Fund Managers Share 'Best Ideas' at Charity Event

Wednesday, 16 May 2012 04:22 PM

 

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David Einhorn, who runs hedge fund Greenlight Capital, said at a popular investor conference on Wednesday that shares in Martin Marietta Materials are overvalued.

The stock immediately plummeted as much as 14.5 percent on the noted short-seller's comments, an indication of his prowess to move markets.

Meanwhile, Einhorn also said favorable things about Apple Inc., calling it a well-run company.

"Apple is still penetrating markets and gaining share... tablets still a young immature market," he said. Einhorn said he has hard time understanding "how anyone ranks Apple as below average."

Einhorn was among top hedge fund managers to attend the annual Sohn Investment Conference, a charitable event that raises money for pediatric cancer research. The money managers share their "best ideas" with hundreds of wealthy investors who pay thousands of dollars to rub shoulders with them.

The conference, held this year at Avery Fisher Hall at Lincoln Center, features some of the $2 trillion hedge fund industry's best-known managers, including John Paulson, Bill Ackman, Jeffrey Gundlach and Philippe Lafont.

Laffont, founder of Coatue Management, said he is bullish on data center Equinix Inc, which he called the "Internet backbone" sitting on "beachfront property."

Larry Robbins, founder of Glenview Capital Management, said he is bullish on Tenet Healthcare Corp. Meanwhile, Jonathan Kolatch, founder of Redwood Capital Management, recommended buying Argentine government debt.

The event features 14 hedge fund managers and market commentaries who share their best investment views and picks, with no more than 15 minutes on each presentation. The conference honors the memory of Ira Sohn, a trader who died of cancer. The first conference was held in 1996.

In recent years, the conference has become a closely watched event by traders on Wall Street and hedge funds who often jump on the shares of stocks that get selected as "best ideas." Last year, Twitter was on fire with live tweets from investors and traders attending the conference.

But investors should be mindful that sometimes a manager's "best idea" is nothing more than a one-day trade.

A recent analysis by the hedge fund industry publication AR found that roughly half of the 62 stock picks mentioned as "best ideas" at last year's conference are trading lower over the past 12 months.

And Einhorn, who called for the ouster of Microsoft Corp Chief Executive Steve Ballmer at last year's conference, is backing away from the giant software company. From the end of last year to the end of the first quarter, Einhorn's Greenlight Capital slashed its stake in Microsoft roughly in half.

Here are summaries of "best ideas" offered by some of this year's featured speakers:

 

EINHORN

Einhorn said shares in Martin Marietta Materials are overvalued, benefiting from a one-time stimulus.

Einhorn was also down on Chinese banks, saying "China's exports have been slowing, trade surplus is shrinking..banks are becoming illiquid."

GUNDLACH

While most other managers threw up slides of graphs, Gundlach preferred art work, advertising posters and credit card phrases. Painting a gloomy picture of how to solve the current economic crisis, he said the ideas and action plans by governments and central banks reminded him of a firm he used to work at.

He reiterated that his firm DoubleLine is long natural gas and advised the crowd to short shares in Apple and retailer Nordstrom Inc..

LAFFONT

He also said Equinix spent $2 billion creating data centers over past few years and has good free cash flow.

Laffont is also long Virgin Media. He said Virgin has a high return on capital, with broadband as its most profitable segment.

 

KOLATCH

The Redwood Capital founder said he likes Argentine debt because the South American nation "has even less leverage than meets the eye." He is buying euro-dominated Argentine bonds that come due in 2033 with a yield to maturity of 15 percent.

He added that Argentina's balance sheet has improved significantly through "rapid growth and a market-imposed fiscal discipline."

 

ROBBINS

The Glenview Capital founder said he likes some hospital stocks like Tenet. But at the same time he is shorting utilities, specifically mentioning ITC Holdings Corp.

 

DWIGHT ANDERSON

The Osparie Management founder said he is long Westlake Chemical because he is betting palladium prices will rise more than platinum.

© 2014 Thomson/Reuters. All rights reserved.

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