3 Big Ideas the Gurus Should Be Talking About

The Value Investing Congress is almost upon us! Cheapskates from around the globe are traveling to New York to hear investing luminaries like David Einhorn and Bill Ackman present their top stock ideas and take on the global markets. These heavy hitters have the clout to move stock prices before they're even done with their presentations, so you'd better believe the investing world will be paying rapt attention.

There's more to the VIC than hot stock tips, though. The big-picture ideas and thinking that are batted around each year cast light on pockets of opportunity and ways investors can up their games. Thematic highlights from recent VICs include gold, macro matters, and a real estate recovery.

Here are our predictions for what could be hot topics among the gurus at VIC 2012:

Joe Magyer, Motley Fool Inside Value: The Federal Reserves' no-holds-barred approach to stimulus has interest rates pinned at a generational low. The 1.8% yield on the 10-year Treasury note is less than a third of the 6.6% average yield over the past 50 years.

Yes, deflation is a concern and sluggish growth casts a pall over stocks, but there is a case for optimism and the Fed's aggressive stimulus plans are likely to pressure inflation and interest rates upward. Look for savvy value hounds to present stocks that would benefit from higher rates -- discount broker TD Ameritrade (NYSE: AMTD  ) and its peers could be big hits, as could Visa (NYSE: V  ) and eBay (Nasdaq: EBAY  ) , which both have revenue streams that move nearly in tandem with prices.

Bryan Hinmon, CFA, Motley Fool Pro: Market sentiment would have us believe Americans will be making all purchases through Amazon.com (Nasdaq: AMZN  ) within a few years. OK, that's hyperbole, but the struggles of countless big-box and specialty retailers at the hands of the 1-Click Wonder are very real -- just ask Best Buy. Value investors are salivating at the plunging share prices across retail; brands are on sale, real estate assets abound, and some purchases will continue to ring the registers at physical locations. But what will the pros say about who will survive and how they'll pull themselves together? What are the certain value traps? Activist firm and value seeker Starboard Value gave a preview with its 13% investment in office supplies peddler Office Depot, but there's undoubtedly more value to be had in the sector.

Michael Olsen, CFA, Motley Fool Special Ops and Million Dollar Portfolio: Cash balances at U.S. nonfinancial companies just crossed their eighth consecutive quarter at $1 trillion or higher, costs of borrowing for gilt-edged firms are near generational lows, and S&P earnings sit just a smidge below all-time nominal highs. You could argue one of three things: Firms are about to spend like RuPaul on a Club Med getaway, they're absolutely terrified, or some combination of both. While there's an exception to every rule, the empirical evidence tells the story best. Most managers are not good capital allocators: A Bain study, "Profit From the Core," found that during the 1990s, only 13% of 1,800 firms achieved total shareholder returns in excess of their cost of capital while maintaining 5.5% real earnings and sales growth.

The environment is ripe for shareholder activism, and were I one, I'd be champing at the bit. Firms can (and should) allocate excess cash to value-accruing activities, like dividends and share repurchases; use currently depressed interest rates to take on debt and lower their costs of capital; and amid the recent flurry of spinoffs, REIT conversions, and splits, break up lumbering, perpetually undervalued conglomerates.

Two examples spring to mind: News Corp., and Kraft (Nasdaq: KFT  ) . For the many negative things people have said of News Corp., no one complained when Rupert Murdoch announced plans to split the company. And for Kraft's long-languishing share prices -- puzzling given its cadre of stalwart brands --the shares have found new life since management announced plans to split the company.

Whatever ends up happening, it promises to be an exciting two days. Keep your eyes peeled, as we'll be giving our analysis of the things that strike us.

Want to see Ackman, Einhorn, and friends pitch their best ideas in person? Motley Fool readers can attend the Value Investing Congress with a $300 discount. Click here to learn more, and be sure to enter the discount code FOOLN12.

Joe Magyer owns shares of Amazon.com, Visa, eBay, and TD AMERITRADE. Neither Michael Olsen nor Bryan Hinmon owns shares of the companies they mentioned in their respective portions of this article. The Motley Fool owns shares of Best Buy and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com, eBay, Visa, and TD AMERITRADE, as well as writing puts on TD AMERITRADE. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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