WilliamPriestEpochInvestmentPartners

BarronsTheArtofSuccessfulInvestingConferenceOctober21,2013
Growthinmarketearningsgoingforwardwillbelessthanthehistoricalrate
Atthesepricelevelsseeslongtermreturnof68%
o However,needtotakealongtermviewbecausetherewillbeplentyofvolatility
QEisthebiggestexperimentinmonetarypolicyinhistory
o Hascausedabubbleinfinancialassets
Thelongrun10yeartreasuryrateshouldbeaboutequaltothenominalGDPrate
Bondsaredangerousrightnow
o AAPLbondsalreadydown4yearsworthofcoupons
o Equitiescaptureinflationaswellasincreasesinproductivity
TheG7hasahigherdebt/GDPratiothanin2008
Thekeytodividendinvestinginthisenvironmentisnotbuyinghighyieldsbutbuyingyieldsthat
aregrowingquickly
NationalOilwellVarco(NOV)sees$5.30earningsthisyear$6.50nextyear[stockisat$79.50on
10/23/13]
o Theyaregoodatcapitalallocation
Firstquestionheasksmanagementistheircapitalallocationstrategy[amremindedofGeorge
Sertlsquestiononcostofcapital]
o GivesawayalotofcopiesofTheOutsiders.
Accountingislikeabathingsuit.Itrevealsalotbutwhatitconcealsisvital.
CVSCaremark(CVS)tradingata7%FCFyield.
o CompanywillbenefitfromObamacare
Believesinaconcentratedportfolio
o Therearetwokindsofmanagers:thosethateatwellandthosethatsleepwell.
CMEGroup(CME)willbenefitfromDoddFrank
o DoddFrankstandardizesmanyderivativesandrequiresthemtobetradedonan
exchange
o Willalsobenefitfromhigherratesashigherratesmeansmoretradingactivity
Blackstoneishisfavoriteprivateequityfirmbutitscurrentlyfairlyvalued
ThereisnoruleoflawinChina.
o Heissuspiciousofanyandallnumbersthatcomeoutofthecountry
o Themarginalutilityoffurthergovernmentspendingismuchlowerthanitusedtobe
Europesoutlookisdismal
o Theyhavedemographicissues
Outlookonrawmaterialsispoor
o Chinesedemandwilldecline
Therearepeoplethatworktoliveandpeoplethatlivetowork[LeonCoopermanmentioned
thatherecentlytookhisfirst2weekvacationin45years]
OurGINIcoefficientisquicklyrising[GINIcoefficientiscalculatedbystratifyingincomesinto
deciles.Itisameasureofincomeinequality.Arisingcoefficientmeansrisinginequality.]
SomeonewillbuytheremainingVodafonebusiness[Einhornslatestlettertoinvestors
mentionsthattheVODstubisatadiscounttopeers]
Thelaboroutsourcingarbitragethatsbeengoingonforyearsisprettymuchover
WilliamPriestEpochInvestmentPartners
BarronsTheArtofSuccessfulInvestingConferenceOctober21,2013
o WagesinChinahaverisenalot
Techsectorisnowadividendpayer
o Growthhasslowedwaydown
Socialmediadoesntmakeanysenseandthevaluationsarecrazy
o TheIPOmarketisveryfrothy