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The Complete Ira Sohn Conference Highlights

Tyler Durden's picture





 

While Paul Singer, Kyle Bass, and Stan Druckenmiller got the headlines, there were in total 14 worthwhile speakers at yesterday's Ira Sohn conference. Though many of the themes were unsurprising, it is nonetheless useful to compare your own views to those of these professional money managers who are now bludgeoned daily by the 'idiot-maker' rally... of course, that is, until they are proved 100% correct.

 

Jones Trading Recap of Ira Sohn Conference  (Yousef Abbasi)

Paul Singer - Elliot Management

  • Singer talks about the global banking environment, notes that it is opaque and very highly leveraged.
  • He says that Value-at-Risk (VAR) is not the appropriate measure for a financial institution's health.
  • He notes that the average person is not feeling the recent equity rally, says they are worried about jobs, paying more for life necessities.  This distortion is furthering class warfare.
  • On bonds, they are mispriced in the US, UK and Japan.  He does not say short bonds, but says that there are distortions in the market.

Kyle Bass - Hayman Capital

  • Stock Idea - Long DEXO - Company is a re-org but has a solid turnaround plan that should take shape over the next three years.  He says that it is a cheap option, although it is risky.  He says debt should trade to par and that shares could rise 5x.
  • On Japan, he says the Yen will continue to weaken and the JPY could hit 120, he sees Japan CPI hitting 2% in the next couple of years.  He calls the current policy of QE in Japan "adding a ponzi scheme to a ponzi scheme."

Li Lu - Himalaya Capital

  • Idea is South Korean preferred shares and mentions - Long Samsung, Hyundia.  Notes that these trade at a deep discount because of confusion around if they are debt or equity.

Keith Meister - Corvex Management

  • Stock Ideas - Long LVLT, TWTC
  • Says that spread between debt and equity is as wide as it has ever been and companies have plenty of options to make purchases and create growth.
  • TWTC -Company is substantially under-levered.  He thinks TWTC can continue to grow organically and could be bought at the right time. Says company could be interesting for large Telecom or Cable operators.  He sees 40% upside to shares.
  • LVLT - Company has been historically levered. He sees LVLT as a potential consolidator in the business. The company is a scale assets and a real estate play, says that it reminds him of Sprint when people look at the asymmetry in terms of risk/reward.

Bill Ackman - Pershing Square

  • Stock Idea - Long PG
  • He notes the company is a great business and its under-earnings relative to what he sees as its intrinsic earnings power.  He notes several underlying PG brands that could be stand-alone companies.
    Says that 40% of sales are coming from fast growing, emerging markets.
  • Believes that the company under-earns because it has a bloated overhead cost structure, but that most of the issues the company suffers from are readily fixable.
  • Says company should be able to generate 5% organic growth - emerging markets contributing 7%-10%.  Also believes that gross margins are 200bps below where they should be and that the company should be able to generate a 24% EBIT margin.
  • On PG CEO, Bob McDonald - He notes that he sits on 21 other corporate board and could be "distracted" by these other interests.  He says they've made progress, but are still lagging some competitors - wants to see more improvement over next few quarters.
  • Intrinsic value ofPG seen at $125, stock is trading at $78.

Stanley Druckenmiller - Duquesne Family Office

  • Stock Idea - Long GOOG
  • Commences by calling QE a nuclear weapon and believes that Bernanke has embarked on the wrong policy. But he notes that listening to Bernanke shows that he's not going "wobbly anytime."
  • No condition of Bear market until Fed changes - so expect the market to continue to rise.
  • On commodities, he says that the super-cycle is ending and believes that their a "poisonous cocktail" in commodities when it comes to China.
  • He says he thinks the AUD will sell-off hard.
  • He is bullish onGOOG  - says that its a great tech company and notes some of their new technologies pushing from glass to auto.

Mitchell Julis - Canyon Partners

  • Stock Idea - Long CCO
  • CCO -he sees it as a name that is trading at a depressed multiple.  Notes that although the stock is complex, it is interesting as leveraged equity and has been a good return for investors.

Steve Eisman - Emrys Partners

  • Stock Ideas -Long LEN, SPF, PHM, FOR, CLNY, OCN. Short HCG.CN.
  • US vs. Canadian Housing is the presentation and Eisman comes out bullish on US Housing saying that it is still near the bottom.  Although builders are NOT cheap, he notes improving fundamentals.
  • FOR -He says is worth $30/shr as a land play - it owns 136k of undeveloped land.
  • CLNY -Another small play on housing that has potential
  • OCN -Says is perhaps the most powerful but counterintuitive pay on housing.  He says the stock is complete mis-priced as it is "undervalued by a lot."
  • With regards to Canada, he notes that their banking system is holding higher leverage ratios and that the Canadian equivalent to our GSEs is insuring much of the mortgages.  Says he believes its too late for a soft-landing for housing in Canada.
  • HCG.CN -The largest non-prime mortgage originator in Canada - it has been pretty aggressive with growth and will have problems if housing rolls over.

Jim Chanos - Kynikos

  • Stock Ideas -Short WDC, STX.
  • Chanos notes that PC sales continue to fall as tablets are taking over.  He also notes that the memory space is facing competition from the cloud.
  • STX -he says that the company's management has been engaged in "opportunistic" sales and that insiders are selling out or leaving.

Tor Olav Troim - Golar Lng Energy

  • Talks about the pros and cons of the shipping industry.

Jon Jacobson - Highfields Capital

  • Stock Ideas -Short DLR.  He also says be wary of T and LINE.
  • DLR -says dividend is unsustainable and that its different from any other REIT as its business has low barriers to entry - notes thatAMZN and MSFT are in the midst of a data center war as well.

Clifton Robbins - Blue Harbor Group

  • Stock Idea - Long AKAM.
  • Says that he sees the perfect storm brewing in M&A and is very bullish on it - noting cash on corporate balance sheets, etc.
  • AKAM -15%-30% of the world's internet traffic is touched by the company, its a singularly unique business.

Jeff Gundlach - DoubleLine

  • Stock Idea -Short CMG.
  • Gundlach says that everything is backwards and that although he expects
    QE to continue - he thinks that the Fed Minutes show "talk" about ending
    QE, just for the illusion.
  • He says investors should NOT be asking when QE is going to end, but they should be asking how to invest if it never does.
  • He says short French bonds as France is a basketcase.

David Einhorn - Greenlight Capital

  • Stock Idea -Long OIS.
  • He notes its a low cost provider of oil rigs and that it has better margins than peers but is not getting credit for them.
  • He notes that if Jana Partners gets its plan to spin certain operations off into a REIT, the company could be worth $155/shr.

 

(H/T Colin McFag)

 


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Thu, 05/09/2013 - 09:33 | Link to Comment FEDbuster
FEDbuster's picture

Any video available of this conference?  Several interesting panelists that would be worth watching their whole presentation. 

Thu, 05/09/2013 - 10:52 | Link to Comment Motorhead
Motorhead's picture

What, no Simon Black? 

Thu, 05/09/2013 - 09:43 | Link to Comment Dr. Engali
Dr. Engali's picture

Ackman has to be one of the least creative MFrs in the financial world. P&G for cripes sake. 

Thu, 05/09/2013 - 09:44 | Link to Comment jdoo
jdoo's picture

Does anyone have a link to the slides Gundlach presented?

Thu, 05/09/2013 - 09:57 | Link to Comment kito
kito's picture

not one mention of "hunker down with canned goods, gold, cash, firearms and a belief in the Lord"................................

Thu, 05/09/2013 - 10:15 | Link to Comment FEDbuster
FEDbuster's picture

Representatives from SHTF Investments, LLC or TEOTWAWKI Worldwide weren't invited to speak at this year's conference, maybe next year?

Thu, 05/09/2013 - 09:55 | Link to Comment Quinvarius
Quinvarius's picture

Kind of weird how they all hate the rally, but buy stocks as if they think their picks won't get crushed with everything else when the air pocket beneath is violated.  No one ever thinks their stocks are going to get hit with the rest of the market.

I am a big proponent of the fact that markets move on easy money and easy credit.  But I see nothing but warning signs indicating there is no transmission of easy money/credit into the real economy.  That means the stock market is a purely speculative bubble.  And the Fed is not there directly buying stocks.  Real traders who have to manage losses and take margin calls are in there.  You'd be a fool to take Buffet's advice and treat the stock market bubble like the bond market bubble.  Only one has direct government/Fed buying. 

Thu, 05/09/2013 - 09:57 | Link to Comment adr
adr's picture

I am going to start a company called Promise. I won't sell anything but promises.

You send me $100 and I will give you a promise certificate that I will pay you $300 some time in the future. You won't know when, but it is a promise.

Just think of the revenue potential. With no real product or need for much labor, the overhead costs are virtually nothing. I expect to go public with at least a $500 billion IPO. Ticker: PRMS, if it isn't taken.

I'm thinking the algos with take the stock to stratospheric heights, and retail investors will eat it up. AFTER ALL WHO WOULDN'T WANT TO INVEST IN PROMISE!!!!

The wonderful thing is that I can make good on my promise certificates by selling shares. With an endless supply of Bernankemoney there will always be a buyer for more stock at ever higher valutations. Stock splits will lower the share price letting even more people enter the market.

UNLIMITED POTENTIAL.

Even if I decide to keep all the cash, I am in the clear. I pre-printed "Promises are made to be broken" cards.

Ponzi scheme, ha. It isn't a ponzi if it is outlined in the prospectus that you pay $100 and will be sent $300 in the future. IT'S CALLED INVESTING. Works for insurance companies.

The PROMISE of a better future!

The investment opportunity of all time.

Thu, 05/09/2013 - 10:20 | Link to Comment ugmug
ugmug's picture

 

 

I think they call it 'psychic readings'......which is all that wall street money managers have become.

Thu, 05/09/2013 - 10:23 | Link to Comment FEDbuster
FEDbuster's picture

Throw in lots of flashing lights, bells and whistles and tons of glossy paper.

Thu, 05/09/2013 - 10:25 | Link to Comment All_Is_Well
All_Is_Well's picture

Can I apply for position of CFO? I have an idea. We can go virtual and call the sub BITPROMISE! We will clean up!

Thu, 05/09/2013 - 10:53 | Link to Comment MachoMan
MachoMan's picture

I believe someone has already beaten you to the punch...  it's called religion...  and their business model is better in that clients (suckers) are not to be repaid until after death and then only in ways immeasurable to humans.  At some point I would think the skeptics would take over with a simple argument regarding the number of virgins it would take to service the recently departed, but I digress...

Thu, 05/09/2013 - 11:31 | Link to Comment Snoopy the Economist
Snoopy the Economist's picture

adr: Consider changing the name from PROMISE to PONZI (PNZI)

Thu, 05/09/2013 - 10:21 | Link to Comment Ignorance is bliss
Ignorance is bliss's picture

Do you dance in the in zone with gold, silver, and lead, or do you play the market ? Jeff gundlach has it right. QE will never end. I am betting Weimar. Lots of money, lots of paper gains in the stockmarket, it's like winning at monopoly. Who cares, the paper game will stop when you cant buy real assets.

Thu, 05/09/2013 - 13:25 | Link to Comment Rusty Nayle
Rusty Nayle's picture

I was hoping to hear about how Ben Bernanke was bullish on STFU and SMH

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