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.

Avenue Capital's Marc Lasry: "The Best Place To Invest Is The US"

Avenue Capital's Marc Lasry today appeared on Bloomberg TV to talk about markets.

Pulled from the full transcript, Masry commented that:

On the U.S. economy, Lasry said: "I actually think the U.S. economy is doing great compared to the rest of the world.  So the first question is where would you want to invest?  Do you want to invest in the U.S., do you want to invest in Europe, do you want to invest in China, do you want to invest in emerging markets?  At the end of the day, the best place to invest is the U.S. So if I was going to be an equity investor, I would be an investor in the U.S."

On the idea of more Fed stimulus, Lasry said: "I think it would be the worst thing in the world…I think right now, we have been living off of theses low interest rates and having more stimulus isn’t what you need.  What you actually need is you need to get back to a little bit of normalacy and understand that the Fed can’t keep on pumping more and more stimulus into our economy.  Our economy is fine.  Let it grow and let it do what it needs to do."

Embedded below are some of the videos of Lasry's interview on Bloomberg TV:

Video 1


Video 2


Video 3


Video 4


For more from this manager, head to Marc Lasry's interview on Wall Street Week.

Marc Lasry on Wall Street Week: "Huge Opportunities" in Energy Debt & Europe

Anthony Scaramucci and Gary Kaminsky this week on Wall Street Week interviewed Marc Lasry of Avenue Capital, which now has $14 billion in assets under management after initially starting with around $7 million.  Lasry likes to take fixed income risk but generate equity-like returns.


Lasry noted that he's been seeing "huge opportunities" in the energy sector, mainly due to the fact that oil's gone down.  He says you don't want to be an equity holder, but you want to be a senior debt holder.

He's also finding some investments in Europe as the banks over there are deleveraging.  Avenue is buying assets at 60-70 cents on the dollar from people who are required to sell due to regulatory pressure.

On what he looks for in an investment:  "We're trying to buy something we think is worth 100 cents for 60 cents on the dollar.  So you're always trying to buy something at a discount to what you think the asset value is.  And you can only do that when you're buying from non-economic sellers... someone who's nervous or somebody who has to sell.  So you need to have a lot of drama or issues around the world."

Embedded below is the video of Marc Lasry's appearance on Wall Street Week:



Be sure to check out previous Wall Street Week episodes like their interview with David Rubenstein as well as Steve Einhorn here.

NYU Stern Evaluation Investment Newsletter: Marc Lasry Interview

NYU Stern's student-run investment newsletter Evaluation is out with its second issue.  This time around, they focus on distressed investing with interviews with Avenue Capital's Marc Lasry, as well as bankruptcy expert Dr. Ed Altman, among others.

Also featured are investment pitches from the Stern Investment Idea contest.  Ideas include long Urban Outfitters (URBN), short Ulta Salon (ULTA), long Apple (AAPL), long Bonanza Creek Energy (BCEI), long Wisdom Tree (WETF), long Amerco (UHAL), and long FTI Consulting (FCN).

Embedded below is the second edition of NYU Stern's Evaluation investment newsletter:



If you missed it, we posted NYU Stern's inaugural issue here as well.

Avenue Capital Discloses Punch Taverns Position

Marc Lasry's Avenue European Management hedge fund has been building a stake in London listed pub company Punch Taverns (LON:PUB). 

Due to trading on the 6th and 10th of January, Avenue now own the equivalent of 8.29% of Punch Taverns' voting rights, all via contracts for difference/derivatives.

Avenue know the company well as Lasry mentioned in an NYT interview in 2012 that they held a position in Punch's debt.

Larry Robbins' Glenview Capital Management are Punch Taverns' largest shareholder with an 18.77% stake which they have held for over five years.

Per Google Finance – “Punch Taverns plc is a United Kingdom-based pub company. The Company is  engaged in the operation of public houses under either the leased model or as directly managed by   the Company. The Company operates in two business segments: punch partnerships, a leased estate   and punch pub company, a managed estate. Punch Partnerships is the Company’s leased division,   comprising 5,967 pubs nationwide. Punch Pub Company is its managed division, comprising 803   pubs nationwide. The leased model involves the granting of leases to tenants who operate the pub   as their own business, paying rent to the Company, purchasing beer and other drinks from it and   entering into profit sharing arrangements for income from leisure machines. Pubs that are directly   managed involve the employment of a manager to operate each managed pub.

Marc Lasry Sees Opportunities in Europe: Interview

Yesterday, Avenue Capital's Marc Lasry appeared on CNBC to talk about markets and his latest positioning.

He noted they're still long J.C. Penney bonds and think things will work out as it's essentially a turnaround bet.  We've previously posted Lasry's presentation on JCP bonds.

They see opportunities in Europe due to the deleveraging and are also looking to do direct lending to take advantage.  He said you want to focus on equities in Southern Europe but bonds in Northern Europe.

Embedded below is the video of Marc Lasry's interview:



If you missed it, we also posted up Jamie Dinan's interview as well as Lee Cooperman's interview from the same segment.

Invest For Kids Chicago Notes 2013: Lasry, Eisman, Peltz, Cooperman & More

The fifth annual Invest For Kids Chicago conference just took place and MarketFolly has notes from the event which featured tons of prominent hedge fund managers presenting investment ideas to benefit charities.


Notes From Invest For Kids Chicago 2013

- Marc Lasry (Avenue Capital): Long JC Penney & Connacher Debt

- Lee Cooperman (Omega Advisors): 4 long ideas

- Steve Eisman (Emrys Partners): Long Ocwen Financial & Altisource Portfolio Solutions

- Nelson Peltz (Trian Fund): Presentaiton on Mondelez

- Dinakar Singh (TPG-Axon): 2 investment ideas

- Sam Zell (Equity Group Investments): Real estate thoughts

- Jeff Gundlach (DoubleLine): His presentation

- Mark Kingdon (Kingdon Capital): Thesis on Boeing & Aegerion Pharma

- Steve Kuhn (Pine River Capital): Pitch on American Capital

- Rick Rieder (BlackRock): His presentation

- Stephen White (Castle Union): Pitch on Avid Technology

- Peter Zaldivar (Kabouter Management): Long Hotel Shilla

Marc Lasry Long JC Penney Debt: Invest For Kids Chicago Presentation

Next up in our notes from Invest For Kids Chicago 2013 is Marc Lasry of Avenue Capital.  He pitched J.C. Penney (JCP) as a long at the event.


Marc Lasry's Presentation at Invest For Kids Chicago 2013

•    Reason all the risk in the system is that LIBOR is that 25 bps
•    Supposed to generate a 40x RFR for get 10% per annum. But isn’t there risk there?
•    Why is that risk?


•    Idea #1 is J.C. Penney Debt
o    Why JC Penney? Convince to go and shop
o    Everyone believes JCP will file for bankruptcy
o    Bonds mispriced based on that assumption
o    JCP operates in 49 states (no Hawaii)
o    Slowing retail environment and they get rid of old CEO and bring in Ron Johnson
o    Ron Johnson took a bunch of risk
o    Coupons and promotions here historical
o    Prior to new strategy $17 billion in sales $1.4 billion of EBITDA yet goes to -$500 million of EBITDA
o    Able to raise $2.2 billion of new debt to get to $3 billion of debt and $2.5 billion on unsecured – but that have $2 billion of cash
o    Interest payments are $250 million so hard to file of bankruptcy
o    JCP survives unless the value differential
o    Make ~25% return per year for 2 years in debt so you are making 80x RFR due to the believe that JCP will file bankruptcy
o    Same stores sales are flat to up
o    So you are creating the company
o    Majority is telling you “you are wrong”
o    “Nobody likes noise and don’t want to deal with it and that creates opportunity”

While Lasry's talking about debt, numerous other prominent hedge funds have been in and out of JCP equity and you can scroll through that link to follow the saga.


•    Idea #2: Connacher Oil & Gas Bonds at 70
 o    Worth par over a year to a year and a year and a half
o    Pure oil sands company in western Alberta
o    Crude is at $90 a barrel and the price of crude was $45 in 2012
o    Keystone pipeline was delayed and so shipping crude was expensive by rail and they have reduced arbitrage from $16 per barrel in operating margin to $32 (should still rise)
•    Buying investment at 43% discount to NAV because the market doesn’t understand what Connacher is doing and create something at a big discount to a proven value (as opposed to under comps) 


Check out the rest of the hedge fund presentations from Invest For Kids Chicago here.

Delivering Alpha Less Than Zero Panel: Lasry, Richards & Fleming

Continuing coverage of CNBC and Institutional Investor's Delivering Alpha Conference, next up is the Less Than Zero Panel featuring Avenue Capital's Marc Lasry, Marathon Asset Management's Bruce Richards, and Morgan Stanley's Gregory Fleming in a talk on the hunt for yield.

If you missed previous posts from the conference, check out a summary of the best ideas panel as well as the global opportunities panel.


Marc Lasry (Avenue Capital):  He argued that 10 year Treasuries will be around 2.5% to 3% in 5 years.  He talked about investing in European debt, saying that you're getting (over)paid for the risk premium.  We've highlighted Lasry on European opportunities recently.  He said that he's buying bank debt in private markets (in Europe), saying that you want to be in regions where "everyone's nervous."  Lasry also argued that 10% plus annual returns are doable if there's a 7-year lockup.


Bruce Richards (Marathon Asset Management):  He said that government bonds = highest risk, lowest return.  He likes structured credit as he thinks the hunt for yield will get insane through 2014 as he made a Hunger Games reference.  He also says that everyone knows inflation is the way out for the US government.  Additionally, he argued he could make 12-14% in high yield.


Gregory Fleming (Morgan Stanley):  He highlighted the retail investor's demand for yield while still having major risk aversion.  It's difficult to combine the two, obviously.  Citing Jim Grant, he also called Treasuries "return free risk."


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


For more from the Delivering Alpha Conference, head to a summary of the best ideas panel (including Leon Cooperman, Jim Chanos and more) as well as the global opportunities panel (featuring Richard Perry).

Avenue Capital's Marc Lasry: Huge Amount of Distressed Opportunities in Europe

Marc Lasry, co-founder of Avenue Capital appeared today on Bloomberg TV where he said he thinks there's a huge amount of distressed debt investing opportunities in Europe.  He also argued that Europe would not blow up.

His firm manages just under $13 billion and this is the second time we've seen him appear to talk about the opportunities in distressed debt.


Here are some select excerpts from his interview we found intriguing:

On investing in Europe:  "The great thing about Europe today is you've got a huge amount of supply and very little demand. So you're not really bumping into everybody. I think that’ll change over time."

Which is the better opportunity: US or Europe?  "I think in Europe today, you're getting overpaid for the risk. For us, we can buy senior debt in Europe for around 50 cents, 60 cents and here in the U.S. you're paying 70 cents or 80 cents for it. The question is, where do you want to be investing? A lot of it goes to, if you look at investing today, the risk-free rate is 20 basis points, so where are you getting paid to take the risk? For us to make 15% to 20%, we think we can do it in Europe a lot easier than here."

How Avenue's been investing:  "We have been investing the capital about 5% a month. The reason for that if we think over the next year or year and a half, there's a huge amount of opportunities and the question is, is the better time to invest three months ago or three months from now? Our view is to invest over time. And we think we'll just average in the prices."

Is Lasry worried about Europe short-term? "It matters but our long-term view is over the course of the next two or three years, everything is going to work itself out, and whether it's George Soros or it's somebody else, which you constantly keep hearing every week and every month that Europe has problems. We all know that. I think it'll work out. If you believe that and you invest, you'll do well."


Embedded below is Marc Lasry's full interview with Bloomberg TV:




For more on this investor, Marc Lasry is profiled/interviewed in the new book The Alpha Masters which is definitely worth reading.

The Alpha Masters: Review of Maneet Ahuja's Book on Dalio, Paulson, Tepper, Loeb & More

We've just finished a must-read book on some of the top hedge fund managers in the game. The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds by Maneet Ahuja takes you behind the scenes with exclusive interviews and profiles of the managers you read about on this site each day.

Ahuja is CNBC's hedge fund specialist and co-creator of the Delivering Alpha summit. Through her roles, she's developed quite the rolodex and has put it to work by giving readers unprecedented access to prominent managers. With a foreword by PIMCO's Mohamed El-Erian and an afterword by Myron Scholes, Ahuja's book profiles the following nine managers:

Chapter 1: The Global Macro Maven - Ray Dalio, Bridgewater Associates
Chapter 2: MAN versus Machine - Pierre LaGrange & Tim Won, MAN Group/AHL
Chapter 3: The Risk Arbitrageur - John Paulson, Paulson & Co
Chapter 4: Distressed Debt's Value Seekers - Marc Lasry & Sonia Gardner, Avenue Capital
Chapter 5: The Fearless First Mover - David Tepper, Appaloosa Management
Chapter 6: The Activist Answer - Bill Ackman, Pershing Square Capital
Chapter 7: The Poison Pen - Dan Loeb, Third Point
Chapter 8: The Cynical Sleuth - Jim Chanos, Kynikos Associates
Chapter 9: The Derivatives Pioneer - Boaz Weinstein, Saba Capital Management

The book's cover photo is the perfect depiction of what many perceive the hedge fund industry to be: money and secrecy hidden behind locked doors (or in this case, a bank safe deposit box). But just as the cover suggests, Ahuja has unlocked the door to the industry's top titans and she lets you in on some of their secrets and little known facts.


How David Tepper Named His Hedge Fund

One such tidbit is found in Chapter 5 about David Tepper.  While Market Folly often details Tepper's portfolio activity, The Alpha Masters sheds light on little known facts such as why he selected the name 'Appaloosa Management' for his firm to begin with.

It's always interesting to learn what hedge funds are named after because they often tell a story or reveal information about the managers themselves. In Tepper's case, it simply highlighted his desire to make money.

Ahuja writes,

"Tepper and Walton only needed the perfect name for their new venture. Greek mythology was popular at the time and they first decided on Pegasus, the flying horse, before discovering it was already taken. So Walton went to the library and came back with a book on horses. They knew they needed a name that started with 'A' to be first to receive faxes on trades, which was how orders were processed back then. They had learned well from their stints at Goldman that two minutes could make or break you. The first name they came across was 'Achaikos' but they found it too hard to pronounce. So they skipped ahead and settled on 'Appaloosa.' And the fund was born."


Why The Alpha Masters is a Must-Read

This book is a compilation of stories and fascinating facts about nine top managers. We've been tracking these prominent hedge funds for years, but The Alpha Masters kept peeling back layers of intricate details.

At first glance, some of the historical background on the managers' lives may seem tedious and boring. But then you realize that Ahuja has included these anecdotes because it paints a picture as to who the manager was and what they've become.

These stories told in the manager's own words make you feel as if you're simply at lunch with a friend reminiscing about their past. But Ahuha has masterfully taken that friend and replaced them with a hedge fund titan removed from Wall Street's trillion dollar pedestal. And when you've finished reading, these seemingly untouchable god-like moneymaking machines have morphed into mere mortals just like you.

After all, like many entrepreneurs and small business owners today, these hedge fund icons at one point in their lives took a big risk, pursued their dreams, and started their own firms.  Ahuja chronicles the entire journey (even before the fund's inception) and the real value is seeing what each manager had to go through to get where they are now.  As these dream chasers soared to amazing altitude, they now tell their success stories as luminaries sure to inspire the ascension of the next master money managers.

But apart from the human element, this book does exactly what its title implies: it's unlocked the genius of the world's top hedge funds by giving you tons of access to people you'd probably never meet as well as stories and wisdom you'd probably never hear otherwise.

The most valuable aspect of this book is that it gives you a front row seat in a classroom full of hedge fund icons detailing their investment thought process, what mistakes they've learned from, how they've developed as investors, and what it takes to succeed.  While many perceive hedge funds to be secretive, Ahuja has acquired astute anecdotes from top managers and purveyed them for all investors to learn from.  And, unbeknownst to us, it was a pleasant surprise to find MarketFolly.com listed as a reference at the end of the book.


Definitely check out The Alpha Masters (hardcover) or Kindle e-book version here.

Marc Lasry on Opportunities in Distressed Debt

Avenue Capital's chairman and founder Marc Lasry was on Bloomberg TV yesterday giving an interview where he talked about investing in European debt.  He also said investors should focus on the the world's largest economy, the US, rather than China.  He's been focused on homebuilders and on the energy side, mainly focusing on senior secured.

He talked about raising $3 billion for a special situations fund to invest in European debt.  He argues that you need a lockup with that money because these situations are going to take years to play out.  Here's the video:



The hedge fund manager also touched on his distressed focus, noting that while others might think he's taking on a lot of risk, he doesn't believe so since he often deals with senior secured debt.

He mentioned how he learned a lot from David Bonderman.  One of the best lessons he learned is: "there's a difference between what the perception is and what the actuality is."

He also talked about his love for poker as he regularly hosts games.  Lasry says there's many similarities between investing and poker as the card game is very mathematical.  In the past, we've highlighted the high amount of hedge fund managers that play poker. 

Embedded below is the other video of Lasry's interview:



For more on his investment niche, head to comments from a hedge fund distressed panel.

Marc Lasry: Long General Motors & Hovnanian Bonds ~ Invest For Kids Chicago Notes

At Invest For Kids Chicago yesterday, Marc Lasry of Avenue Capital gave a presentation on going long General Motors (GM).

Be sure to check out all notes from Invest For Kids Chicago where numerous high profile hedge fund managers shared their latest investment ideas.


Long General Motors (GM)

Lasry pitched GM, saying that the company had the largest US market capitalization at $12.2 billion in the late 1950's. In 2000, GM's revenue was higher than Wal-Mart at $189 billion. Currently, GM equity trades at less than 1.0x EV/EBITDA (including JVs at 17.9B, cash 20.3B, Market Cap 41.7B, other assets 4.3B, 5.5B in debt, and 6.9B preferreds).

He compares GM now to Apple (AAPL) back when they needed $150 million from Microsoft (MSFT) or AAPL would have gone bankrupt. Since that loan from Microsoft, Apple many years later has become the largest company in the world at $350 billion.

Lasry says investors are focusing on timing re: GM and that's not the right way to do it. Ultimately, he acknowledges there's lots of risk out there. But the key question you have to ask, he says, is "are you getting paid enough to invest?"

The risk for GM is another recession and people buy fewer cars. As a true contrarian, he likes to buy when others aren't. He started buying the bonds when it was 2x EBITDA and you can get an even better entry point today. We just covered how David Einhorn's Greenlight Capital bought GM equity in the third quarter as well.


Long Hovnanian (HOV)

Lasry also mentioned that he liked homebuilder Hovnanian as rates and prices are both very low. The company has 350 million in cash, 1B inventory and 1B NOLs. He likes the 6 to 7% bonds at 35 with 20% yield. You get paid to wait and thinks you are covered and he'd rather get paid to wait with the bonds than take on more risk with the equity. Avenue Capital believes that the US GDP will have 1% growth next year and no double-dip recession.

You can view full notes from Invest For Kids Chicago here.

Hedge Fund Panel: Credit Opportunities In The Current Environment (Lasry, Altman, Eberts)

This is the last article in a series on the hedge fund panels that recently took place. Over the past few days, we've covered an introductory post that outlined key takeaways from the event and a separate post that detailed the "Case For Global Equities in 2010" from a panel of prominent long/short equity hedge fund managers. Additionally, we highlighted the hedge fund manager panel on the global investment landscape in 2010 as well as the discussion of alpha in asset allocation.

The last hedge fund panel we're covering includes thoughts from Anchorage Advisors' Kevin Ulrich, Avenue Capital's Marc Lasry, Goldman Sachs' Kenneth Eberts, and Owl Creek's Jeffrey Altman.

Credit Opportunities In The Current Environment: Where Do We Go From Here?


The panel agreed that 2009 was fueled by liquidity. They note that the easy money has been made and many situations actually played out very fast. The cycle is not over; there is more to come and there was disagreement as to where the most opportunity was: mid-caps or large credits that are restructuring.

Marc Lasry (Avenue Capital): Lasry thinks that the large cap opportunities are gone for 2010 and that mid-caps provide the best opportunity as there is still $1 trillion to be re-financed there. Avenue really likes restructurings and is adding to their staff to take advantage of it. Lasry thinks that middle market companies are discounted since there's not much liquidity (banks aren't providing them capital). He mentioned that in 2009 you "had" to be invested and you can tell who did well from a credit perspective by looking at the returns. Avenue's international fund was up 66% last year as detailed in our post on 2009 hedge fund performance numbers.


Jeffrey Altman (Owl Creek Asset Management): Altman and Owl Creek are contrarians by nature and think the opportunities will be in one-off's rather than entire sectors like it was in 2009. They see opportunity in finance and healthcare because many other investors aren't fond of those arenas as they are filled with volatility. Last year, they mainly focused on process driven trades and as those are maturing, they're interested in moving forward with LBO's that needed restructuring. Right now they have tail hedges on via S&P puts and CDS because they are worried that if there is another economic/financial problem that the government won't be able to do much since rates are already at 0%. Overall though, Altman sees opportunity for those with capital to deploy as private equity firms and banks are doing less in the arena.


Kenneth Eberts (Goldman Sachs): Eberts mentioned that Goldman Sachs Investment Partners was heavily invested in capital structure arbitrage in 2009 as they thought it was the best way to own the economic tails (buy equity, short debt). Moving to 2010, they are honing in on the short side in investment grade as they feel it is the 'worst priced' since it's the tightest. He notes that if everything is fine and dandy in the world, they won't move much. However, if we start to see problems again, these will be seen as mis-priced and will fall hard. Lastly, he thinks that if China doesn't buy the excess Treasuries supply coming to market in 2010 that you could see a credit widening.


Kevin Ulrich (Anchorage Advisors): Ulrich focused on how the liquidity-driven 2009 is a thing of the past and that there are still opportunities on the long side in the distressed segment. Anchorage likes cyclicals near-term as there is an opportunity to benefit from financial and operational leverage. He mentions that credit default swaps (CDS) are still the best way to short, but notes they have definitely become less liquid. However, he does think a clearing house would be an improvement.


That ends the coverage of the conference. Head to all the posts on the hedge fund panels including:

- The Case For Global Equities in 2010

- Is There Alpha in Asset Allocation?

- The Global Investment Landscape in 2010

- Key Takeaways From The Event