5 Big Ideas from the Sohn Conference

Marcato Capital Management Reiterates Bullish Call on Buffalo Wild Wings (NASDAQ:BWLD)

Mick McGuire of Marcato Capital Management reiterated his bullish view on Buffalo Wild Wings (NASDAQ:BWLD) in a presentation at the aforementioned conference, arguing that the restaurant chain must transition to a franchised store model to unlock value. The founder of Marcato asserted that the management of the owner and operator of Buffalo Wild Wings, R Taco and PizzaRev restaurants needs to implement three proposals to unlock value: complete the transition to a 90%-franchised model (the mix of company-owned and franchised restaurants is around 50/50 at the moment), improve operating margins, and optimize the company’s capital structure by issuing more debt.

“We believe BWLD’s stock price could rise by more than two to three times under Marcato’s proposal,” said Mr. McGuire in the presentation. Marcato Capital Management’s founder presented evidence that restaurants which have more than 70% of their stores as franchises trade at higher multiples than chains operating mostly company-operated stores, asserting that the shares of Buffalo Wild Wings could reach a price level of between $218 and $311 by moving to a higher franchised model. There were 25 asset managers in our system with long positions in the restaurant chain at the end of June, down from 29 recorded as of the end of March. Jim Simons’ Renaissance Technologies reported ownership of 190,100 shares of Buffalo Wild Wings (NASDAQ:BWLD) in its 13F for the June quarter.

Social Capital Says Workday Inc. (NYSE:WDAY) Will Reach Market Cap of $100 Billion in 10 Years

Chamath Palihapitiya, the founder and CEO of Social Capital, which primarily invests in fast-growing private tech companies, told the crowd at the recently-held Sohn Conference that enterprise cloud software company Workday Inc. (NYSE:WDAY) will be worth $100 billion in ten years, which would represent a significant increase from its current market cap of around $18 billion. According to Mr. Palihapitiya, the provider of financial management, human capital and analytics applications is “a company that we think is purpose-built to really stand the test of time.” The founder of Social Capital applauded the launch of Workday Financials, a system of record to manage financials, and presented a slide showing that Workday Financials helped Netflix Inc. (NASDAQ:NFLX) significantly improve its ability to quickly close the books and file with the SEC.

Chamath Palihapitiya also said that “When you’re a really talented engineer and working at a place that has become sales and marketing driven [referring to competitors such as Oracle and SAP] you quit and go to Workday,” emphasizing the rapid pace of innovation at the company. The investor also mentioned that Workday has 97% customer satisfaction, pointing out that “this is the way people react to Google or Facebook so we should probably pay attention.”

There were 25 hedge funds followed by Insider Monkey with equity investments in Workday at the end of the second quarter, which amassed around 7% of the company’s outstanding shares. Eashwar Krishnan’s Tybourne Capital Management was the owner of 2.75 million shares of Workday Inc. (NYSE:WDAY) on June 30.

The final page of this article discusses two other investment ideas presented at the Sohn San Francisco Conference.