my favorite investment today

Cabot Investors Conference 2013 www.cabot.net

My Favorite Investment Today

Chloe Lutts Jensen, Moderator

All Cabot Analysts


Global X Top Guru Holdings

• “Famous managers’ most concentrated stock picks … tend to do better than (their) funds on the whole.”

—Brendan Conway (Barron’s)

• Top hedge fund positions from 13-F filings

• Assets: $3.94 million

• Equal-weighted stock holdings

• Management fee: 0.75%

• July YTD 25.9% (vs 14.4% NYSE Comp)

• Positive alpha

Robin Carpenter


GURU Moving Alpha


Trinity Industries (TRN)

• Max Buy Price 39.54; Min Sell Price 55.49

• Current P/E is 11.3. Dividend Yield is 1.3%

• Sales will rise 9% and EPS will climb 20% during the next 12 months

• Trinity has a huge backlog of orders for railcars

Roy Ward


Facebook (FB)All the Characteristics of a Big Winner

• Mass market

• No competition

• New opportunity (mobile)

• Accelerating sales

• EPS estimates, margins ramp

Michael Cintolo


Huge Blast Off = Accumulation


Volatility as an Asset Class

Options are Insurance

• Geico/Allstate = Options Sellers

• Selling Volatility on a broad equity index has a positive expected return premium over time, as the seller effectively provides insurance to the buyer of volatility.

Jacob Mintz


• Over 20 years, the market has overpriced volatility by an average of 4.6 vol points

• Implied volatility has exceeded realized volatility 88% of the time since 1990


The Merrill Lynch vol/arb index enters into trades that monetize the difference between implied and realized volatility.


Current Volatility Conditions

• Vix at 13

• Realized 30 Day Volatility of SPX is 8

• A premium of 5 points


Baidu.com (BIDU)

Paul Goodwin


Tesla (TSLA)

Timothy Lutts


TripAdvisor (TRIP)


Issue• Lots of great discoveries in medicine cannot reach their targets

Tom Garrity


Big Idea: Delivery of Medicine

• Because of medicine’s inability to rapidly cross extra-cellular matrix (ECM) into the lymphatic vasculature and capillary beds, they can't exert their therapeutic effects


Halozyme (HALO)

Patented enzymes allow drugs currently administered intravenously (IV) to be administered subcutaneously (SC) – Increased and faster absorption– Less frequently administered– Improved efficacy of existing therapies –Modify abnormal tissue


PartnershipsMilestones Payments plus Royalties

• Hoffmann-La Roche ($13.8 billion in 2012)

• Pfizer (Up to $570 million)

• Baxter Healthcare ($1.59 billion in 2012)

• ViroPharma Incorporated (Milestone Payments Plus 10% Royalties)

• Intrexon Corporation ($54 million Plus Royalties)


Halozyme Proprietary • Endocrinolo

gy

• Oncology

• Dermatology

my favorite investment today

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