Delivering Alpha Conference Notes 2017: Robertson, Dalio, Chanos, Cooperman & More

CNBC and Institutional Investor's Delivering Alpha Conference just took place and featured many big name speakers.  Here's notes from the event itself and summaries of television interviews as well:


Delivering Alpha Conference Notes 2017


Julian Robertson (Tiger Management)

Robertson noted that interest rates need to increase because there's a bubble forming in the stock market.  Since rates are low, stocks don't really have much in the way of competition for money.  He also predicts that Trump will ask Janet Yellen to stay on as Federal Reserve Chair.

He recently got back into Alibaba (BABA).  He previously owned it at "a very low price" (seven years ago) but sold it around $100 but now he's back in.  Says it's unbelievable how the company has seen 50% in earnings.  While other investors claim it to have accounting issues, Robertson said, "It would have to be such a giant fraud.  I mean, I can't imagine anything would be that colossal."

Argued that Apple (AAPL), Facebook (FB), and Google (GOOG) are cheaper than they would have been in the 1960's, 70's or 80's.  On Netflix (NFLX), he noted "does anyone not like it?"  He said it "might be a little out of reach" now but it's still tempting him because it's run by good people and he loves it.

He likes the cruise industry, saying that "(It) has come of age.  And older people my age are attracted to the cruise ship industry.  And they are booming right now, and all over the world they are booming.  And I think they're for the golden oldies."

Robertson still also owns Air Canada: "We got into it at around 8 or 9.  And it's now 23, approaching 24, and the multiple is about the same as when we got in, which is all of five times earnings.  So we have too much Air Canada, but I can't make myself sell it."

Also noted he doesn't think he'll ever understand Bitcoin.

He also continued to share his view that part of the hedge fund crisis is exacerbated by the fact that there's so many of them now and they compete against each other.

Robertson also gave advice to the younger generations: be sure that you love the field and let that be what guides you.



Ray Dalio (Bridgewater Associates)

Dalio's biggest concerns were the following: wealth gap, social conflict, and various financial burdens (debts and pensions).

"I think we're probably in a 2.5% type of growth environment.  I mean, the real question is, to some extent, whether you can unleash the productivity by some of the changes that a pro-business environment can produce."

He thinks tax reform etc will be a watered down version and will come later.

He likened the current environment to 1937 in terms of the early stages of a tightening.

Dalio thinks that we're in an environment with a lot of conflict: political, conflict between parties, conflict between countries.  "This is very important.  This is even more important than how the tax changes are going to take place."

The Bridgewater founder then talked about balancing alpha and beta.  He said gold is essential and part of that balance.  He called it "an effective diversifier of assets" as well as "an alternative version of cash."  He feels it should be 5-10% of everybody's portfolio.

He also thinks it'd be terrible if Gary Cohn left the administration and it'd be bad for the market too.

When asked what he's most worried about, Dalio mentioned risks like North Korea, but said his bigger worry is long-term: wealth and social gap and the conflicts that arise from that.  He's worried about the various debt and pension burdens.

We also recently posted Ray Dalio's TED talk which takes you inside a meeting at Bridgewater.  He also has penned a new book, Principles.



Leon Cooperman (Omega Advisors)

He said that "Conditions that normally lead to significant market decline are either not present or not forecastable."

"The market is in a zone of fair and full valuation.  I see very few signs of exuberance."

Stocks mentioned by Cooperman include First Data (FDC), which he's owned for some time now and called very cheap.

Also, United Continental (UAL), which he felt has solid management that's identified a lot of cost opportunities.  He thinks earnings there can see around 15% over the next few years.  Operating profits could rise by 50% over the next few years and the company has bought back 2% of its shares

He also pitched two energy ideas: Hess (HES), as well as WPX Energy (WPX).  "The solution for low oil prices is low oil prices.  These two (stocks) have growing production profiles and a net asset value well above current prices at existing oil prices."  He thinks oil is headed higher to $60.  Says the sector has been overly discounted.  Says Hess in particular will increase production.

He also likes Shire (SHPG), citing its growth, positive pipeline, and the expectation of stock buybacks.

Said bonds look like they're in a bubble but at same time notes the Fed has been 'forcing people into risk' via its monetary policies.  It will change one day he says, but not yet.



Boaz Weinstein (Saba Capital)

He warned investors to avoid junk bonds.  Argued that half or a third of junk bonds today are held by retail investors, who have a ton of exposure, partly due to the rise of ETFs.  He feels the high yield market is overheated and he's short bonds of various retailers and hospitals.  At the same time, he's long equity of some of those same companies.  "Equity is at a much more rational price and credit markets are ignoring those signals."

Noted that portfolio protection is cheap but few are buying it.  "Does everyone think they can get out on the top?"



Jim Chanos (Kynikos Associates)

He says that "what's worked will continue to work" and monetary will stay easy and investors will live with the valuations.

Chanos says it's easier to find short ideas in this environment, but those ideas "don't work" due to the underlying upward trend.  He says the market was far more correlated last year than it has been this year.

He's short Continential Resources (CLR).  "People have been looking at the industry with rose colored glasses.  This is a problem with the North American shale business.  If we don't get a pickup in the company's fortunes in the back half of the year it's going to struggle."



Jeff Smith (Starboard Value)

Pitched Perrigo (PRGO), generic drug maker.  Says a lot of these products are sold on Amazon now and the company can expand sales of its over-the-counter medicines via that channel.  Shares have been undervalued from pricing pressures.

Also mentioned Altaba (AABA) as a top idea.  This is the former Yahoo stub that is left after selling the core Yahoo business.  What's left is a stake in Alibaba (BABA) and Yahoo Japan, etc.  It's basically a holding company.



Mick McGuire (Marcato Capital)

The activist investor has taken a new stake in Terex (TEX), the company that makes construction equipment.  They started buying last year and roughly own around 1.1 million shares per a recent SEC filing as they own 6% of the company

McGuire feels the company should see a revenue boost after a strategic re-positioning.  It's in the middle of an operating turnaround and is reducing SG&A, so there's operational profit upside.  The company also switched its sourcing program which could potentially save them around $500 million annually.  Thinks shares could triple, and has already doubled since he invested in 2016.



Chamath Palihapitiya (Social Capital)

The venture capitalist who now also runs public investments, said that he's massively long cryptocurrency bitcoin.  He calls the blockchain technology disruptive.

He argued that tech investors need to look at a company's ability to innvoate: "There's just this massive trade right now between the disruptors and the disrupted."  He says there's a lot of opportunity to be long disruptors and short the disrupted.



Jamie Dimon (JPMorgan Chase)

He called bitcoin worse than Tulip Bulbs and thinks it will eventually blow up.  Said he'd fire any of his traders trading bitcoin for being stupid.  Says it could go up to $100,000 before it blows up, who knows.  His daughter bought it, it went up, now she thinks she's a genius, he said.  Thinks it could be vulnerable to government intervention.

Thinks government policies are stifling growth.  If things changed, we'd see 3% growth rather than sub 2% which we've seen annualized now.  Singled out small businesses as most impacted.

Argued banks in the US are very sound at the moment.  Says the successor to JPMorgan is inside JPMorgan.



Mary Erdoes (JPMorgan Asset Management)

When asked about US stocks or bonds, she said none of the above.  Sees enormous opportunities in Europe, Japan, and emerging markets.  Thinks that some investors are worried about emerging markets due to the US dollar as an 'anchor' currency.



Steve Mnuchin (Treasury Secretary)

He says that tax reform is too important not to be passed and that it can occur this year and might even be retroactive back to the beginning of 2017.  Said the President's number one concern is North Korea and security.  Said hedge funds wouldn't have the carried interest provision under Trumps tax proposal.



Steve Schwarzman (Blackstone Group)

He's optimistic on tax reform, saying the 'worst' we'd do is a tax cut somewhere around 25-28%.

He thinks the biggest risk to markets are geopolitical, in particular North Korea.  He said "i would not be buying office buildings in Seoul" though didn't comment further on how this would affect investment decisions.

Schwarzman also argued that he relationship between China and North Korea is not friendly as it is perceived to be.  "The Chinese do not want a nuclearized Korean peninsula, and they're very serious about that.  They also don't want to have a shooting war occur and have 20 million refugees from North Korea go into China.  So it's complicated for them as to what they do."



Barry Sternlicht (Starwood Capital)

"It feels like the ocean is full of money, but it could evaporate."  Says he's most worried about potential problems from North Korea or Syria.

Delivering Alpha Conference 2016 Speaker Transcripts

Last week we posted up notes from the Delivering Alpha Conference 2016.  It featured numerous prominent hedge fund managers and now CNBC has made transcripts from various talks available.  Click the links below to read each full transcript:


Delivering Alpha Conference 2016 Transcripts

Ray Dalio (Bridgewater) and Tim Geithner (Former Treasury Secretary): Transcript

Paul Singer (Elliott Management):  Transcript

Marc Lasry (Avenue Capital) and Barry Sternlicht (Starwood): Transcript

Carl Icahn (Icahn Enterprises): Transcript

Steve Schwarzman (Blackstone Group): Transcript

Jack Lew (Treasury Secretary): Transcript

David Ganek (Level Global): Transcript 

Joseph Tsai (Alibaba): Transcript

Delivering Alpha Conference Notes 2016: Singer, Dalio, Chanos, Miller & More

CNBC & Institutional Investor's Delivering Alpha Conference is underway and below are some notes.  This post will be updated throughout the day as the various speakers/panels are ongoing:


Delivering Alpha Conference Notes 2016

Paul Singer (Elliott Associates):  Said that it's a "very dangerous time in global markets" right now.  Argued central bank independence doesn't really exist.  Noted that Bank of Japan is basically a top-10 shareholder of various Japanese corporations but the economy hasn't rebounded.  Called it insane, "It's not working, but they keep going."  Feels that investors are careless about inflation threat.  Says sell long-term bonds.    "There will come a time when inflation, despite growth suppressive policies can blow through targets and surprise everyone."  Says we're basically in the middle of close to a 40 year experiment in how leveraged a system can be, and in how many ways.  Thinks gold as a directional asset is underrepresented in portfolios "as the only money and store of value that has stood the test of time that is, in my view, undervalued and underpriced in today's world and sort of is the opposite of confidence in central banks."


Ray Dalio (Bridgewater Associates):  Discussed ways to spur economic growth with Timothy Geithner.  Dalio says, "We're in a situation where central banks want to drive you out of cash and out of bonds."  Called it a dangerous situation, as central banks run out of assets to buy and push investors into riskier assets.  Dalio thinks raising rates is risky as it's not priced into the yield curve.  "There's only so much you can squeeze out of a debt cycle and we're there, globally."


Jim Chanos (Kynikos Associates):  Still short Alibaba (BABA), says they're "buying anything that's for sale, just burning cash."  He's also still short Tesla (TSLA) and SolarCity (SCTY).  Says the two companies combining basically puts TSLA on a path to potential bankruptcy.


Carl Icahn (Icahn Capital): Said he's requesting from the FTC the right to own up to 50% of Herbalife's (HLF) outstanding shares.  Currently has the right to around 35% of the company.  Re: the market, "I think it's very dangerous in the market right now.  If they don't raise rates, I think we're in a major bubble."  There's a problem either way with a dilemma if you raise rates or if you don't.  Says the economy is messed up because of people like Janet McCabe at the EPA.  Also: "I hate to be immodest but I've returned 28% annualized since inception."


Marc Lasry (Avenue Capital):  Said that you can "make a lot of money on direct lending," stepping in for reluctant banks.  On investing - find people who are talented / engaged / who care and invest with and then don't worry about daily/monthly liquidity.


Bill Miller (Legg Mason):  Likes Amazon (AMZN) or Facebook (FB) compared to Alphabet (GOOG/L) due to the growth rates and margins.  Thinks AMZN doubles in 3 years.  Also likes Valeant Pharmaceuticals (VRX) long, one of his larger positions.  His main trade idea was long S&P 500, short 10-year Treasury (dividend yield on S&P is higher).


Robert Bishop (Impala Asset Management):  Best idea was Teck Resources (TCK): improving China demand, management has cut costs, end of metals 5-year downtrend.  Says Freeport McMoran (FCX) still has a worrisome debt picture.


Barry Sternlicht (Starwood):  Real estate in New York City is "a disaster" with rents at the high-end down 15%.  Noted the problem many investors face: "you have to invest in something, you can't just sit in cash."  On Tesla, says he loves the car but would probably be short the company.  Questioned Pinterest's valuation, arguing it seemed like a lot of money for a bulletin board.  Said Doppler Labs could be like the next Oculus Rift.


Mary Erdoes (JPMorgan):  "They're called crowded trades when they don't work and momentum trades when they do work."  Says it's time to weed out the stock pickers who aren't the best. 


Dawn Fitzpatrick (UBS):  Likes merger-arbitrage, argues that bank prop trading desks exiting keeps spreads attractive and wide on bigger deals.  Said short-term alpha is harder and that investors need to be more patient.  Says women are less emotional investors and better at cutting losers.

Delivering Alpha Conference Notes: Richard Perry, Eric Mindich, Bill Ackman, Nelson Peltz, Jeff Smith & More

The 2015 Delivering Alpha Conference hosted by Institutional Investor and CNBC is currently taking place and we wanted to highlight some of the thoughts from top investment managers on the best ideas panel and other panels.  Here's a brief summary of what each manager said:


Delivering Alpha Conference 2015 Notes

Richard Perry (Perry Capital): He feels Puerto Rico could possibly be the 51st state and thinks it's an interesting place to invest; he said GO bonds are safe and will trade at par. Perry argued that Greek bonds trading at 50 cents on the dollar could eventually return to par as there's a 'meaningful possibility' that a Greek bailout would actually be followed through.


Eric Mindich (Eton Park Capital):  He said that it's mostly individual investors in the turbulent Chinese A shares market.  He called the H shares more interesting.  He's a bit troubled by the future of the euro due to the situation in Greece.


Nelson Peltz (Trian Fund):  Peltz talked about his activist investment in DuPont (DD) and noted that he'd "rather be rich than right."  He continues to like PepsiCo (PEP) and thinks the company can deliver earnings growth each quarter but could do better.  Commenting on McDonald's (MCD), he said that the culture needs to be flipped on its head and it could take years.  Peltz feels Pentair (PNR) has the potential to become a platform company.  He said he has two new positions, one industrial and one he's not naming which account for 1/3 of his capital.  We recently highlighted some of Trian Fund's portfolio activity here.


Bill Ackman (Pershing Square): Ackman likes businesses that will withstand the test of time and he avoids tech since it's 'too dynamic.'  He mentioned that a lot of people haven't been talking about one of his newest investments: Fannie Mae and Freddie Mac and he really likes these.  Peltz chimed in that he doesn't know anything about the company but thinks Fannie is his favorite of Ackman's investments.  While some investors like Bruce Berkowitz (Fairholme Fund) have played the preferred shares, Ackman has a large position in common stock.  He says it offers the most upside but also conceded that it has the most downside too.  Ackman also voiced concerns on China, citing leverage and lack of transparency.  He says that almost every company he owns today is some sort of 'platform company' and we've highlighted this concept via Ackman's presentation at the Sohn Investment Conference.


Jamie Dinan (York Capital):  He keeps a lower media profile so it's always good to get his thoughts.  He avoids leverage since he lost a lot on margin in 1987 which was a very valuable lesson for him.  His keys to success?  Go where the action is and respect risk parameters.  Dinan notes that if you're in a position and the rules change, that's when bad trades happen.  York has more than half its base in illiquid credit.  He likes Japan, noting that "The Bank of Japan is your friend" and valuations are good with possible corporate governance changes coming.  He compared Japan now to the US in the 1980s in an economic sense.  He noted they've invested $700 million in Indiana toll roads.  Dinan also said he likes Puerto Rico but not the GO bonds.  He prefers complex infrastructure plays.


Jeff Smith (Starboard Value):  He mentioned a new idea of his, Macy's (M).  He thinks you get the company 'for free' when you take out the EV of its real estate.  He values the real estate at around $21 billion and hopes to work with management as he thinks M is worth $125 per share.


Bill Miller (Legg Mason):  He continues to like airlines stocks, saying they're in a long-term uptrend.  He likes Delta (DAL).  Commenting on bonds, he said that there's a benign bond market.  He also loves Amazon.com (AMZN) which is his biggest position at 6%.  He also likes builders and they're a big part of his portfolio as well, as he thinks they'll earn around 20% a year.


Jeff Gundlach (DoubleLine Capital):  He doesn't think the Fed will raise rates in 2015.  He said he's fond of emerging market debt (dollar denominated) and some high yield bonds (a shorter-term view on the latter).  He thinks high yield bonds will be a 'debacle' in 3-4 years.  Regarding bond rates, he notes they're rising secularly and went on to say that this is a good thing which most people don't realize.  Bond portfolios want rates to rise since you can reinvest at higher rates.  Looking extremely long term, he thinks India is a great place to put cash for the next 50 years.  Lastly, he also mentioned that he's allergic to companies that don't make money (AMZN).  He mentioned he bought Annaly Capital (NLY) recently and is out of his Apple (AAPL) position.  You can hear more from Gundlach in his recent Wall Street Week interview.


Keith Meister (Corvex Capital): He pitched American Realty Capital Properties (ARCP), a name he's presented at previous conferences as well (he owns 8% of the company).  He thinks you're taking 'bond like' risk for 'equity like' returns with this one and that the stock will pop once they reinstate the dividend and sees 25-50% upside.  Our Hedge Fund Wisdom newsletter analyzed the company if you want to play catch up quickly.


Tom Sandell (Sandell Asset Management):  His best idea was Ethan Allen (ETH), a furniture retailer.  He notes the company has practically zero debt and could be an ideal private equity candidate for a takeover.


Paul Singer (Elliott Management):  He likened the situation in China to potentially worse than the subprime crisis.  He thinks that perception of securities there has been impaired and it's just 'wild.'  Authorities there are trying to sustain the market with all kinds of moves but confidence is damaged by some of these rules.  He said the 70% haircut that Argentina forced on bondholders was the most severe he's seen in a large economy.  Singer said his firm essentially manages risk by putting in a lot of effort, a hands-on approach (basically activism).

...

Check back for more updates later.

Larry Robbins Focusing on Companies Deploying Capital

Institutional Investor has released an excerpt of their interview with Glenview Capital's Larry Robbins from the Delivering Alpha Conference.  In it, Robbins talks about how the market will react to the Fed releasing the 'training wheels.'

He says Glenview has been actively focusing on companies actively deploying capital, taking advantage of cheap interest rates, etc.  He likes companies that are "flush with cash, that have significant debt capacity, that are defensive and growing and that are trading at cheap valuations (maybe not as cheap as 2 years ago)."

For more from him, we've posted Robbins' 6 best ideas at the Delivering Alpha conference.

Embedded below is the video of Larry Robbins' interview:



For more from this conference, we've also posted an interview with Maverick Capital's Lee Ainslie.

Lee Ainslie on M&A Boom, Cybersecurity & the VIX

Institutional Investor just released an excerpt from an interview with Maverick Capital's Lee Ainslie from the Delivering Alpha Conference.  In it, Ainslie touches on the M&A boom, cybersecurity, and the low volatility index readings (VIX).

Ainslie says that there could be a bigger level of mergers and acquisitions than in 2007 thanks to large corporate cash balances and the fear that interest rates will increase or the tax inversion loophole will close. 

He also likes to look for secular trends from the top down and then identify specific companies that will benefit from those trends.  One of the biggest trends he's seeing now is network security / cybersecurity, though he doesn't mention any specific names.

Lastly, Ainslie points out that the VIX has seen spikes on a more frequent basis as the years go by.  He argues that the there's a contrast between the threats in the world and the low levels the VIX has been sitting at, which he thinks is not being priced appropriately. 

Embedded below is Institutional Investor's interview with Lee Ainslie:



You can view some of Maverick Capital's portfolio activity here.

Stan Druckenmiller's Presentation at Delivering Alpha Conference

A few weeks ago, we highlighted Stan Druckenmiller's comments at the Delivering Alpha Conference.  Now, CNBC has released the full video of his talk which is worth viewing.

Embedded below is Stan Druckenmiller's presentation at the Delivering Alpha conference:



For more from that event, be sure to also check out Lee Cooperman's stock picks and Larry Robbins' best ideas.

Stan Druckenmiller's Thoughts at Delivering Alpha Conference

At CNBC and Institutional Investor's Delivering Alpha conference today, legendary investor Stan Druckenmiller shared his latest thoughts.

At the event, Druckenmiller said he can't bet as big as he used to these days.  He also noted that other investors like David Tepper and George Soros have the biggest (you know what) on Wall Street these days.

Also, he knocked IBM as a company that's spending all of its money on share buybacks instead of on innovating and this could come back to haunt them as they get passed by modern technology companies.

Regarding the latest slew of IPO's, Druckenmiller pointed out that 80% of those companies don't really have earnings.

Turning to the Fed, he also argued that the consequences of monetary policy will be a lot worse than they think and said their policy is baffling.

He thinks we have to keep dancing until the music stops, but the problem is most people won't be able to exit fast enough once it happens.

Lee Cooperman's Favorite Stock Picks at Delivering Alpha Conference

At CNBC and Institutional Investor's Delivering Alpha conference today, Omega Advisors' Lee Cooperman shared his favorite stock picks.

He likes Actavis (ACT), a tax inversion play, Citigroup (C), a good buy he says because the economy is healing with loan demand and one that could narrow the discount to book value over time, as well as Gaming and Leisure Properties (GLPI) and Nordic American Offshore (NAO).

Other plays he likes include: QEP Resources (QEP), Supervalu (SVU), Louis XIII (577 HK), and Monitise (MONI.LN), the mobile payments play he's pitched before.

Lastly, he also mentioned Thermo Fisher Scientific (TMO), KKR (KKR) and Sandridge Energy (SD).

Cooperman also noted that the last time the Fed raised rates was in 2006 and around 25% of fund managers weren't really around to experience that.

He also joked that the last time he was bearish was during his Bar Mitzvah.

One quote that stood out from him was that, "if you buy something that's out of favor, things seem to happen to make you right."


Lee Cooperman will be presenting new investment ideas at the upcoming Value Investing Congress in a few months and readers can receive a discount to the event by registering here and using discount code: MARKETFOLLY

Larry Robbins' 6 Best Ideas at Delivering Alpha Conference

At CNBC and Institutional Investor's Delivering Alpha conference today, Glenview Capital's Larry Robbins highlighted his six best ideas.

His stock picks were: Thermo Fisher Scientific (TMO) which has been his largest holding, Monsanto (MON) which he previously pitched here, as well as HCA (HCA), Hertz (HTZ), National Oilwell Varco (NOV) and Flextronics (FLEX), a position he added to in May.

He likes that all of these can raise money on the cheap and then buyback shares.  So basically, his favorite investment idea is a theme of companies levering up.

Also, today we highlighted that Robbins has been buying Carter's (CRI) shares recently too.

Larry Robbins & Jacob Gottlieb on Healthcare Plays: Delivering Alpha Conference

At the Delivering Alpha Conference, Larry Robbins of Glenview Capital, Jacob Gottlieb of Visium, and Kris Jenner of Rock Springs Capital sat down to talk the Affordable Care Act and Obamacare.


Larry Robbins, Glenview Capital

Robbins notes that Thermo Fisher Scientific (TMO) is their largest position.  He says it's independent of the Affordable Care Act as it's 75% consumables.  The growth there is driven by capital allocation.  The space will benefit from sequestration ending in 2014.

He also likes Walgreen's (WAG).

Robbins expects an increase in pharmaceutical consumerization after Obamacare starts.  Robbins also noted he still likes McKesson (MCK) ~ we've highlighted in the past how it's been one of his largest holdings for some time.

Glenview's founder notes that healthcare used to trade at a 10% premium to the market, but their portfolio trades at a 25% discount so he loves if companies buy back stock or make acquisitions.  He sees hospitals likely to continue consolidation, which means the for-profit players gain share.

With the Affordable Care Act and more people getting insured, you'll see growth on growth (especially in hospitals) but on the other hand, there will be losers down the chain as they're over-earning now and will get squeezed.

In the space, big pharma have a lot of cash but not a lot of innovation.  Small companies are exactly the opposite, so consolidation will continue there.

If you missed it, Robbins recently made a very rare media appearance and talked about HMA, THC and what he thinks about this market.


Jacob Gottlieb, Visium Asset Management

Jacob Gottlieb of Visium voiced his concern over taxes on healthcare as it could be counterproductive to making more affordable and better quality care.  As far as what his picks go, he likes healthcare IT providers and well-run hospitals.


Kris Jenner, Rock Springs Capital

Kris said there will be winners and losers in all of this.  The opportunities in healthcare are robust and based in innovation.  That innovation will be more-so in business models than new drugs.  He said he likes Vertex Pharmaceuticals (VRTX) and Gilead Sciences (GILD).

Thanks to @EquityNYC for live tweets on this panel.


For more from the Delivering Alpha Conference, head to:

- John Paulson on gold, real estate & merger arbitrage

- Nelson Peltz on PepsiCo & Mondelez 

- Best Ideas Panel with Mark Kingdon, Chris Hohn, Jim Chanos & Lee Cooperman

- Carl Icahn on activism

Delivering Alpha Best Ideas Panel: Mark Kingdon, Chris Hohn, Jim Chanos, Lee Cooperman

The Delivering Alpha Conference today featured a 'best ideas' panel that featured some hedge fund titans including Jim Chanos (Kynikos Associates), Chris Hohn (Children's Investment Fund), Mark Kingdon (Kingdon Capital), and Lee Cooperman (Omega Advisors).  Here's a brief summary of their picks:

Mark Kingdon, Kingdon Capital

Long Japanese automakers: Long Toyota (TM), Long Fuji Heavy (7270.TO) Long Mazda (7261.JP)

He says these companies obviously benefit from Abenomics in Japan.  Toyota he likes as an innovative leader with focus on hybrid technology.  Fuji Heavy (Subaru) is moving from low margin to high margin products.   He says Mazda might have the most upside of the names. 

Chris Cooper-Hohn, Children's Investment Fund

Long Porsche (PAH3.DE) - It's basically a holding company owning 150 million shares of Volkswagen.  If the two merge eventually, the stock doubles.  We've highlighted Hohn's thesis on Porsche before.

Long EADS (EAD.FR) - A liquid large cap with a new focus on making money.  Could double over 2 years. 

Long Aurizon Holdings (AZJ.AU)- Australian railroad, a total turnaround story as the company has transitioned from government-owned to a company more aimed at profit.  He thinks it could double over next 3 years


Lee Cooperman, Omega Advisors

Long Qualcomm (QCOM) - points to a large amount of cash on the balance sheet and a lot of pessimism on the name.

Long Sandridge (SD) - could be a double.

Long Express Scripts (ESRX) - company is growing and buying back stock.  We've also posted up another Cooperman interview recently where he talked about other stocks he likes.


Jim Chanos, Kynikos Associates

Short Caterpillar (CAT) - a bet on China's property development slowdown and he says the company is just exposed to the wrong products at the wrong part of the cycle.  Here's Chanos' pitch on CAT here.

Short Hewlett Packard (HPQ) - he also reiterated his call against the PC, saying it's dying a slow death.  This has been a longstanding short and we've posted up Chanos' thesis on HPQ as he called it a value trap last year.



For more from the Delivering Alpha Conference, head to:

- John Paulson on gold, real estate & merger arbitrage

- Nelson Peltz on PepsiCo & Mondelez

- Larry Robbins & Jacob Gottlieb on healthcare plays

- Carl Icahn on activism 

Nelson Peltz on PepsiCo, Mondelez & DuPont: Delivering Alpha Conference

Trian Partners' Nelson Peltz sat down at the Delivering Alpha Conference today and talked about PepsiCo (PEP), Mondelez (MDLZ) and Andrew Ross Sorkin revealed that Peltz has been building a position in DuPont (DD).

Back in April, we highlighted how Peltz took stakes in both PEP & MDLZ.  At the event today, he laid out two scenarios for PEP which he thinks the company should pursue:


On PepsiCo and Mondelez

1. PEP should buy Mondelez (MDLZ) for $35-38 per share.  MDLZ is part of the split from the old Kraft that broke up into Mondelez and Kraft Foods (KRFT).  MDLZ is seen as the fast growing snacks business (Cadbury etc).

The problem with MDLZ he says is operational.  He loves that the CEO made important strategic moves (splitting up the old Kraft entity), but notes that management really needs to boost margins to catch up with direct competitors.


2. Separate Pepsi's beverage side from its snacks business (FritoLay).  Peltz says that these businesses have dis-synergies and they would benefit from a split.  He says Pepsi's beverage side can go to a cashflow generating company run with appropriate leverage.

Then, Peltz noted that the FritoLay snacks business can flourish on its own and even possibly pursue an acquisition of MDLZ after a potential PEP break up since they're both in the snacks business.

Peltz did acknowledge the secular trend of consumers focusing more on healthy items.  He thinks this is more-so focused on sugary drinks, but does note that sweet/salty snacks could be vulnerable as well.


Peltz's New Stake in DuPont?

Andrew Ross Sorkin also said that sources are pointing to Peltz acquiring a stake in DuPont (DD).  Peltz wouldn't really add any color when asked about it (pun intended).

Embedded below is video of Peltz's interview:



For more on this investor, we've highlighted some of Peltz's trading activity here.


And for more summary of the Delivering Alpha Conference, head to:

- John Paulson on gold, real estate & merger arbitrage

- Best Ideas Panel with Mark Kingdon, Chris Hohn, Jim Chanos & Lee Cooperman

- Larry Robbins on healthcare

- Carl Icahn on activism

John Paulson on Gold, Housing/Real Estate & Risk Arbitrage: Delivering Alpha Conference

John Paulson, founder of hedge fund firm Paulson & Co, sat down with CNBC's Carl Quintanilla at the Delivering Alpha Conference today and touched on numerous topics, mainly focusing on gold and the housing recovery/real estate.  He noted that his returns this year at his main funds range from 5% and 32%.


Paulson on Gold

He's been getting a lot of negative publicity for his Gold Fund.  However, he points out that this fund is only around 2% of his assets under management.  He was looking for a currency alternative to the US dollar in the event we get inflation, and he notes that gold has been an excellent candidate for this in the past.

Paulson said, "Although the Fed has printed a lot of money to date, there is little inflation.  Some (investors) who bought gold have lost patience.  The rationale for owning gold has not gone away.  The consequences for printing money over time will be inflation... it's just difficult to predict when."

He thinks gold is in a 'pause period' right now and sees demand for gold increasing again and points out that it's always been volatile.  He thinks it's an important part of anyone's portfolio.


Paulson on Housing / Real Estate / Land

They took a long-term view on housing, as it's a cyclical area (7 years up, 7 years down).  They saw a peak around 2006 (and shorted subprime) and they think it's bottomed so they've gone long.  He sees it as the beginning of the recovery and said it could last another 4-7 years, inviting others to jump in, saying "it's not too late."

Paulson went on to say, "Buying a home is the best investment an individual can make.  Affordability is at an all time high.  You can lock in rates of a fixed rate mortgage and get the benefits."

He then continued, noting, "I'm not sure (home prices) will increase 10% every 5 years, but probably around 5-7%."

Paulson has exposure in real estate via land as he says land is actually affected the worst in real estate cycles.  He noticed this pattern in the crisis of 1990, so he set up special real estate funds to exclusively buy entitled lots across the country.

Prices fell almost 80% from their peak value in 2006.  They like to buy in distressed situations (from banks, builders, etc) in growth areas of the country.  They've focused on Arizona, California, Colorado, Nevada, and Florida.

They've also played securities:  Before/during the crisis, they shorted BBB tranches, then started buying AAA tranches that fell in price by 40%.

He also highlights his stake in Realogy (RLGY), the largest residential broker in the country (we flagged Paulson's stake in RLGY late last year and also pointed out how Lone Pine Capital bet on RLGY recently as well).

On his bet on the housing recovery, John Paulson said he's as sure of this bet as he was about his subprime short.


Paulson on His Legacy Risk Arbitrage Strategy

Paulson's legacy fund strategy is merger arbitrage.  He talked about how companies he likes to buy are often ones from the announced deals that could get a competitive bid.  He's also looking to see which industries will see consolidation and take a stake in companies that could be takeover targets.

He also talked about his stakes in Sprint and Leap Wireless that have panned out well.

Paulson also noted how there's a lot of talk/chatter in the cable business.  He pointed to John Malone's stake in Charter Communications (CHTR), which he thinks will acquire more cable assets.  While there's been talk of Time Warner Cable (TWC), he says that's a large entity.  He also named Cablevision (CVC) as a potential target, but notes that's up to the Dolan family.

In risk arbitrage, he says "There's always a regulatory risk, and that's an important part of the analysis."

Paulson said he never considered retiring after his successful big subprime bet: "The goal in money management is not to do one great year, it's to compound returns over many years."  He says he'd like to manage money another 20 years, as he admires Warren Buffett and George Soros.

Video from Paulson's interview is embedded below:




For more from the Delivering Alpha Conference, head to:

- Nelson Peltz on PepsiCo & Mondelez

- Best ideas panel with Mark Kingdon, Chris Hohn, Jim Chanos & Lee Cooperman

- Larry Robbins & Jacob Gottlieb on healthcare plays

- Carl Icahn on activism 

Jim Chanos Short Caterpillar (CAT): Delivering Alpha Conference

At the Delivering Alpha Conference today, Kynikos Associates' Jim Chanos laid out the chase to short Caterpillar (CAT).  Basically, he sees CAT as a loser in a commodities super cycle (on the heels of a Chinese construction boom) is coming to an end.

This notion isn't really new from Chanos, as he has repeatedly talked about his bearishness on China property/development.

Chanos says Caterpillar is a great company, but they're essentially levered to the wrong products at the wrong time (the worst part of a cycle).  While it's cheap at 12-13x earnings, he points out that earnings aren't really expected to grow in the next few years (meaningfully above historical levels).

Embedded below is the video of Chanos' idea explained in full:



For more on this short seller, head to Jim Chanos' Sohn Conference presentation on shorting hard disk drive makers.

Notes From Delivering Alpha Conference

Here's an index of notes from the various panels at CNBC & Institutional Investor's Delivering Alpha Conference:


- Best Ideas Panel featuring Omega's Leon Cooperman, Kynikos' Jim Chanos, BlueMountain's Andrew Feldstein, BlackRock's Robert Kapito, and Queen Anne's Gate Capital's Kathleen Kelley.

- Global Opportunities Panel featuring Richard Perry (Perry Capital), Fortress' Peter Briger, Harvard Management's Jane Mendillo, and JPMorgan's Mary Callahan Erdoes

- Less Than Zero Panel featuring Avenue's Marc Lasry, Marathon's Bruce Richards & Morgan Stanley's Gregory Fleming

- Real Estate Panel featuring Pershing Square's Bill Ackman, Starwood's Barry Sternlicht, and Blackstone's Johnathan Gray

- Commodities Panel featuring Ospraie's Dwight Anderson, Arbalet's Jennifer Fan, and Taylor Woods Capital's Beau Taylor

Delivering Alpha Real Estate Panel: Ackman, Sternlicht & Gray

Continuing coverage of CNBC & Institutional Investor's Delivering Alpha Conference, we're now shifting to the real estate panel featuring Pershing Square's Bill Ackman, Starwood Capital Group's Barry Sternlicht and Blackstone Group's Johnathan Gray.

If you missed it, we've also posted up notes from the other panels at the conference.

Bill Ackman (Pershing Square):  Ackman's been in the news recently regarding a new stake in Proctor & Gamble (PG) so naturally he addressed that first saying, "We think it's a great company ... it's a cheap stock, but it's cheap for a reason.  We own the stock, we like the company, we own about $1.8 billion in equity in options."

That's a lot when you frame it in the context of a $10 billion dollar fund.  Recently, Ackman was also saying his PG bet is the largest initial bet on a company he's ever made.  Many have postured that he'll look to shake-up management and examine splitting the business up.

Ackman also touched on his stake in J.C. Penney (JCP), whose shares have been in steady decline.  He argued that it's the only company that can make 15-20x return (seems awful high), attributing the sell-off to a PR problem versus fundamentals.

On the subject of real estate, he advocated buying single family homes, arguing that it's a good business and an "asset class where institutions are underrepresented."  For more from this investor, we just posted up Ackman's recommended reading list.


Barry Sternlicht (Starwood Capital):  He noted that there's enough debt financing and that spreads are tight.  He also pointed out that you don't really see foreign banks here.

Echoing Ackman, Sternlicht says they've been buying houses and thinks the market could even possibly be overbought.  On Europe, he thinks it's still the first inning there so if you get involved, you've got to buy and hold.  We've highlighted thoughts from Sternlicht before in investing lessons learned from Richard Rainwater.


Johnathan Gray (Blackstone):  They bought a lot of commercial real estate near the top of the market but said it's not painful because rents are improving (due to lack of new construction).  He believes there's some opportunity out there to buy things that others aren't interested in.  The caveat, is that financing is harder to obtain than in the past.

Blackstone obviously likes Ackman's notion of buying homes as that's what they've been doing.  Two thousand for $300 million, saying execution is key.  He especially seems to like European deals and thinks the continent is not going into an abyss.  In summary, he wants to buy hard assets at a discount to replacement cost.


Be sure to check out more insights from top investors from the conference:

- Best ideas panel

- Global opportunities panel

- Chase for yield panel

Delivering Alpha Commodities Panel: Dwight Anderson, Jennifer Fan & Beau Taylor

The last set of notes from CNBC & Institutional Investor's Delivering Alpha Conference comes from the commodities panel featuring Ospraie's Dwight Anderson, Arbalet Capital's Jennifer Fan, and Taylor Woods Capital's Beau Taylor.

Be sure to check out notes from the Delivering Alpha conference for all the other panels.

Dwight Anderson (Ospraie):  The legendary commodities man thinks there's risk in corn, wheat and grain markets (corn has spiked insanely higher, trading limit up on numerous occasions).  He argued more investors should look into farmland.  We've highlighted in the past how Michael Burry likes farmland (yes, the Michael Burry of subprime shorting fame).  Two months ago at the Ira Sohn Conference, we also highlighted how Anderson was long palladium, short platinum.


Jennifer Fan (Arbalet Capital):  She was named one of Institutional Investor's rising stars in 2011 and Arbalet was one of the biggest fund launches this year.  Her comments included that being a farmer is harder than being a hedgie.  She also echoed Anderson's sentiment that corn is risky.  She also pointed out that Chinese GDP numbers are volatile (much more-so than what's reported).


Beau Taylor (Taylor Woods Cap): He feels that crude oil could go much higher ($200 per barrel), citing violence in countries like Syria, Iraq, Iran and some African countries.  He likes Brent over WTI.  He also likes farmland, but says it's hard to scale.

Sources: Notes from readers, II's blog, @ldelevingne


Be sure to check out all the other notes from the Delivering Alpha Conference.

Delivering Alpha Best Ideas Panel: Cooperman, Chanos, Feldstein & More

CNBC and Institutional Investor's Delivering Alpha Conference is going on today and we wanted to aggregate the highlights.  The "best ideas" panel included Omega Advisors' Leon Cooperman, Kynikos Associates' Jim Chanos, BlueMountain Capital's Andrew Feldstein, Queen Anne's Gate Capital's Kathleen Kelley, and BlackRock's Robert Kapito.

From the conference, we've also posted up the global opportunities panel as well as the chasing yield panel.


Leon Cooperman (Omega Advisors):  He pitched going long US stocks and called them the best house in the financial neighborhood, a tune he has been singing for well over a year.  However, he did make an excellent point that the maximum "pain trade" is going higher as tons of people are sitting on large sums of cash earning nothing. 

As for specific names he likes: Capital One (COF), Express Scripts (ESRX), Halliburton (HAL), Gannett (GCI), Kinder Morgan (KMI), MetLife (MET), Qualcomm (QCOM), Watson Pharma (WPI) and Western Union (WU).  He also likes AIA Group (1299.HK) traded in Hong Kong.

The Omega Advisors founder also continued to bash bonds, saying "buying US bonds right now is like walking in front of a steam roller and picking up dimes.  It's just not a good policy."

As far as the election goes, he thinks that if Romney wins, the market will spike by 150 points, but if Obama wins, it drifts lower. For more from the Omega man, we just posted up Leon Cooperman on 14 attributes that make a good portfolio manager.


Jim Chanos (Kynikos Associates):  The noted short-seller was out again negative on tech companies.  He mainly pitched the bear case on Hewlett Packard (HPQ), calling it a value trap.  We just recently highlighted Chanos' presentation on global value traps where HPQ was highlighted among other names.

He says that "when you lose the paradigm shift, you spend an awful lot of money defending what you have."  He compared HPQ to Eastman Kodak as the company is in declining businesses.

Chanos also touched on how instead of giving cash back to shareholders, companies will make value-destroying acquisitions.  He cited HPQ's buy of Autonomy last year.  The Kynikos man argues that HPQ has overspent on acquisitions and they're hiding research & development expenditures through them.

He's also negative on Dell (DELL) saying that the company finances its subprime customers (financing their revenue growth).  For more on Chanos we just recently posted up his thoughts on the psychology of short selling.


Andrew Feldstein (BlueMountain Capital):  He likes less liquid credit, angling for 8-12% returns over a 3-7 year time horizon.  He says you have to be patient as this opportunity is available due to everyone's obsession with liquidity (i.e. don't put your money here if you don't have an appropriate time horizon).  He mentioned bonds such as Prospect Medical if you can buy and hold.  Feldstein also mentioned he's less excited about legacy distressed assets in Europe.


Kathleen Kelley (Queen Anne's Gate Capital):  Formerly of Tudor and Kingdon, she pitched two ideas: short the British pound (against long US dollar) as well as short platinum, targeting 20-30% moves to the downside.  She wants to be long the USD against the sterling because the USD can be a commodity currency.

She also likes shorting platinum as there's an oversupply due to slowing Euro auto sales.  At the Ira Sohn conference two months ago, Ospraie's Dwight Anderson pitched going short platinum as well (in addition to going long palladium).


Robert Kapito (BlackRock):  He's going for the "income hog" approach by focusing on equity dividend funds, dividend stocks like AT&T (T), Verizon (VZ), Merck (MRK), Johnson & Johnson (JNJ), high yield bond funds (or individual issues from Sprint, Ally) and municipal bonds such as the San Francisco Airport, New Jersey Tolls.  He thinks that default worry surrounding munis is "overrated."


Sources: Notes sent by readers, II's blog, @iimag,  @ldelevingne, @footnoted, @aarontask

For more from Delivering Alpha, head to the global opportunities panel (featuring Richard Perry) as well as the hunt for yield panel (featuring Marc Lasry)

Omega Advisors' Leon Cooperman Likes Apple, Boston Scientific, KKR Financial, & Sallie Mae

At the Delivering Alpha conference, hedge fund founder Leon Cooperman of $6 billion Omega Advisors sat down with Maria Bartiromo to talk about the markets and what stocks he likes.

While Cooperman feels the market will be higher by the end of the year, he said that on a short-term tactical approach, he's found that hedge funds have low exposure. We've highlighted this as Dan Loeb's Third Point had reduced exposure for four consecutive months.

Cooperman thinks the fact that investors are underinvested could be a catalyst as money flows back into stocks and his focus is on a nine to twelve month timeframe. As to where the hedge fund manager is seeing value, he points to:

- Apple (AAPL): He says you can buy it at 10x next year's earnings.

- Boston Scientific (BSX): It generates over $1 per share in free cashflow annually (a 15% free cashflow yield) as the company looks to use that cash to buyback 10% of the company.

- KKR Financial (KFN): The stock yields over 9%, sells at a discount to book value, and the dividend is covered twice by earnings. He expects the yield to even go higher.

- Sallie Mae (SLM): Cooperman says that the $13 stock will earn $1.90 next year and he says the assets are worth $19-20.


In order to be bullish on equities (which he is), Cooperman says you have to invest under four assumptions:

1. The US is not like Japan and we will have a growing economy

2. The ECB will step up for European financial institutions

3. The President softens his anti-wealth, anti-business stance

4. Stability in the Middle East


Embedded below is the video of Leon Cooperman's interview from the Delivering Alpha conference:



We also detailed Leon Cooperman's appearance on the hedge fund best ideas panel at the conference as well. He will also be presenting his latest investment ideas at the Value Investing Congress.