U.S. companies in the spotlight: Uber, Disney, Warner Bros., and Berkshire Hathaway
There are many ways to approach value investing. One, according to Boyar Value Group CEO Jonathan Boyar, is through the search for high-quality companies that “sell at a significant discount to what a buyer pays and have a catalyst for capital appreciation.” In this regard, he highlights the interest in “hidden assets that have not been recognized by the market” and with a high potential. All of this is, in his opinion, of vital importance. But not everything falls within the investment horizon of the MAPFRE US Forgotten Value Fund: Charlie Munger and Warren Buffett called all the investment possibilities in which one feels comfortable the “circle of trust”.
The fund's strategies are based on a similar idea: “We look at consumer-oriented businesses, such as media. In general, sectors that we can really feel, analyze and, above all, understand,” explains Boyar in an interview at The Virtual Value Investing Q&A Speaker Series organized by Brown University.
Based on this philosophy, the Forgotten Value portfolio includes well-known companies that have performed well in recent years and still have room for growth in the coming years. Uber, for example, is one of the companies that Boyar considers to be “extremely undervalued.” “What we really like about Uber is the competitive edge. The result is that demand is increasing and I believe that, with the reopening, the travel business is really going to bring surprises,” says the Boyar Value Group CEO.
Like the private travel services sector, the media is undergoing a great deal of change and, as he says, it is difficult to “find the winners.” But, based on the adage that “those who have the best content are the ones who are going to come out on top,” Boyar sees Disney as a company with great potential: “They have millions of subscribers, competitive pricing and have yet to roll out worldwide. I see them as big winners.”
Warner Bros. is also playing in the same league. Discovery, which, following its recent deal with AT&T, “is bringing together many types of content” and “can generate many synergies.” That’s why he considers this position to be a stock with high potential “once the merger between the two companies has been completed.”
The level of capitalization is not a determining factor in MAPFRE AM's fund investment decisions. In fact, there is the case of Berkshire Hathaway, which, despite its wide recognition in the United States, has less weight than other large multinationals. However, the firm chaired by Buffett has great appeal, to the point that over the last five years it has gained 64%.
Without losing sight of the U.S. market, another interesting position according to Boyar is Angi, a U.S. domestic services company that is also part of the fund's portfolio. Being part of the conglomerate of companies that controls IAC (which owns 85% of Angi), he recognizes the firm as “a great business that is pivoting in a unique way.”
Why and how were they chosen?
As the expert mentions, Forgotten Value looks for companies whose value is not really recognized by the market and which have high long-term potential. To carry out the selection process, he explains that “they treat each case differently, based on the needs of our clients.” He also favors, he adds, investing from an active management perspective: “We don't invest all at once. It's interesting to look down and take positions over time.”
The long-term view is even more interesting in the current economic and geopolitical context, which has changed investors' perspectives on the market. How has it changed since the pandemic? It may, he acknowledges, “be too early to draw conclusions.” “I think there is a significant psychological impact. I don't know what the long-term effects will be, because the world is changing so quickly. Time will tell,” he concludes.