Atticus Lowe & Lance Helfert at the 3rd Annual New York Value Investing Congress reported by Marcelo Lima.

Atticus Lowe & Lance Helfert of West Coast Asset Management began their talk with a list of 10 signs of a strong company:

1. A simple business model – Dell vs. Wrigley
• Understandable, focused
2. A wide-moat competitive advantage – Cisco Systems vs. Microsoft
• Barriers to entry, pricing & buying power, sustainability
3. Recurring revenue – ADP vs. Toll Brothers
• Long-term contracts, repeat clients (razor blades)
4. Low inventory risk – Starbucks vs. Circuit City
• Don’t get stuck with inventory – quick turnover
5. Alignment of interest – National Home Health Care vs. ATP Oil & Gas
• Ownership, motivations, per share value, compensation
6. A healthy culture – General Electric vs. Johnson & Johnson
• Ruthless vs. selfless, ethical, lead by example
7. A flat organizational structure – Kodak vs. Contango Oil
• Fewer layers better, lean environment, close to customer
8. Low reinvention risk – Apple vs. Tootsie Roll
• Product life cycle, predictable, hit or miss, uncertainty
9. Low capital requirements – General Motors vs. Google
• Flexibility, resilience, generate cash vs. consume
10. Favorable demographics – Tribune vs. Angiotech
• Population characteristics – digital, baby boomers

They presented Noven Pharmaceuticals, of which they own 14%. Noven has a patented drug patch – a proven concept – which is much smaller than previous patches, and can administer a huge variety of drugs in a less intrusive way.

The company’s enterprise value is $270m, which is particularly attractive given that aside from their product portfolio and pipeline, there’s a JV with Novartis which alone is valued by WCAM at approximately $350m.

Overall, they believe a base case for the stock is $21.60 per share with potential to reach $30.80.

Marcelo Lima is a securities analyst for the Flexor Fund, at Miami-based Horn Eichenwald Investments. He focuses on running a concentrated value-oriented portfolio.