These are my notes and instant reactions from a presentation at the Value Investing Congress, the notes below might contain errors, paraphrases, incorrect quotes, or misinterpretations.
Whitney Tilson is one of the founders of the Value Investing Congress and he speaks at all of them — and I wrote quite a bit about the ideas he shared in his pre-conference workshop session, so if you want more from him check out those notes.
I was convinced to buy SodaStream (SODA) several months ago (following his Spring VIC presentation) based in part on his assessment of the value of their mature european business and their hard-to-replicate CO2 exchange business, and that particular idea has not played out yet (the terrible Christmas season last year continues to linger, the US business remains pretty weak, and they also have some Israel/Palestine risk and blowback — I’m willing to wait and see how they do this Fall, with hopes that they don’t pursue “growth at any cost” in the US at the expense of their cash-gushing core business).
So perhaps he’ll have additional thoughts on SODA, and we’ll see what else he wants to talk about today. He moved up his talk today to talk before lunch, presumably because of something he wants to say, but I guess we’ll find out.
It looks like he’s going to talk about short ideas once he gets to specific stocks, so if you don’t like shorting or reading about shorts, now’s your chance to take a break.
He started out with a presentation about what he has learned from a dozen years of short selling — “12 reasons not to short” that most people know (gains are capped, losses are infinite, cost is high, it’s painful in a bull market, irrationally high stock prices can stay that way for a long time, the last 5 years have been carnage for most short sellers)
Why does he do it despite all the good reasons not to do it:
It’s fine as “insurance” as long as it’s cheap.
Doug Kass: “Being bearish in the bull market has been, thus far, a mug’s game and a hedge against profits.”
Seasoned short sellers are seeing this as worse even than the internet bubble, which was at least just one part of the market.
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