Francisco Garcia Parames At The Value Investing Congress

Francisco Garcia Parames spoke at the Value Investing Congress and discussed the differences between investing Europe and America, mentioning a few investment ideas during the course of the presentation. Parames runs Bestinver Asset Managment, and has been referred to as the Warren Buffett of Europe. Parames runs two portfolios, a Global portfolio and an Iberian portfolio. Upon discussing the differences between investing in Europe and the United States, Parames said that Europe is a less efficient market than the U.S. He went on to say that most of the European funds are quasi tax exempt, and this makes it easier to rebalance portfolios. Parames went on to say that many public companies in Europe are family owned, and have a longer term view in terms of investing. The companies use organic growth, to go along with prudent acquisition strategies. He talked about one of his investments, owning BMW preferred shares as an example of a less efficient market. Parames believes that the BMW preferred shares have 211% upside in them. It currently trades at 3.1 times 2012 free cash flow., essentially free in his mind. Parames holds 11 million shares, but the float is very low, only trading 60,000 shares daily. He said that the margins at BMW are ~7%, and the company needs better manufacturing operations to achieve operating margins of 8-10%. The last investment Parames mentioned is one trading in Spain, Ferrovial, an infrastructure company. It has significant assets in Toronto, approximately 40% and approximately 25% of its assets are in the U.S. Parames believes shares are worth 17.1 euros, and the company is currently trading at 7.2 euros.