The “Art of Successful Investing” with Schafer, Gundlach, Ketterer (Part II)

 In the second part of our highlight of Barron’s “Art of Successful Investing” conference, we find a number of interesting investment themes, predictions and new ideas from top investing experts.

Oscar Schafer, manager of the hedge fund O.S.S. Capital Management (which he has since announced will close), noted “we run a concentrated portfolio, with just 12 to 15 long positions and 15 to 20 short positions.” He identifies several lesser-known companies with significant potential for increasing valuation. For example, he points to ownership and management at Par Pacific Holdings as a reason to view the company optimistically.

Jeffrey Gundlach, founder of Doubleline Capital, discusses potential value in market pockets. For example, of Puerto Rican general obligation bonds he says, “Bondholders will either have a home run and be paid 100 cents on the dollar, or the bonds will be restructured and you’ll make 75 or 80, which is close to your cost.” Although he observes that “energy bonds are the riskiest because the fundamentals are bad,” he notes “if you’re going to buy them, I want you to buy 30-year treasury bonds also, because they will work well together.”

Finally, Sarah Ketterer, CEO of Causeway Capital Management, explains why she thinks the recent emissions cheating scandal makes Volkswagen an attractive stock. She says that after the fines and related outlays are paid, the company will restructure massively. “The catalyst to cut costs is here,” she believes. This fits well with what she described as her “original investment thesis,” which was to “find the company with the greatest amount of fat to cut.”