Ira Sohn

The overnight economic data dump started in China, where both exports and imports rose more than expected, at 14.7% and 16.8% respectively, on expectations of a 9.2% and 13% rise. The result was a trade surplus of $18.16 billion versus expectations of $16.15 billion. The only problem with the data is that as always, but especially in the past few months, it continued to be completely made up as SocGen analysts, and others, pointed out. The good data continued into the European trading session, where moments ago German Industrial Production rose 1.2% despite expectations of a -0.1% drop, up from 0.6% and the best print since March 2012. The followed yesterday's better than expected factory orders data, which also came at the best level since October. Whether this data too was made up, remains unknown, but it is clear that Germany will do everything it can to telegraph its economic contraction is not accelerating. It also means that any concerns of an imminent ECB rate cut, or a negative deposit rate, are likely overblown for the time being, as reflected in the kneejerk jump in the EURUSD higher.

When Mary Meeker, formerly of pre-IPO bubble analyst fame, released her "USA, Inc." presentation last year, which assayed the US government as if it were a corporation, her conclusion was simple: the country is broke, and can not continue along the path it is on now. Fast forward to today, when the US debt balance is over $1 trillion higher, and the next edition of Mary Meeker's presentation which she released at last week's Ira Sohn conference. Her conclusion: the US is now broke-er than ever.

Now that the Ira Sohn conference has become a worthless hypefest, in which everyone and their kitchen sink is invited in a desperate attempt by hedge funds to offload positions put on ages ago to witless alphaclone chasers, the real "idea dinners" are few and far between. One such remaining one, which unlike others does not seek to publicize its positions to every retail investor, is that held by Monness Crespi, in which very select hedge funds are invited. Below we summarize the stock picks from last night's dinner. We are not at all surprised to find FaceBook already making enemies.

S&P 500 e-mini futures closed at their day-session lows, below yesterday's day-session lows, and heading for overnight lows rapidly - once again giving up some decent early gains amid much heavier volume into the close. Markets were a mess today. Risk-assets in general had the highest intra-correlation in a long-time - with FX, credit, rates, curves, and stocks moving in almost lockstep all day (up then down). Equities were smashed left, right, and center by comments from the Ira Sohn conference (as it seems people have given up reading hedge fund 13Fs) with Einhorn's comments in particular showing up just how fragile and thin the real liquidity picture is so many stocks. Silver plunged just after the European close (margin/collateral calls?) and dragged the rest of the commodity complex down with it as stocks basically turned on a dime after hitting yesterday's closing VWAP this morning. Treasury yields rose and plunged in the same pattern - ending the day marginally lower than overnight low yields at the long-end but marginally higher at the short-end (post FOMC minutes). Financials were the worst performer again, down around 1.5%, with the majors in particular now starting to catch up to credit market's long-held conviction on these names (with MS -10.5% YTD and BofA plunging today but still +27.8% YTD). Gold remained relatively stable getting a lift post-FOMC (along with silver as the inevitability of QE was clear - but an equity plunge necessary before it can occur) - though we note the Gold/Silver ratio is now unch YTD. Credit markets are not done worrying yet - and that weighed on JPM (-2%) as IG9 pushed above 150bps offered for the first time this year and HYG (the high-yield bond ETF) collapsed along with HY credit spreads. Still doesn't feel capitulative as overnight nerves for Greece remain high.

Here are some of the things that David Einhorn likes and does not like, having just started his speech at the Ira Sohn Conference:

• Martin Marietta - stock plunges 10% and triggers circuit breaker.
• France - "a french default is not out of the question" - France not limit down yet. He says that a return to the Franc is not out of the question.
• Einhorn likes GJF.NO - "Norway is the only country which can finance itself."
• Einhorn likes Cairn Energy as it trades at discount to assets in just Britain and India.
• Says China is misunderstood and is not an investment opportunity: not enough money to feed the economy and banks aare becoming illquid; money is leaving the country
• Also does not like Japan for all the usual Kyle Bass and Andy Xie reasons. The Yen will continue strengthening.
• Einhorn likes AMZN, calls it "elephant in the room", but questions profit growth.
• Einhorn likes Dena Co, and Gree Inc in Japan
• Einhorn is short DKS
• Einhorn, who is long about $870MM AAPL as per last night's 13F, likes AAPL. Stunner.

Today begins the 17th annual pilgrimage of hedge-funders near and far to the Ira Sohn conference, where some of the "best and brightest" share their top picks with everyone else in an attempt to generate a buying (or shorting) frenzy and more hedge fund hotel traps. Sadly, this is what to many passes for alpha these days. Yet does the Ira Sohn conference actually lead to any outperformance? Well, Absolute Return has compiled the 1 year return of the recommended investments from last year's conference. The results are absolutely abysmal. Which makes us wonder if the time of groupthink has peaked, and instead the time to fade absolutely everything to come out of such conferences, where analysts pretend to do homework by piggybacking on others' often times very, very wrong research, and which confuse beta expansion with alpha, has come. 

The following note from Caris & Co. on HLF (which launched Herbalife in September at a Buy and a $75/share PT) has got to be the worst sell side note in history. The catalyst, according to the firm: what David Einhorn may or may not say. Now that is true value added. Next up: Goldman goes long IBM because it flipped heads.

For anyone deluding themselves that alpha still exists apart from beta, and can be generated sans "expert networks", we bring you the top stock picks from the Ira Sohn's San Francisco conference hosted last night. We will bring more detail shortly.

While the hedge fund world (at least those who are not lucky enough to be among the 250 who have access to valueinvestorclub.com) is currently frenzied by the latest public revelations of attempted groupthink at the annual Ira Sohn conference, which Market Folly is doing a good job of summarizing in real time, Absolute Return magazine has compiled the returns of various managers' recommendations based on their 2010 picks. The big winners: Arbess, Eisman, Grantham, Dinan, and oddly enough Larry Robbins. The biggest loser by far was David Einhorn, whose once iconic cult of 13F clones appears to have lost critical mass. In the middle David Tepper, whose modest beat in Santander was more than offset by losses in Bank of America. Of course, nothing compares to John Paulson's thesis that BofA would hit $30 by the end of 2011. Full summary below.

Missed the first Ira Sohn west conference? Here is your chance to catch the complete notes via BTIG's Mike O'Rourke. Presenters included John Burbank of Passport, Barry Rosenstein of Jana, Brian Zied of Bridge Capital, Mitch Julis of Canyon, Jeffrey Ubeen of ValueAct, Robert Rosner of Buena Vista Fund, John Taylor of the John Taylor Rule, Chris Chabris, and Richard Farber of Kayne Anderson. Ideas discussed include the future of the world, Dutch company TNT, Charles River Labs, Sirius XM, Valiant Pharma, Taiwan Semi, the Libor-OIS spread, Natty and Patriot Coal. So for all those who still hold on to the illusion that alpha is possible in this market, read on.

Full recap of the ideas and recommendations at yesterday's Ira Sohn conference.

The annual hedge fund "go to" meeting, the Ira Sohn conference, is currently in progress, and 12 hedge funders will discuss their top picks. The place where Einhorn famously declared his Lehman and Moody's shorts, and Ackman announced he was "bearish" on MBIA and Ambac is perceived as the place where HF managers disclose their highest conviction plays, usually leading to major market waves in the ensuing days. The managers presenting this year are as follows:

For the latest and greatest thoughts in the investment community. Created by Mike O'Rourke of BTIG.