This week, some of the world’s top investors gathered in New York for the Ira Sohn Investing Conference to provide some good stock picks for charity.
But there wasn’t any talk about high-fliers such as LinkedIn (NYSE:LNKD). Rather, the conference was full of value ideas with some of the picks appearing quite gutsy. But good investing is often about being a contrarian.
Here’s a look at some of picks:
MBIA (NYSE:MBI): This one is a favorite of ErezKalir, who is a manager of Sabretooth Capital. His presentation was aptly titled — “Economic Death as a Special Situation.”
Excited now? MBIA was once a top company, providing insurance for municipals and structured investments. But in 2008, the company nearly imploded because of its high exposure to subprime mortgages.
Even though MBIA has massive liability exposure, it may be overblown by investors. Consider that the company had highly sophisticated contracts with its clients. Besides cases go through the court system over the next few years, MBIA may be able to recover money through fraud claims.
Aon (NYSE:AON): In light of the disaster in Japan as well as the destruction by tornadoes in the U.S., the insurance industry does look dicey. But Steve Eisman, who is a money manager at Frontpoint Financial Services, believes that such things will benefit investors.
If anything, there should be less pricing competition in the sector, which should help to boost returns for the next few years. And one company that could benefit nicely is Aon, which is a broker. Thus, as premiums expand, so should commissions.
Aon also has a massive global footprint, with operations in over 100 countries.
Microsoft (Nasdaq:MSFT): The company seems like a has-been, and the stock has been dead money for the past 10 years.
But Greenlight Capital’s David Einhorn thinks there is value for investors. After all, the price-to-earnings ratio is a dirt-cheap 9.8.
Keep in mind that Microsoft has several franchise businesses, such as its Windows platform, Office Suite and server tools. All these generate huge amounts of free cash flow.
What’s more, Microsoft should benefit from some major trends in technology, especially cloud computing. It is one of the few companies that has the global scale to help customers.
Yet as expected, Einhorn rattled the cage of Microsoft and called for the CEO, Steve Ballmer, to step down. He calls him the head of “Charlie Brown” management.
Tom Taulli’s latest book is “All About Short Selling” and he has an upcoming book called “All About Commodities.” You can find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.
