We were one of the media sponsors of the 2024 Sohn Investment Conference in New York City on April 3rd and we will be sharing our takeaways with our premium subscribers over the next few days. One of our readers shared the following compilation about some of the stocks pitched at the 2024 Sohn Conference yesterday. Our favorite pitch isn’t in this list but we actually pitched that theme last week to our premium subscribers. You can subscribe to our Premium Readership Newsletter and see our in-depth report on the cheapest AI stock in the market right now (see the deeply discounted subscription offer at the bottom of this article). Here are some of the stocks pitched at the Sohn 2024 Conference:
Eric Wolff, Gumshoe Capital Management
Investment Idea: Pason Systems
Energy company Pason Systems is a dominant provider of EDR, or electronic drilling recorder, solutions for the oil and gas industry, according to Eric Wolff, portfolio manager at Gumshoe Capital Management. Wolff sees between 45% and 180% upside for Pason, which he said has between 60% and 85% of market share in the Western world.
“Pason offers a superior service that is hard to duplicate. … We think this is an excellent business that deserves to trade a healthier multiple than it does today,” Wolff said, adding that the company is trading at an oil and gas multiple rather than at a software valuation. “We think this is a near monopolistic business … even if the multiple doesn’t expand, we can achieve 18% returns through cycle just based on the calendar for business.”
Shares have added roughly 4% this year, and jumped more than 19% over the past month.
Michelle Ross, StemPoint Capital
Investment Idea: Crinetics Pharmaceuticals (CRNX)
One stock that could nearly double from here on the surge of interest around weight loss drugs and an increased focus on endocrine health is Crinetics Pharmaceuticals, according to Michelle Ross, CIO at StemPoint Capital.
The stock is up nearly 33% year to date.
Crinetics, which develops therapies for endocrine diseases, can tap into a multibillion-dollar potential U.S. market opportunity as it targets therapeutics for Cushing’s Disease and Congenital Adrenal Hyperplasia, Ross said.
Endocrinology is an $8 billion market, but the cumulative market size including the company’s future therapy targets is upwards of $200 billion, which includes estimates for future obesity drugs, the investor said. She has a one-year price target of $88 for the stock, implying 92% upside, while her long-term price target of $339 suggests a whopping 665% upside for the company.
Ross said she expects significant outperformance for years to come, competing with the likes of Eli Lilly and Novo Nordisk, as the “obesity market moves from an injectable to an oral pill.”
During the last three years, Crinetics delivered 200% outperformance, as compared to the SPDR S&P Biotech ETF (XBI), she said. This year, Crinetics is up by more than 31%, whereas XBI has risen 1.8%.
Nikhil Daftary, NK Capital
Investment Idea: Alimentation Couche-Tard
A Canadian operator of global convenience stores is a buying opportunity in an industry that is often overlooked, according to Nikhil Daftary, co-founder and partner at NK Capital.
Alimentation Couche-Tard is listed in Canada, but makes most of its profits in the U.S, where it is the second-largest convenience store chain, behind only 7-Eleven, Daftary said. It has CA$75 billion market cap with an “unbelievable record of success,” according to the investor. What’s more, Daftary anticipates that scale gas stations will be a surprising beneficiary of the growth in electric vehicle adoption.
“We believe Couch-Tard is one of the greatest success stories in public markets priced like a value stock,” Daftary said, adding that the company has a share price to match an 18% CAGR. “We believe the company can grow EPS in mid-teens growth rate for many years to come” that can one day rival some of the world’s biggest chains, such as Starbucks and McDonalds.
“We think Couche can be one of the biggest retailers in the world one day,” he said. The stock is down 4.4% this year, losing roughly 11% over the past month after the company posted disappointing third-quarter earnings.
Short-sellers
Chris Drose, founder of Bleecker Street Capital, called out food packaging company Sealed Air as “a melting ice cube hiding in plain sight.” The short seller noted that the company has a $5 billion market cap with about $4.8 billion of debt.
Nate Koppikar, portfolio manager at Orso Partners, named Globe Life (GL) as a short pick, calling it “one of the sleaziest businesses” he’s ever come across, as it uses brokers to sell short-term medical plans that “turned out worthless” for customers.
He expects the stock could crater by 50% this year, as he anticipates the Justice Department and Federal Trade Commission may take action against the company. Shares were down 2.8% in midday trading.
Safkhet Capital founder Fahmi Quadir named Adtalem Global Education (NYSE:ATGE) as her highest conviction short, pointing out that it received nearly $2 billion in taxpayer funded subsidies last year but generates “horrendous student outcomes” with graduates unable to pay their debt back.
Vijay Shilpiekandula, Dilation Capital
Investment Idea: ASML
Vijay Shilpiekandula of Dilation Capital, who was named the Sohn Idea Contest Winner, presented ASML as his best stock idea. The Dutch semiconductor company is an “R&D powerhouse” and “high-quality business” that looks attractive on a growth-adjusted basis compared to peers, the investor said. A future potential catalyst he’s looking forward to is ASML’s investor day on April 17, where Shilpiekandula expects management commentary about opportunities in high-bandwidth memory and generative AI.
“What I find like good opportunity for investors in the market to think about right now is to be creative about the long-term capacities and the long-term earnings potential of this company based on this gold rush that all these memory makers and large language models are chasing,” Shilpiekandula said.
Shares of ASML are up 29.5% this year. The company beat fourth-quarter revenue and profit expectations, but said its revenue for this year will be similar to that of 2023.
Jesse Cohn, Elliott Investment Management
Investment Idea: Etsy (ETSY)
E-commerce platform Etsy is an undervalued company, according to Elliott Investment Management managing partner Jesse Cohn. His firm owns over 10% of outstanding shares, which he said has a “really good business model” as it has proved to be highly profitable and extremely cash-generative.
While he maintains that Etsy is a durable business, he noted that Etsy has meaningfully underperformed the broader market, as the company has lost 19.6% year to date due to ongoing macroeconomic struggles in consumer spending since the Covid pandemic. That should be an opportunity for investment, according to the activist investor, however.
Etsy “trades in-line now with load and no growth peers across internet, e-commerce and traditional retail,” Cohn said. “On a cash flow basis, it trades at a discount to Bath & Body Works, Gap. … It’s relatively early in its operational and monetization process.”
Seth Fischer, Oasis Management
Investment Idea: Kao
There’s an underappreciated buying opportunity in Japanese global chemicals company Kao, according to Seth Fischer, founder and CIO at Oasis Management.
Kao, the company behind Biore, Curel and other cosmetics brands, has an attractive portfolio of products that have yet to realize their full potential, Fischer said. This can be changed with more global marketing initiatives, he noted.
The Japanese stock is flat on the year, even as the Nikkei 225 is higher by more than 17% as the Japanese index scaled fresh all-time highs this year.
“They have great technology, many interesting products, but they have yet to translate that into any sort of growth mindset,” Fischer said. “But we think it’s a Sleeping Beauty.”
David Einhorn, Greenlight Capital Investment
Investment idea: Solvay
Greenlight’s David Einhorn unveiled Solvay as his top investment idea, saying the European chemicals company is a market leader with an attractive valuation.
“Solvay is an essential chemical company that holds the number one position across all of its markets” Einhorn said. “While all of these are thought of as commodity businesses, they are higher margin and much more stable than most commodity chemical businesses.”
Solvay shares are down more than 3% year to date. Over the past year, they have tumbled more than 70%.
Michael Buckley, Duquesne Family Office
Investment idea: Natera (NTRA)
Natera, a medical diagnostics company, could have huge upside based on the strength of its oncology business, according to Michael Buckley, portfolio manager at Duquesne Family Office. Natera shares are higher by more than 47% this year.
Buckley said the firm’s oncology segment, which he said has the potential to detect cancer earlier in patients than has a CT scan, can drive the company’s revenues going forward. Currently, two-thirds of the company’s revenue comes from its women’s health business, he said. What’s more, he expects that the company will be able to reach profitability sooner than the Street currently anticipates.
“Not only is it an exciting stock with incredible growth potential, but it’s one of the few healthcare companies that can both dramatically improve patient outcomes while lowering total system costs,” he said.
Mohammed Anjarwala, Advent Global Opportunities
Investment Idea: Carpenter Technology (CRS)
Carpenter Technology is an underappreciated business in the aerospace industry that can also be a play on the backlog of planes from Boeing and Airbus, said Mohammed Anjarwala, managing director at Advent Global Opportunities.
“We think Carpenter is one of the best ways to play the growing backlog of planes at Boeing and Airbus, as they ramp up their billing rates,” Anjarwala said.
Carpenter is a leading supplier of specialty alloys for the aerospace industry, a market with high barriers to entry given stringent testing requirements for parts, Anjarwala noted. The investor said Carpenter, one of just three suppliers, has cornered roughly 40% of the market. What’s more, the company can benefit from the rise in travel as global incomes rise.
The managing director expects the stock could trade at $200 per share, or 20 times forward P/E, around the same level of its peers. Currently, it trades a little above $70 per share, roughly at a 17 times forward P/E. The stock is up by 3.6% this year. They jumped 3% on Wednesday.