5 years of Bestinver conferences

Bestinver 2013 Conference

As many of the readers of this blog already know, value investing. The company has just held its XII Annual Conference, where it details its strategy and its vision of the markets to its clients. In this article I will make a small compilation of the most outstanding aspects in the Bestinver Annual Conferences of the last 5 years, from 2.009 to 2.013.

Tabla de contenido

VIII Annual Bestinver Customer Conference 2009

Francisco García Paramés maintained his extremely negative vision for the Spanish economy.

He recalled that the two previous occasions in which indices lost 70% from highs were exceptional buying opportunities, and he hopes that this time history will repeat itself.

He estimates that "whoever buys now will multiply his investment by three". Of course, as long as you have patience and hold out long enough.

The manager of Bestinver reiterated that we will only be able to get out of the crisis when house prices adjust to their real value, for which there is "a significant drop"

IX Bestinver Annual Customer Conference 2010

Francisco García Paramés, general director of Investments of the entity, was questioned by one of the attendees about whether Bestinver's investment philosophy was more similar to that of Benjamin Graham, based on investing in companies with low prices, or that of Warren Buffett, committed to quality. García Paramés assured that the drive towards quality was increasing and that the portfolio of the funds is more similar to that of Buffet, having started however with a philosophy like Graham's, an evolution that he considers natural. "First we look for good companies and we calmly wait for them to get a good price," he said.

"Ten years ago we had 35% in liquidity because we did not see opportunities, now it is the other way around and we see many values ​​with interesting multiples"

Bestinver will continue betting on the potential of emerging markets and, particularly, the Chinese market, which is why it decided to open an analysis office in Shanghai under the charge of Herman Chan. However, the Acciona group manager assures that, for the moment, it prefers to maintain its exposure to these markets through companies based in Europe, although with a diversified sales portfolio to these countries.

Looking ahead to 2010, the manager maintains its negative view of the Spanish economy. From her point of view, the world economy has started on the path of recovery, but the Spanish economy is not following the same line.

This negative view of the Spanish market translates into a “practically nil” exposure to the most cyclical sectors such as real estate, consumer discretionary and banking. “The financial sector is difficult to analyze from the outside and it is difficult to work on balance sheet debt.

X Bestinver Annual Customer Conference 2011

"I can say that the quality of our portfolio is the best we have ever had," says Paramés. This increase in quality is due, as Guzmán explained, to the fact that they have better portfolio businesses (because companies have more and better competitive advantages), because they are companies that do not need heavy investments and play in industries that will continue to exist in the next 15 years and companies will continue with a significant share in them.

The largest positions in the international portfolio are BMW (8,5%), Exor (7,1%), CIR / COFIDE (6,9%), Wolters Kluwer (6,8%), Schindler (5,7%) and Thales (4,6%) and the PER 2011 of the international portfolio is 7,4.

In the Iberian portfolio, its main positions are Semapa Portucel (9,2% of the fund), Ferrovial (9,2%), Corporación Alba (7,9%), Sonae (6,8%) and Gas Natural (5,9, XNUMX%).

Bestinver managers spend 90% of their time analyzing companies and, according to Paramés, they trust them "blindly".

During the conference, Paramés briefly commented on two Spanish companies with different results. On the one hand, he assured that CAF has probably been the best investment they have made in the manager's 20 years and acknowledges that it continues to be an "exceptional" company still undervalued but no longer at the same levels as years ago. Thus, they have been reducing their position in the company. On the other hand, Paramés has recognized that Inditex has been an "error of omission" for never having had it in its portfolio. "We have analyzed it several times but it has always been more expensive than we liked and now I do not know if it is a good investment but, in any case, looking back it is clear that it has been a mistake," he acknowledges.

Regarding the Spanish financial system, Bestinver's management team has insisted on the same discourse that they have defended for years. "Until the real estate assets of financial entities are reflected in the balance sheet in a way that we consider to be true, we will not invest in the financial system," they say.

XI Annual Bestinver Clients Conference 2012

"We have gone from looking for more price to looking for more value, a natural step for all value investors," says Paramés, who assures that it is a journey from positions closer to Benjamin Graham, the creator of the value style, to Warren Buffett, the world's highest representative of this investment style today.

One piece of information that can give clarity about this higher quality is the fact that 50% of its companies that the manager has in its portfolio have net cash and only 20% have some debt.

In summer, Alvaro Guzmán did the exercise of analyzing the errors that they have committed historically and grouped them into three groups: investments that have been carried out in companies with a lot of debt, which account for 75-80% of the errors, another 10% for not having correctly estimated the company's fash flow and another 10% for investing in new businesses, without enough years to anchor them.

They recommend investing in an 80/20 for the international portfolio compared to the national one and Paramés ensures that it does not market timming and, as soon as it has money available, “the next day” it invests it in the funds of the manager. In fact, he recommends that everything that the investor does not need to put 100% of the money in the stock market over 50 years. Álvaro Guzmán does not agree on this point with Paramés and says that it is not a bad thing to have cash to be able to invest in times of market downturns and take advantage of opportunities.

XII Bestinver 2013 Annual Customer Conference

"For the first time we see a light of hope in Spain, we are more optimistic because the crisis situation has been accepted and that adjustments had to be made and measures are being taken along the right lines"

Regarding specific companies, the XII Conference has left several news: the managers have confirmed that they have already started to invest in Telefónica, they have regretted not having reduced their exposure to Pescanova to 0% and they have assured that, invest in banks, they would only do so in national ones.

In the section on banks, Paramés has also acknowledged that they are "analyzing it in depth", although he says that the problem is that they have an Iberian portfolio that they quite like and it would be necessary to sell something to buy banks and "we are not yet there". Yes, they are looking at it and he assures that it is the moment in which they are most open to investing in the sector in the last ten years. In any case, he assures that it is "difficult" that they will ever buy BBVA or Santander shares, since 70% of their business is outside of Spain, which makes their analysis very difficult because they should know the financial systems of more than 20 countries . Thus, when they decide to enter the financial sector, they will do so in banks with a purely national business.