Sohn Investment Contest Presentations: IAC Interactive, WR Grace, Grupo Televisa, Constellation Software, Premier

We posted up notes from the Sohn Conference New York 2015 featuring all the big name hedge fund managers like David Tepper, David Einhorn, Bill Ackman and more.  Now Bloomberg Business has posted up the full slideshow presentations from up and comers who were finalists in the Sohn Investment Idea Contest.


Sohn Investment Idea Contest Presentations 2015

The winner of the contest was Angelo Martorell of the Wharton School, who pitched long IAC Interactive (IACI).  While the company owns various assets, his pitch centered around the company's online dating assets, and in particular its popular Tinder app. 

Embedded below is Angelo Martorell's pitch for IAC Interactive:



You can download a .pdf copy here.


There were also 4 finalists.  Here are their slideshow presentations as well:


Arthur Baer, Cavendish Fund Management: Short Premier (PINC):  This short is predicated on misleading accounting and he sees 60% downside in the name.

Embedded below is the slideshow presentation on Premier (PINC):



You can download a .pdf copy here.



Sean Murphy, Game Creek Capital: Long Grupo Televisa (TV):  This is a play on cable/satellite/content in Mexico.  There's potential to consolidate the cable industry and benefit from secular trends as the cable industry now in Mexico is similar to the late 1980's in the United States.

Embedded below is the slideshow presentation on Grupo Televisa (TV): 



You can download a .pdf copy here.



Lily Miao, The Wharton School: Long Constellation Software (CSU):  The thesis on this name is focused on outstanding management and smart capital allocation.

Embedded below is the slideshow presentation on Constellation Software (CSU):



You can download a .pdf copy here.



Venkata Amarthaluru, University of Pennsylvania: Long W.R. Grace (GRA):  This has been somewhat of a hedge-fund-favorite and Ted Weschler of Berkshire Hathaway has been a big bull on the name dating back to when he ran his own hedge fund and before.  With GRA's spinoff coming up, Venkata recommends to buy pre-spin and then sell the Construction Products division and hold the New Grace Co.

Embedded below is the slideshow presentation on W.R. Grace (GRA):



You can download a .pdf copy here.


If you missed it, be sure to also check out our full notes from the 2015 Sohn Conference.

TPG-Axon's Dinakar Singh Likes Sirius XM & Time Warner Cable: Interview

Dinakar Singh, CEO of $4 billion TPG-Axon Capital recently sat down with Bloomberg TV so we wanted to post up some of the highlights of his rare appearance.

It seems as though he is betting against telecom stocks and is also bearish on some financials (in particular US regional banks).  He's bullish on names like Sirius XM (SIRI), Time Warner Cable (TWC), and W.R. Grace (GRA).  He sees growth in the chemical, aerospace, and healthcare industries.

A graphic on screen showed TPG-Axon's key long exposures in tech & media: SIRI, TWC, Viacom (VIA.B), Kabel Deutschland, Equinix (EQIX), Expedia (EXPE), Priceline.com (PCLN), and Yandex (YNDX).


On the current environment:   “For us, we pick stocks. That is how we make money. More and more, everyone has become more emotional in markets. We get scared by headlines and we all start acting the same way whether you are a CEO or a consumer. Jobs do matter. I think when you look at the U.S. in the last number of months, our view coming in this year is that people got too excited. There was a bounce back from last year and some good weather but it was going to be a slow gradual sloppy messy restructuring without a big recovery. Things have reversed. I think people are getting too pessimistic…I think ultimately consumers and CEOs are reading the same headlines and scared. I think you are seeing a cyclical or temporary step down. We do not think there one should expect a big bounce, but there won’t be much of a plunge either. It feels like the numbers are crummy but they will probably stay this way for a while. The fiscal cliff is a real issue. I think you're seeing an impact right now.”  


On how to play this market:   “People have gotten scared and they’re paying a lot for safety. On the safety side, people like dividends in safe industries. So Verizon is trading 18 times earnings because people want safety and a good dividend. There are companies like Time Warner Cable that we think are just as defensive but they did not happen to pay a dividend, they have even better cash flow, but they traded as a result much less well last year. For us, big opportunity. So media and cable that’s very cash flow rich and where we think management is going to turn that spigot on and turn it into a dividend or buy back machine that makes sense. Sirius, Time Warner Cable, companies like that. On the cyclical side, not everything is terrible. There are some sectors where we think there is good structural growth and balance sheets will be put to work. Some chemical companies are very good restructuring candidates. Aerospace suppliers.  Aerospace is in the middle innings of a very long term upgrade cycle.”


On telecom services:   “In a hedge fund, this is called a funding short. It is not that you think it is terrible and going straight to 0, but it is priced fully and not going up much so not a very good risk reward. Within telecom services there are two categories. There are the Verizons, we get it, they trade here for a reason, but they are pretty fully priced. On the other side, there are other companies that are legacy telecom companies where the dividend is a very high, but business really is eroding. It is priced well today because of a high dividend, but it is not sustainable. When you look around the world, a lot of high dividend stocks in Europe are not trading well because people are looking at them and saying I get it. I have a dividend today but it might not be there tomorrow.”


On China:   “If you look at China specifically, multiples had really collapsed…You have two general types of companies. Big, state-owned companies that people don’t trust and private companies that people really don’t trust. There isn’t a lot that trades at big multiples anymore. I think if you can find cases where there is real growth and they can pay cash back to you, you’ll make money.”


Embedded below is the first part of the interview of Dinakar Singh's interview with Bloomberg TV:



And here's the second part:

Jonathan Auerbach's Hound Partners Bets On Transdigm Group (TDG): 13F Filing

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund 13F filings.)

Next up is Jonathan Auerbach's hedge fund Hound Partners. Hound is a New York based firm that Auerbach started with assistance from legendary hedgie Julian Robertson. He is one of the many 'Tiger Seeds' that Robertson has sprouted up in an attempt to crank out a new round of successful investment managers. Auerbach of course previously worked for Robertson's Tiger Management.

If you hadn't noticed, we're starting to get into some 'smaller funds' (and we use that term loosely) in regards to assets under management. We started with funds in the billions and now we're covering some that manage hundreds of millions. We've elected to do so in an effort to identify up and coming managers as well as to showcase how smaller funds often run more concentrated portfolios and are easier to track.

The positions listed below were Hound Partners' long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Brand New Positions
DirecTV (DTV) & Liberty Media Starz (LSTZA) ~ both as a result of the recent merger
Windstream (WIN)


Increased Positions
Monsanto (MON): Increased position size by 68.7%
Heckman (HEK): Increased by 18.9%
Transdigm Group (TDG): Increased by 15.8%
Chimera (CIM): Increased by 12.4%


Reduced Positions
American Tower (AMT): Reduced position size by 49.6%
Rambus (RMBS): Reduced by 42.1%
Abovenet (ABVT): Reduced by 38%
Heckmann WTS (HEK-WS): Reduced by 33.5%
Arabian Amern (ARSD): Reduced by 32.9%
Grace WR & Co (GRA): Reduced by 27.7%
HQ Sustainable (HQS): Reduced by 22.1%



Removed Positions (Sold out completely):
Liberty Media (LMDIA) ~ merger complete
Berkley (WRB)
Google (GOOG)
Myriad Pharma (MYRX)
Alexandria Real Estate (ARE)


Top 15 Holdings by percentage of assets reported on 13F filing

1. Transdigm Group (TDG): 13.98%
2. DirecTV (DTV): 10.6%
3. Kinder Morgan (KMR): 10.17%
4. Liberty Media Starz (LSTZA): 8.57%
5. Grace WR & Co (GRA): 7.01%
6. Petrohawk (HK): 6.86%
7. Monsanto (MON): 6.73%
8. Abovenet (ABVT): 6.31%
9. Heckmann (HEK): 5.44%
10. Covanta (CVA): 4.73%
11. Great Lakes (GLDD): 3.98%
12. Chimera (CIM): 3.86%
13. Echostar (SATS): 2.40%
14. Usec Bonds: 1.97%
15. American Tower (AMT): 1.80%
    

While these SEC filings obviously do not disclose their entire set of positions or assets under management, one thing you can immediately notice about Hound Partners is the fact that a lot of their US long equity stakes are very concentrated. Their top 10 positions are far more concentrated than the vast majority of hedge funds we've tracked in our series. In fact, their 10th largest stake garners a larger portfolio weighting than many other hedgies' top position. (Keep in mind that there are still some gaps left in the portfolio picture that we can't see since they aren't included in disclosures). That said, Hound still runs a more concentrated basket of stocks and as such is a good fund for tracking purposes as you know they have conviction in their plays.

One of their interesting positions we took note of was Heckmann (HEK) as we've not seen it pop up in other hedgie portfolios. In the past, this has been labeled as a backdoor Chinese water play. Their largest and most notable stake though is in Transdigm Group (TDG) and we highlight this because Dan Loeb's Third Point is also betting big on TDG.

Auerbach's hedge fund had a massive stake in Liberty Media (over 14% of their previously reported assets) that has now translated into positions in Liberty Starz and DirecTV as a result of the merger. We see yet another hedge fund interested in tower stocks and Hound Partners has chosen to play this data theme via American Tower. However, they did chop their position in half over the past quarter so take note. The only major addition they made was to their existing stake in Monsanto (MON) as they increased it by over 68%. In terms of sales, they let a third of their GRA position go and cut even more of their ABVT stake.

Data used for this article comes from Alphaclone, our source for backtesting strategies and sorting through all the hedge fund portfolio maneuvers with ease. Assets reported on the 13F filing were $348 million this quarter compared to $347 million last quarter. Remember that these filings are not representative of the hedge fund's entire base of AUM.

We'll be tracking 40+ prominent funds in our fourth quarter 2009 hedge fund portfolio tracking series. We've already covered Seth Klarman's Baupost Group, Mohnish Pabrai's Investment Fund, Carl Icahn's hedge fund Icahn Partners, David Einhorn's Greenlight Capital, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, David Tepper's Appaloosa Management, Warren Buffett's portfolio, John Paulson's hedge fund Paulson & Co, Lee Ainslie's Maverick Capital, Dan Loeb's Third Point, Eddie Lampert's RBS Partners, David Ott's Viking Global, and Chris Shumway's hedge fund Shumway Capital Partners, Chase Coleman's Tiger Global, Philip Falcone's Harbinger Capital Partners, Roberto Mignone's Bridger Management, Thomas Steyer's Farallon Capital, John Burbank's Passport Capital, Brett Barakett's Tremblant Capital, George Soros' hedge fund Soros Fund Management, and Philippe Laffont's Coatue Management, and Charles Anderson's Fox Point Capital. Check back daily for our new updates.