ValueAct Capital’s CBRE Recommendation Delivers 150% Gain

This is how we shared Jeff Ubben’s CBRE Group Inc (NYSE:CBRE) stock pitch more than 6 years ago:

“On October 2, 2012, ValueAct Capital‘s fearless leader Jeffrey Ubben made a presentation on Day 2 of the 8th Annual Value Investing Congress in New York. Entitled “Avoiding Complexity and the VAC Circle of Life”, Ubben discussed several aspects of his investment philosophy during his presentation as well as the lessons he had learned through his years of triumphs and failures managing his own firm, and prior to that, serving as a managing partner at Blum Partners, and managing the Fidelity Value Fund. Among other things, he touched on the importance of steering clear of complex, unfocused businesses, as just one failure of its many parts can drag the rest down with it. Ubben also touched on the need to avoid companies with bad governance, instead putting oneself in a favorable position from the start of an investment rather than behind the eight ball with a dearth of problems to fix and a recalcitrant management team to butt heads with. This is particularly relevant for Ubben, who takes activist positions in the majority of his investments and seeks to work closely with management and the board to facilitate positive change.”


You can see Ubben’s CBRE powerpoint presentation here.

At that time CBRE shares were trading at $19 per share. This week Ubben’s long-term activist value hedge fund sold 6.7 million shares of CBRE for $49.51 per share. Tech heavy S&P 500 Index returned around 120% since then whereas CBRE delivered gains north of 150%.

Insider Monkey’s mission is to identify promising (and also terrible) hedge fund stock pitches and share them with our subscribers. We launched a long activist investing strategy in our monthly newsletter 2 years ago. This strategy’s stock picks returned 61% in 2 short years, vs. a gain of 21% for the S&P 500 Index ETF (SPY). Last October we shared one of our stock picks, Ascendis Pharmaceuticals (ASND), in a free sample issue of our monthly newsletter. The stock doubled in less than 5 months.

We have been very successful at identifying stocks that will decline even in a bull market. We launched this short strategy a little more than 2 years ago and share these stocks in our quarterly newsletter. This strategy’s picks lost 27.5% since then, vs. a gain of 25% for the S&P 500 Index. This means our short strategy actually outperformed the market by 52.5 percentage points (let us know if you don’t understand how the outperformance for a short strategy is calculated).

Last week our monthly newsletter identified another undervalued stock that is expected to increase its earnings by more than 10% annually and trades at only 10 times its 2019 earnings. We expect this stock to return 60% in the next 12-24 months. Email us if you are interested in this stock.

Hedge funds have a tarnished reputation. Most of them can’t generate outperformance after fees. The good news is that there are still a lot of hedge fund managers whose best ideas beat the market by large margins. Jeff Ubben is one of these fund managers. Ubben’s top 10 stock picks beat the market by more than 10 percentage points between 2008 and 2016. His best ideas (according to our proprietary algorithm) performed even better, beating the market by nearly 14 percentage points a year. Ubben sold a large chuck of his CBRE Group Inc shares for a huge profit and he’ll probably be deploying the proceeds from this sale into his new best idea in the following days. Keep an eye on his latest moves by subscribing to our free daily newsletter.

Disclosure: None. This article is originally published at Insider Monkey.