Hedge fund industry luminaries made their cases at the Sohn Investment Conference yesterday. David Einhorn’s struck hardest.
Einhorn, who has warned about a growing bubble in the U.S. stock market, closed the event—which raises money for pediatric cancer treatments—with the claim that electronic healthcare records company Athenahealth Inc. is worth about one-tenth of the $127 it was fetching. And investors reacted quickly, shaving 10% off the fund’s value in after-hours trading.
“The thing about bubble stocks is the best reason to own them is because they are going up,” Einhorn said. “When they stop going up, these stocks become falling knives.”
Before Einhorn got in his last shot, Pershing Square Capital Management’s William Ackman, DoubleLine Capital’s Jeffrey Gundlach, Tudor Investment Corp.’s Paul Tudor Jones, Coatue Management’s Philippe Laffont, Fortress Investment Group’s Michael Novogratz, Glenview Capital Management’s Larry Robbins and Shumway Capital’s Chris Shumway announced their ideas.
Ackman reiterated his faith in government-backed mortgage giants Fannie Mae and Freddie Mac, in spite of a bipartisan plan to wind the companies down. Ackman said that the two have low liquidity risk and that their shares could jump 12-fold.
Jones decried the current macro environment as “boring” due to low interest rates, and wished for “a macro doctor to prescribe central bank Viagra, because otherwise it’s going to continue to be dull.” Robbins plumped for Monsanto, which he said he’s invested $1 billion. He told Bloomberg Television that the controversial company’s genetically-modified seeds would be unnecessary “in a utopian world” where “we would all be able to shop with hedge-fund managers and Hollywood stars and pay whatever we wanted at Whole Foods.” But, he continued, “in the real world, we do need o increase the food supply and GMOs unlock the key to that.”
Laffont told attendees that Liberty Global shares could more than double in value due to growing demand for broadband services and a future merger, which “will happen, it’s just a question of time.” Gundlach and Shumway discussed shorts that they like, with the former pointing to housing and the latter to China.