome. He also pointed out how a Washington investment has the highest return of any investment he has seen – at over 100 to 1 and if you look at government discretionary spending only compared to political donations the leverage implied is close to 400 to 1.
In general he likes emerging markets (not in reference to the United States) but says that is consensus now and is very illiquid now and if that turns it will go down sharply. Likes anything China has to bring across its borders (potash, copper, crude oil, soybeans, coking coal), and Big Western Caps.
It was a very interesting presentation.
Another interesting presentation was from Amitabh Singhi of Surefin Investments talked about the investment landscape in India, Pointed out that India has over 5,000 listed companies which he thinks is 2nd only to the United States. The opportunities to talk to companies and find inefficient markets is much greater. He talked about India’s problems such as infrastructure, housing, commercial transportation, power distribution, judicial issues, and corruption. All these give investors opportunities.
It has been an interesting Congress so far and some very interesting conversations. I will try to write some more over the next few days.