Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

The Winklevoss Twins Didn’t Talk About These Stocks Last Week, But These Guys Did

The Winklevoss twins: The Value Investing Congress was last week, and we at Insider Monkey were in attendance. While the Winklevoss twins got most of the social media attention, there were some great stock picks from this year’s batch of presenters. If you did want to create a so-called “VIC Portfolio,” here’s how to start it with four specific names.

Supremex and Glentel

This Canada-listed small-cap duo comes courtesy of Guy Gottfried and Rational Investment Group. Supremex Inc (TSE:SXP) is an envelope manufacturer that has a dominant market presence in Canada and the potential to double its dividend. Glentel Inc. (TSE:GLN) is a wireless communications company that is cheap, has a solid dividend, and massive growth potential due to “new relationships not yet contributing to results,” according to Gottfried.

In his presentation appropriately titled “Needles in a Haystack,” the fund manager listed three reasons why investors should consider Glentel: (1) its management and capital allocation strategies are shareholder friendly, (2) the aforementioned growth potential, specifically through its connections with Target and BJ’s, and (3) a “depressed valuation.” Gottfried calculates that Glentel trades at a deeply discounted price-to-free cash flow multiple of 7.5x. Industry norms—depending on the classification—range between two and three times higher than this level.

Supremex, meanwhile, is a bit of a different type of play. Gottfried argues that low liquidity and “sparse” analyst coverage leave this stock underappreciated. He thinks that the company, which has a payout ratio below 25%, can up its dividend twofold and yield 15% a share.

United Rentals

At Insider Monkey, we tout United Rentals, Inc. (NYSE:URI) pretty highly and for good reason. The stock was our market-beating small-cap strategy‘s No. 1 stock pick for at least four consecutive quarters, and shares of the rental behemoth are up 54.5% over the past twelve months.

The crux of any bullish thesis on United Rentals is founded in the belief that a U.S. economic recovery will continue, particularly in the construction markets. What sets URI apart is the fact that it absolutely dominates the rental equipment industry in a post-recessionary macro environment where consumer-spending habits have changed significantly. In layman’s terms, preferences have switched to favor rental equipment over the purchasingof actual big-ticket machinery, and one hedge fund manager explained this phenomenon in detail at last week’s VIC.

Mick McGuire, manager of Marcato Capital Management, issued a presentation titled “Don’t Buy This Recovery,” with the word buy in italics, thus implying that investors should rent it with United Rentals instead. McGuire shared that he and his team like the company for five reasons: (1) favorable cyclical trends, particularly in the U.S. construction market, (2) the “secular shift toward renting,” (3) advantages of scale due to the RSC acquisition in 2012, (4) a “favorable” capital structure, and (5) a cheap valuation.

Regarding the last point, McGuire and Marcato estimate that United Rentals trades at a mere 4.0 times 2015 estimated EBITDA. This is about 23% below long-term averages.

Bonus: Microsoft

This isn’t technically a VIC pick, but it’s still worth mentioning while we have you.

Donald Yacktman

The most notable discussion at the conference might have been Donald Yacktman’s answer to a question about Microsoft Corporation (NASDAQ:MSFT). While the manager of Yacktman Asset Management gave a 14-page slideshow examining the process of “viewing stocks as bonds,” the real meat of his talk came when an attendee asked him why he prefers Microsoft to Apple Inc. (NASDAQ:AAPL). Yacktman stated emphatically that Microsoft’s margins are protected while Apple’s are not, primarily due to more competition in the smartphone space.

In 2013, at least, Yacktman has been dead on, as shares of Microsoft are up nearly 23% year-to-date. Apple, on the other hand, has seen its stock price drop by 8% over this time frame. See Yacktman’s full slideshow here, and check back with Insider Monkey for more hedge fund updates and maybe even some info on the Winklevoss Twins.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter.

Insider Monkey’s small-cap strategy returned 47.6% in its first year ended last month, beating the S&P 500 index by more than 29 percentage points. Try it now by clicking the link above.

Disclosure: none

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!