By Svea Herbst-Bayliss
NEW YORK May 16 A highly anticipated hedge-fund
conference on Wednesday where managers are invited to share
their "best ideas" with investors fell flat on that score.
Bill Ackman, founder of Pershing Square Capital Management,
came talking about a stock he has held for a long time, retailer
JCPenney Co Inc, one day after the company reported
disappointing earnings and its share price sank.
Lone Pine's Stephen Mandel said his hedge fund opened a new
position in retailer Kohl's Corp, whose shares are down
more than 15 percent over the last 12 months.
David Einhorn, who runs hedge fund Greenlight Capital, did
not unveil any big investment idea at the annual Sohn Investment
Conference as he did in 2008 with his critical and prescient
take on Lehman Brothers.
It was that call that catapulted the conference, a
charitable event that raises money for pediatric cancer
research, into a must-attend event for wealthy investors.
This time around, Einhorn threw darts at Martin Marietta
Materials Inc, calling the shares over valued.
The stock immediately plummeted as much as 14.5 percent on
the noted short-seller's comments, but it came back somewhat,
closing down 8.2 percent.
Meanwhile, Einhorn said favorable things about Apple Inc
, already a market darling.
"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."
The Ira Sohn 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 Laffont.
Laffont, founder of Coatue Management, said he is bullish on
data center Equinix Inc, which he called the "Internet
backbone" sitting on "beach front property."
Larry Robbins, founder of Glenview Capital Management, said
he is bullish on Tenet Healthcare Corp and 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
And Einhorn, who called for the ouster of Microsoft Corp
Chief Executive Steve Ballmer at last year's
conference, is backing away from the software company. From the
end of last year to the end of the first quarter, Einhorn's
Greenlight Capital slashed its stake in Microsoft by roughly
Here are summaries of the "best ideas" offered by some of
this year's featured speakers:
Paulson said he is long Caesars Entertainment Corp,
AngloGold Ashanti Ltd and CVR Energy Inc. He
said AngloGold trades at a significant discount to spot gold.
"It's an extremely attractive opportunity," he added.
Earnings have been exploding at AngloGold, Paulson said,
noting that the trend is continuing.
"From an operating standpoint, this company is firing on all
cylinders," he said.
CVR Energy is a merger arbitrage play that Paulson said "is a
gift from Carl," adding he means Carl Icahn, the famous
Some of Paulson's portfolios suffered heavy losses last year
and he has been working hard to calm jittery investors who might
be on the verge of bolting.
Einhorn raised red flags on Amazon.com Inc even
though the company has taken billions away from other retailers.
He questioned whether it was strong enough to replace them and
called its future "a riddle" while showing a slide of Jim Carrey
as "The Riddler" from "Batman."
He was more explicit about Dick's Sporting Goods Inc
, which he said "could soon be left in the dust."
Einhorn also said Martin Marietta Materials shares are over
valued, benefiting from a one-time stimulus.
Einhorn was also down on Chinese banks.
"China's exports have been slowing, trade surplus is
shrinking ... banks are becoming illiquid," he said.
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
He reiterated that his firm, DoubleLine, is long natural gas
and advised the crowd to short shares in Apple and retailer
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 Inc. He said
Virgin has a high return on capital, with broadband as its most
The Redwood Capital founder 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
The Glenview Capital founder likes some hospital stocks such
as Tenet. But at the same time he is shorting utilities,
specifically mentioning ITC Holdings Corp.
The Osparie Management founder said he is long Westlake
Chemical Corp because he is betting palladium prices
will rise more than platinum.