Special situations in Europe and the UK with Investor Conor Maguire | Value After Hours S06 E37
Oct 14, 2024
auto_awesome
Conor Maguire, a special situations investor from Dublin, shares his insights into undervalued European and UK equities. He discusses the post-COVID landscape of bankruptcy and the rise of private credit, offering investment opportunities amid market concerns. Maguire highlights the potential of a UK automotive parts company to revitalize value through strategic spin-offs. Additionally, he explores OCI's market restructuring in response to natural gas price fluctuations and explains how understanding Ikigai can align passion with investment success.
Connor McGuire emphasizes value-driven investment strategies that focus on comprehensive company analysis beyond traditional metrics like price-to-earnings ratios.
He introduces a three-part framework for evaluating investments that prioritizes asymmetric risk-return profiles, seeking a minimum three-to-one upside versus downside ratio.
The podcast discusses the stagnation of the UK equity market, highlighting hidden investment opportunities in overlooked sectors amid structural changes and market challenges.
Deep dives
Introduction to Special Situations Investing
The guest, Connor McGuire, shares his expertise in special situations investing, highlighting his background in accounting, corporate finance, and private equity. He emphasizes the importance of value-driven investment strategies that focus on analyzing the comprehensive worth of companies rather than traditional metrics like price-to-earnings ratios. His newsletter serves as an outlet to present his insights and analyses about undervalued opportunities he identifies globally. This approach combines fundamental valuation techniques with strategic consulting for family offices, aiming to uncover overlooked investment potentials.
Framework for Value Situations
Connor outlines a unique three-part framework for evaluating investments, centering on asymmetric risk-return profiles. This framework prioritizes a thorough valuation of the entire business, assessing its total assets and cash-generating capabilities while also examining balance sheet conditions for downside protection. He seeks investments where the potential upside significantly outweighs the downside risk, aiming for a minimum of three times upside relative to downside exposure. This disciplined approach allows him to navigate the complexities of investment markets, particularly in volatile conditions.
Current Trends in the UK Equity Market
The discussion touches on the challenges faced by the UK equity market, which is seen as having stagnated compared to more dynamic markets like the US. Factors contributing to this perception include a lack of high-growth, disruptive companies in the UK and a trend of domestic investors favoring faster-growing foreign equities. Additionally, structural changes, such as a shrinking market due to acquisitions or delistings, further exacerbate the situation. Connor notes that this environment presents hidden opportunities for value investing in overlooked sectors, particularly in the UK, where many stocks may be mispriced.
Valuable Insights on Specific Stocks
Connor provides a detailed analysis of Dallas Group, a UK-based auto parts manufacturer, highlighting its market potential despite current industry challenges. The company, with a sizeable market share in vehicle components, faces a downturn influenced by the broader automotive market's struggle with electric vehicle transitions. However, it also has potential upside through a strategic review that might lead to the spinoff of non-core segments, which could unlock substantial value. This case illustrates the broader theme of uncovering value in sectors that are viewed negatively by the market but possess solid fundamentals.
Market Dynamics and Future Outlook
The conversation explores broader market dynamics in energy sectors, particularly the ongoing reliance on oil amidst transitions toward renewable energy. Connor emphasizes that while alternative energy sources gain traction, oil and gas will continue to play a crucial role in the global economy due to their integration into numerous industries, not just transportation. He predicts a stabilization of oil prices around historical averages, driven by ongoing global economic needs and the limitations of transitioning fully to renewables. This perspective reinforces the importance of strategic investment in energy sectors, looking at both immediate cash flows and long-term growth potential.
Value: After Hours is a podcast about value investing, Fintwit, and all things finance and investment by investors Tobias Carlisle, and Jake Taylor. See our latest episodes at https://acquirersmultiple.com/podcast
We are live every Tuesday at 1.30pm E / 10.30am P.
About Jake
Jake's Twitter: https://twitter.com/farnamjake1
Jake's book: The Rebel Allocator https://amzn.to/2sgip3l
ABOUT THE PODCAST
Hi, I'm Tobias Carlisle. I launched The Acquirers Podcast to discuss the process of finding undervalued stocks, deep value investing, hedge funds, activism, buyouts, and special situations.
We uncover the tactics and strategies for finding good investments, managing risk, dealing with bad luck, and maximizing success.
SEE LATEST EPISODES
https://acquirersmultiple.com/podcast/
SEE OUR FREE DEEP VALUE STOCK SCREENER
https://acquirersmultiple.com/screener/
FOLLOW TOBIAS
Website: https://acquirersmultiple.com/
Firm: https://acquirersfunds.com/
Twitter: https://twitter.com/Greenbackd
LinkedIn: https://www.linkedin.com/in/tobycarlisle
Facebook: https://www.facebook.com/tobiascarlisle
Instagram: https://www.instagram.com/tobias_carlisle
ABOUT TOBIAS CARLISLE
Tobias Carlisle is the founder of The Acquirer’s Multiple®, and Acquirers Funds®.
He is best known as the author of the #1 new release in Amazon’s Business and Finance The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market, the Amazon best-sellers Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014) (https://amzn.to/2VwvAGF), Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012) (https://amzn.to/2SDDxrN), and Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors (2016) (https://amzn.to/2SEEjVn). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.
Prior to founding the forerunner to Acquirers Funds in 2010, Tobias was an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer. As a lawyer specializing in mergers and acquisitions he has advised on transactions across a variety of industries in the United States, the United Kingdom, China, Australia, Singapore, Bermuda, Papua New Guinea, New Zealand, and Guam.
He is a graduate of the University of Queensland in Australia with degrees in Law (2001) and Business (Management) (1999).
Remember Everything You Learn from Podcasts
Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.
