The Ira Sohn conference -- one of the most closely-watched
investor conferences of the year -- kicks off Monday afternoon.
Some of the biggest names in the hedge-fund world -- Greenlight
Capital's David Einhorn, Omega Advisors' Leon Cooperman, Pershing
Square Capital Management's William Ackman, and many more -- will
take the stage to deliver a mix of stock picks, companies they're
betting against, and macro investment ideas. All of this is for the
benefit of the Ira Sohn foundation, which finances initiatives to
cure and treat pediatric cancer.
Stock prices will rise and fall as these investors state their
opinions. MoneyBeat will bring you all the presentations live from
Lincoln Center.
1:09 pm | Constructive | by David Benoit
Yum is Corvex's second-biggest position ever, he says, and says
he wants to work as a "constructive" partner with the company to
help change its structure.
He's off the stage now.
1:08 pm | A $130-$160 stock | by David Benoit
Meister says this would solve all Yum's structure problems,
listing many of the same reasons activists point to for breakups.
He says he believes Yum can grow at big numbers for years, and
turns the Taco Bell slogan onto the company,instead of "Live Mas"
he suggests the company "Think Mas."
He says there is 50%-90% upside by the end of next year, if the
spin happens.
That math is $88 a share for the remaining company, pretty close
to where it is today, and $40-$70 share for the spun off China
business.
1:04 pm | Spinoff | by David Benoit
Meister proposes spinning off the Chinese operations into a
separate company, that will essentially be a giant franchise of Yum
that will pay a large fee to remaining legacy business.
He says this creates the franchise and praises management of
China business.
1:03 pm | A Breakup Proposal | by David Benoit
Meister is about to argue for breaking up China and the U.S.
businesses.
He says China results overwhelm U.S., says they are two very
different business, with different investors and different
structures.
This is a topic that has come up, and the company has not
exactly ruled it out.
1:00 pm | The Chinese Recovery | by David Benoit
Meister says "a key to any investment in Yum is a bet on any
recovery in China."
He adds that he is "confident in management and believe the
recovery has begun."
Meister here is echoing a bit what fellow activist Dan Loeb
wrote to his own investors Friday, when he unveiled a position as
well. Both argue that the safety-concerns in China are being fixed
and the brands are so important there that they will fully
recover.
Meister even said he commissioned a 5-week study of consumers in
China and found that 90% said KFC would recover and 95% said KFC
was safest restaurant.
12:57 pm | Franchise or not | by David Benoit
Meister is talking about how rivals, including McDonald's today,
are moving more toward franchised stores, with about 95% of their
stores franchised as opposed to owned by the company. One reason he
thinks Yum stock has trailed in recent years is a reluctance to
franchise recently.
But, he adds, the Yum management team is aware of this and the
reason is that China doesn't have a set franchise
infrastructure.
12:54 pm | Want to play China middle class? | by David
Benoit
He says Yum is a great way to play what's a growing middle class
in China. KFC is a huge brand in China and Pizza Hut is big there
too.
12:53 pm | $1.5 billion stake | by David Benoit
Meister says he has about 15 million shares, or $1.5 billion,
enough to make him a top 5 holder.
Meister is going to discuss how Yum has a huge business in
China, where there has been some issues with food quality that's
sunk shares and business, but he says is on the way to being
fixed.
12:51 pm | Meister and Yum | by David Benoit
Up now is Keith Meister, founder of $8 billion Corvex, and
former Carl Icahn employee. A big star in activism. And he's here
to talk about Yum Brands, owner of Taco Bell and Pizza Hut.
12:48 pm | More sun in the future | by Juliet Chung
"In short, we look at Qualcomm, we see a lot of similarities
between the Walgreen situation," Rosenstein concludes.
12:45 pm | Long-term value | by Juliet Chung
"The stock price hasn't done much in the few weeks we've shown
up," he said, saying it's not surprising because it will take years
to turn around. Long-term value creation levers include returning
capital (Qualcomm recently announced a share buyback--"a very good
first step") as well as a cost review initiated at Jana's urging.
Jana's also pushing for other changes including better exec
compensation and reducing the board's size.
12:43 pm | Qualcomm's weaknesses | by Juliet Chung
Qualcomm has a bloated cost structure, too many employees,
executive overcompensation and owners "with a lack of owner
orientation" and R&D efforts with a poor ROI.
12:41 pm | Qualcomm | by Juliet Chung
Now he's on to Qualcomm, which activist investor Jana Partners
has been pressuring to consider a breakup and other options. It's
like the "old Walgreen" that needs to consider options, he
says.
12:41 pm | On the upswing | by Juliet Chung
Walgreen's been moving in the right direction, he says, cutting
costs, closing underperforming stores, buying back shares. It beat
Street estimates for 2Q earnings, the first in years, he said.
12:39 pm | Activist influence | by Juliet Chung
Noting two board seats plus say in the next board member is a
lot of say for a shareholder (he's referring to Jana, of
course)
12:38 pm | Alliance alliance | by Juliet Chung
And he's singing the praises of Alliance Boots' exec chairman
Stefano Pessina, which Walgreen bought part of
12:36 pm | Walgreen's woes | by Juliet Chung
Some ways Walgreen had slumped in recent years: too much middle
management, with 12 layers of management between store managers and
the CEO versus 5 for competitors, a failure to take into account a
changing landscape (including dollar stores and online retailers)
and lower margins than CVS and global competitors. It was a
situation that "cried out" for an activist, Rosenstein says.
12:35 pm | Walgreen | by Juliet Chung
Rosenstein's talking about Walgreen now, where Jana won two
board seats last year despite owning little more than 1% of the
stock.
12:34 pm | Inside baseball | by Juliet Chung
He also suggests too much of the media covers activist campaigns
like political campaigns, focusing on the horserace rather than on
the substance of their suggestions.
12:33 pm | Activism's value | by Juliet Chung
Barry will be talking about the value of management teams acting
like shareholders, highlighting a successful example and a company
whose team needs that lens
12:31 pm | Rosenstein | by Juliet Chung
Barry Rosenstein of activist investor Jana Partners is up
next.
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