1st European Value Investing Conference | Value Investor Speaker: Francisco García Paramés

Summary of "1st European Value Investing Conference | Value Investor Speaker: Francisco García Paramés"

Short Summary:

This presentation focuses on value investing, a strategy that involves buying undervalued companies with the expectation of long-term growth.
The speaker argues that value investing is poised for a comeback, citing factors like the recent shift away from growth stocks, historically low interest rates leading to inflation, and the need for increased investment in oil production.
He highlights the potential for value investors to capitalize on growth companies at discounted prices, using examples like his own holdings in Caller LNG, a company involved in the booming LNG business, and oil production companies.
The speaker emphasizes the importance of owning assets rather than holding cash or lending money to protect against inflation and the distortions caused by money creation.

Detailed Summary:

Section 1: Value Investing in a Changing Market

The speaker begins by discussing the historical performance of value versus growth investing, noting that value investing has recently started to outperform after a long period of underperformance.
He argues that this trend is likely to continue, citing factors like the reversal of momentum in growth stocks, the increasing prevalence of passive investing, historically low interest rates leading to inflation, and the changing market environment post-pandemic.
He predicts that value investing will experience a "tailwind" in the coming years, leading to significant returns.

Section 2: Value Investing in Growth Companies

The speaker addresses the common misconception that value investors only invest in low-growth companies.
He presents three of his firm's main holdings: Caller LNG, a company focused on the growing LNG business; Care, a company with a strong presence in the growing nursing home market; and Dickson's, a company with a growing electrical distribution business.
He argues that these companies demonstrate that value investors can find growth businesses at discounted prices, allowing them to participate in their growth at a reasonable cost.

Section 3: The Oil Sector as a Value Opportunity

The speaker presents oil as a classic value opportunity, noting that the sector has been underinvested in recent years due to ESG concerns and a perceived decline in demand.
He argues that demand for oil is likely to remain strong for the foreseeable future, driven by factors like the continued growth of the global economy, the need for petrochemicals, and the slow transition to electric vehicles.
He highlights the tight market conditions in the oil sector, with declining production and limited investment, creating a favorable environment for value investors.
He describes his firm's investment strategy in the oil sector, focusing on medium-sized, family-owned companies with a strong track record and a focus on value creation.

Section 4: The Importance of Owning Assets

The speaker concludes by emphasizing the importance of owning assets, particularly in the current environment of high inflation and money creation.
He advises against holding cash or lending money, as these assets are likely to lose value over time.
He reiterates his belief that owning assets is the best way to protect oneself from the distortions caused by excessive money creation.

Notable Quotes:

"Everything reverts to the average... when you are buying low-priced stocks, they will go up, and similarly, high-priced stocks tend to go down."
"We are going to have the win on our backs, so hopefully, we'll take advantage of that after so much suffering in the last years."
"We define them [growth companies] and specifically, perhaps it's not a very big growth sector, but oil, oil sector, especially production and exploration, we think it's a classic value opportunity."
"Own assets, and don't be a creditor... don't have bank deposits, don't loan to anyone, especially if you're on a long term, and own assets, which is the only way to be protected from the huge distortions that the money creation is creating."