As the hedge fund industry continues to struggle to justify high fees and awful returns, some of this year’s speakers at the Sohn Investment Conference addressed how the largest funds are bracing for what’s ahead. The conference, an event held annually in New York and touted as “the premier investment event”, brings together Wall Street’s elite to exchange ideas and share insights (while raising money for pediatric cancer research). Forbe’s offered an overview of the conference with some takeaways from speakers including Stanley Druckenmiller, David Einhorn (Greenlight Capital), Zachary Schreiber (PointState Capital), Jeffrey Gundlach (Doubleline Capital), and Larry Robbins (Glenview Management).
The former Chairman of Duquesne Capital says U.S. debt is “out of control”, China is worse, but the biggest offender of all is the Fed. Domestic businesses are “stuck” he said, unwilling to invest and “addicted” to share buybacks to bolster stocks. He said the Fed is using low interest rates to ease borrowing costs and smooth over growing problems in the global economy.
Greenlight Capital’s David Einhorn commented on what he sees as a bleak outlook for Caterpillar, a buy opportunity in GM, and how both companies are at “mid-cycles” and being assigned the wrong multiples by investors.
At the conference two years ago, the hedge-fund manager and CEO of PointState Capital recommended that investors short oil stocks due to the upcoming oversupply. His position reportedly led to a $1 billion trade profit as oil plummeted from $100 a barrel to the $60s within a year. In his talk this year, he indicated that he’s basing his next trade on what he sees as an upcoming energy plunge due to continued oversupply due to drilling efficiency, a collapse in China, and the rise of renewable energy. “Saudia Arabia,” he said, has two to three years left before it hits a wall.”
Gundlach concentrated on politics in his presentation. “I think you have to prepare for a Trump presidency,” he said, getting laughs with a slide show presentation around the Republican candidates left in his wake.
“Just hang on” was the Robbins mantra this year, advising investors to take a long view amid market tumult. Robbins, who correctly bet on the consolidation of the healthcare industry coming out of the crisis, said he believes market volatility can “drown out fundamentals”. While over the past year Robbins’ firm (Glenview Management) has shown weak results, he believes that healthcare industry consolidation will continue and threats to growth are overstated.
Other highlights include a bearish view on both Bank of the Ozarks (Carson Block) and pharma company Depomed (Jeff Smith), a bullish view on both Hyatt (John Khoury) and Amazon (Chamath Palihapitiya), and a view that Greek banks have finally reached bottom (Richard Deitz).