The WOAPIC Meeting 2013 document summarizes an investment conference. It discusses 3 value investment themes: serial compounding machines, event driven special situations, and cigar butts. It outlines 3 pillars of value investing - management, moat, and mispricing. Several company examples and case studies are presented to illustrate these themes and pillars. The document concludes with a Q&A section.

1. WOAPIC Meeting 2013
L. Porayko
March 2013

2. “The value of experience is not in seeing much, but in
seeing wisely.”

4. The investment process
A few contemporary
cases
Q&A

5. The Golden Rule is….
Don’t
Lose
Money

7. 3 Value Themes
Serial Compounding Machines
Event Driven Special Situations
Cigar Butts

8. 3 Pillars
Management
Management
Moat
Moat
Mispricing
Mispricing
Mitigants: kill the idea

9. This is what a compounding machine looks like.

10. NOV:
great companyhated sector

11. Look familiar?

12. Mgmt
Vision
Allocation
Execution
Probity

13. Moat
‘No Other Vendor’
EOS (60% M/S)
‘Sticky’Contracts
ROIC>25%

14. Moat cont’d
o⏏Economic rents
oSupply chain
oIndustry standard
oBargaining power

15. Mispriced
Opportunity vs. valuation dislocation

16. Mispriced
What are the normalized earnings?

17. Mispriced
Shouldn’t it trade at a premium vs. peers?

18. Mispricing
EPV $7.40/share
xHistorical P/Elow 13.5x = $99.90/share
x Historical P/Ehigh 18.5x = $136/share
Discount by WACC 8.4% to mid 2014
 Low $99.9/(1.084)1.5= $88.52/share
 High $136/(1.084)1.5 = $120.50/share
MOS = 29%-77% current
share price

19. Mitigants
Cameron-SLB JV threat
Commodity
Disruption risk
Key-man risk

20. SKUL:
a fallen angel left for dead
Mgmt
 Founder
 Activists
 Buy-back 16%
Moat
 De minimis
Mispriced
 P/E 6x vs. comp 23x

21. SPE:
activist on sale?
Mgmt
• Track-record
• 1% MER
• Insider buying
• Dividends
Moat
• Small ponds
Mispriced
• 12% < NAV

22. DRA CRT Acquisition Corp
Preferred Stock DCAQP
Mgmt
‘Sterling’ ICPM
Own 58%
Mispriced
Over-collateralized 5x
 IRR 20%