Ira Sohn Investment Conference Market Movers for Thursday
The annual Ira Sohn Investment Conference was held in New York on Wednesday. At the event, which supports the treatment and cure of pediatric cancer, many of the world's most successful hedge fund managers and other noteworthy investors pitch stock ideas to their colleagues. The investment ideas presented at Ira Sohn frequently cause large price moves in the individual stocks being discussed, and the 2012 conference was no exception.
Among the heavy-hitters that presented this year were Greenlight Capital founder David Einhorn, Pershing Square founder Bill Ackman and Paulson & Co. chief John Paulson. Below, Benzinga recounts the stocks they discussed in their presentations and how those names are faring on Thursday.
David Einhorn - In today's markets, this boyish looking hedge fund manager may be the most influential voice when it comes to individual stocks. Einhorn's short bets on companies such as Lehman Brothers and Green Mountain Coffee Roasters (NASDAQ: GMCR) have brought him great sway on Wall Street. While Einhorn isn't always right, when he is, it is usually in dramatic fashion.
When the Greenlight Capital manager did not mention Herbalife (NYSE: HLF) as a potential short candidate, that stock skyrocketed on Wednesday. Herbalife shares finished up 16.66% to $49.51. On Thursday, however, HLF is retracing some of yesterday's gains and at last check was trading down 6.00% to $46.53.
Previously, HLF had plunged after Einhorn asked some pointed question on an earnings conference call. The presence of the hedge fund manager on the call was enough to spook investors who had feared that Einhorn may be targeting the company on the short side.
Other companies that he addressed included Amazon.com (NASDAQ: AMZN) whose future he described as a "riddle." While Amazon has been tremendously successful, its earnings multiple is also stratospheric for such a large company.
The hedge fund manager made bearish comments on a couple of other names including Martin Marietta (NYSE: MLM) and Dick's Sporting Goods (NYSE: DKS). Both of those stocks are continuing to fall on Thursday. At last check, MLM was down 1.30% to $67.71 after falling yesterday during Einhorn's speech and DKS had shed another 4.63% to $45.72.
On the bullish side, Einhorn had only positive things to say about Apple (NASDAQ: AAPL). Of course, this makes sense, seeing as how Greenlight has a massive $878 million position in the company, which accounts for around 16% of the fund's long equity portfolio.
John Paulson - best known for making billions for himself and his investors by betting against the housing market before the crash, Paulson also spoke at Ira Sohn. Unlike Einhorn, who loves to talk about shorts despite the fact that he is a long-oriented value investor, Paulson talked about his long ideas. He said that he owns shares of Caesars Entertainment (NASDAQ: CZR), which went public in February. According to Paulson, the company's social gaming platform Lakita is worth $8 per share alone. On Thursday, CZR shares have added 1.63% in a bad market tape and were last trading at $13.70. The company came public at $9.00 per share.
Another long idea that the hedge fund manager spoke about is long-term Paulson & Co. position AngloGold Ashanti Limited (NYSE: AU). This stock is a bit of a dog, but the billionaire is convinced that it will eventually be a big money maker. Over the last year, AU shares are down more than 27% and over the course of the last five years the stock has lost 24% despite skyrocketing gold prices.
Paulson told the audience that AngloGold is "firing on all cylinders" and that current prices make an attractive entry point. He also added that it is cheaper to get exposure to gold through AU than through an ETF or futures. Paulson said that he thinks AU may have as much as 75% upside from current levels. On Thursday, AU has jumped 3.13% to $32.66 on the back of the hedge fund manager's considerable sway in the investment community.
The final stock that Paulson talked about was CVR Energy (NYSE: CVI), a company in which his hedge fund recently bought a 9.9% stake. Paulson thinks that CVR could be worth as much as $36.00 per share. On Thursday, the stock has climbed 0.63% to $30.54. While that may not seem like much, it is not bad considering that the broader stock market is getting blasted once again.
Bill Ackman - The final speaker at Ira Sohn was the always interesting Bill Ackman. Attendees were likely sitting on the edge of their seats to hear what Ackman had to say about his largest holding, J.C. Penney (NYSE: JCP). Earlier in the day, the stock had suffered its worst percentage loss ever on the back of a disastrous quarterly report.
Although the market was closed by the time Ackman came up to speak, his hedge fund had lost hundreds of millions of dollars on its over-sized JCP position on Thursday as the stock finished down nearly 20%. While the exact amount of Pershing Square's losses on the position cannot be known, the fund held 38.7 million JCP shares as of its last 13-F filing. Given that JCP fell $6.57 during Thursday's trading session, the total damage done could have been in excess of $250 million. Ouch!
In any event, Ackman didn't sound like he was thinking about unloading his stake at current prices, so maybe he isn't that worried. Ackman talked about the appointment of former Apple exec Ron Johnson as CEO of J.C. Penney. He said that he thinks Johnson thought JCP was the best turnaround story that he could participate in.
He also praised the CEO's new ideas in transforming the brand by focusing less on promotional activity and coupons in favor of more straightforward pricing. Ackman added that JCP is a well-known brand and is not fundamentally broken. In fact, the noted investor thinks JCP could earn $6.00 per share by 2015 and that the stock could trade as high as $77.00 to $125.00.
Ackman's efforts to defend J.C. Penney at Ira Sohn may have stemmed the losses in the stock in the very near-term. On Thursday, JCP shares are trading up marginally after rising more than 4% early in the session.
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