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You’re Going to Hear Some Bold Bets at the Sohn Investment Conference. Ignore Them.
Investors would be wise to disregard advice offered at the famed financial get-together, an Institutional Investor analysis shows.
The annual Sohn Investment Conference is being held in New York City on Monday, but investors might want to think twice before tapping their phones and placing trades based on the views of the cognoscenti on the stage at Lincoln Center’s Avery Hall.
Last year’s stock picks — both longs and shorts — by some of the biggest names in hedge funds have fallen an average of 2.3 percent since they were presented at Sohn.
Moreover, that loss doesn’t include one manager’s disastrous call on Bitcoin, which is down 36 percent since last year’s event.
Last year’s stock picks by star managers David Einhorn, Larry Robbins, and Jeffrey Gundlach all lost money, while the broader market gained more than 8 percent during the same time period.
Greenlight Capital’s Einhorn — a perennial Sohn speaker — was the worst performer of the seven managers whose 2018 Sohn stock picks Institutional Investor analyzed.
Last year Einhorn called for shorting bond insurer Assured Guaranty, arguing it was a “melting ice cube” in part because it had insured defaulted Puerto Rico bonds. The stock fell sharply the day of his talk, but it has since rallied as did Puerto Rico bonds after the commonwealth cut deals with some of the bondholders last summer.
Assured Guaranty’s stock is now up 29.5 percent since Einhorn’s Sohn short call. Einhorn hasn’t disclosed whether he kept the short position on, but last year his fund fell 34 percent, and his assets sank to $2.5 billion. This year, he’s gained some of that back; his fund is up 18.7 percent through April. Einhorn declined to comment on the performance of last year's stock pick.
Doubleline Capital’s Gundlach had another loser, calling Facebook a short. The social media giant’s stock had a wild ride last year, and many hedge funds sold out and it ended down for the year.
But the stock has come back. Since Gundlach pitched it at Sohn, Facebook is up 16.86 percent. Gundlach is speaking again this year. He did not respond to a request for comment by the time of publication.
Glenview Capital’s Robbins — another familiar face at Sohn who will be there again this year — also bombed. Robbins is a specialist in healthcare stocks, but the ones he picked last year have fallen sharply since the event. He praised the pending mergers in the industry, including Cigna’s purchase of Express Scripts and the CVS-Aetna deal — both of which have gone through. But Cigna is down 10.3 percent since last year’s New York Sohn event, and CVS is down 13.5 percent.
Robbins also pitched healthcare company McKesson, which recently paid $37 million to settle an opioid lawsuit by the state of West Virginia. It has fallen 15.7 percent since last year’s Sohn.
Notably, Robbins also had a bad year in 2018. Glenview’s flagship fund fell 16.17 percent last year, but like Einhorn is doing better this year: it is up 15.55 percent through March, according to HSBC’s hedge fund performance scorecard. As of the end of last year, Glenview still owned all three stocks he touted at Sohn last year. Robbins did not respond to a request for comment in time for publication.
The big winner at last year’s event was Light Street Capital’s Glen Kacher, who had the top-performing pick among the seven presenters II analyzed.
Tiger cub Kacher recommended Palo Alto Networks, which is up by more than 30 percent since last year’s event. He said the company had the “leading hybrid security platform” at a time when “a cybersecurity war is being fought.”
Light Street is heavily invested in technology stocks, which had a rough year, but it ended up 3.5 percent in 2018. This year it had gained 12.85 percent through March, as II previously reported.
During the last quarter of 2018, Light Street sold 79 percent of its shares in Palo Alto Networks, according to securities filings. He won’t be speaking this year.
The next big winner last year was Mangrove Capital’s Nathaniel August, whose short of Eros International — a distributor of Indian films and content whose accounting August questioned — has worked out nicely for Mangrove so far. Eros’s shares have fallen 26.7 percent since August made the Sohn call.
Despite his win last year, he won’t be there this year.
Lesser gains have come to British hotelier Whitbread, the activist play by Sachem Head’s Scott Ferguson, who touted Whitbread at Sohn last year. The stock is up 5.8 percent since then — after losing 6 percent in the past five days.
Ferguson called for Whitbread, whose main business is hotels, to sell its Costa coffee chain, which it did in January. However, the decline in the UK hotel business has hurt its revenues this year, the company told investors on its recent earnings call—which led to the stock’s recent downturn.
More modest gains came from Long Pond Capital’s John Khoury, who pitched homebuilder D.R. Horton. That stock is up 2.4 percent since Sohn.
Finally, Pfeifer Capital’s John Pfeiffer predicted that Bitcoin — the cryptocurrency whose price peaked in December of 2017 — would come back. It hasn’t. Bitcoin was trading around $8,900 at the time, and it’s now $5,663, for a 36 percent decline.
Ferguson, Khoury, and Pfeiffer aren’t on this year’s speaker list.