One of the top investment conferences, the 2017 Sohn yearly conference gathered hedge funds gurus like David Einhorn or Bill Ackman, who shared some of their investment ideas, and approximately 3,000 attendees. Founded in 1995, the Ira Sohn Conference raises money in support of medical research to help children suffering from cancer and other childhood illnesses. We have gone over some of the investment theses presented by top hedge fund managers at last year’s conference and have analyzed their performance in this article.
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We start with activist hedge fund Corvex Capital and its manager, Keith Meister. During the conference, Meister made his bullish case for Centurylink Inc (NYSE:CTL), at that time the fund’s largest equity position. Centurylink was in the process of acquiring Level 3 Communications and Meister advocated for Jeff Storey, the CEO of Level 3, to take the reins at Centurylink after the merger. “The Level 3 merger is game changing. Would you pay a premium to buy the New England Patriots and then not start Tom Brady?” said Meister at the conference. Although Centurylink Inc (NYSE:CTL) completed the acquisition of Level 3 in November 2017 and Storey is set to become CEO in May, Keith Meister and Corvex Capital have given up on their bet. According to the fund’s latest 13F filing, Corvex has liquidated its stake in Centurylink during the 2017 fourth quarter. Since Keith Meister argued his case for Centurylink the stock has lost roughly a third of its value.
Although it’s not a very popular stock, Centurylink Inc (NYSE:CTL) registered a boost of popularity among the funds tracked by Insider Monkey in the previous quarter. 40 of the funds in our database reported a stake in the company at the end of 2017, up from 35 long positions registered at the end of September. Southeastern Asset Management, run by Mason Hawkins, held the largest position, which amounted to 71.5 million shares, while Dmitry Balyasny’s Balyasny Asset Management increased its stake to 4.07 million shares during the previous quarter.
Debra Fine, the manager of Fine Capital Partners, was the only female hedge fund manager to offer a presentation at the Sohn Conference. She made a case for DHX Media Ltd (USA) (NASDAQ:DHXM), the Canadian content producer, claiming it is better positioned than Netflix Inc (NASDAQ:NFLX) to capitalize on television shows for children. Aside from the shows themselves, the company could generate revenue by selling related merchandise for children. “A Polly Pocket comforter is a much bigger seller than House of Cards sheets,” said Fine. So far, Fine Capital Partners’ bet on DHX Media Ltd (USA) (NASDAQ:DHXM) has not worked out well at all. Since the conference, the stock dropped by approximately 28% through Tuesday’s closing price of $3 per share. The fund’s current position amounts to 5.34 million shares, according to its latest 13F filing.
Christian Leone’s Luxor Capital Group also holds a significant position in DHX Media Ltd (USA) (NASDAQ:DHXM), having reported ownership of 2.17 million shares at the end of 2017. Gregory Bylinsky and Jefferson Gramm, the managers of Bandera Partners, have stepped up their interest in DHX Media and have boosted their fund’s stake by 30% to 1.3 million shares. In general, hedge funds pay little attention to DHX Media, with only 5 of them having reported a long position at the end of 2017.
Brad Gerstner founded Altimeter Capital Management in 2008 with a focus on the Services sector. At the Sohn Conference, Gerstner presented a bullish thesis on United Continental Holdings Inc (NYSE:UAL), already his fund’s largest equity position at that time. Although he cited Warren Buffett’s big bet on the airline industry as a whole, with Berkshire Hathaway having established positions in the 4 largest US airlines, Gerstner focused only on United and states his belief that the stock is worth $235 a share, more than triple the $75 it was trading at the time. Since then, United shares have slightly depreciated and are currently trading around the $70 level. Brad Gerstner and Altimeter Capital Management stand by their thesis and are still betting on United Continental Holdings Inc (NYSE:UAL). According to its latest quarterly filing, the fund held 11.1 million shares, up by 8% during the fourth quarter.
Warren Buffett’s Berkshire Hathaway has a big bullish bet on United Continental Holdings Inc (NYSE:UAL), which amounted to 28.2 million shares at the end of 2017. Paul Reeder and Edward Shapiro’s PAR Capital Management is also among United’s largest shareholders. According to the most recent regulatory filings, the fund held approximately 15.4 million shares at the end of December, down 23% from the third quarter. Hedge fund interest in United was flat during the fourth quarter, with 51 of them having reported a long position in the latest round of 13F filings.
As mentioned previously, billionaire Bill Ackman was also present at the Sohn Conference, where he made a case for one of Pershing Square’s long term investments – Howard Hughes Corp (NYSE:HHC). Ackman stated his belief that the real estate company was greatly positioned to thrive going forward, pointing to its portfolio of strong development projects from New York to Hawaii. “I think this is one of the most attractive times in the history of the company to invest,” commented Ackman. Although after the presentation the stock oscillated between $120 and $130 for the remainder of 2017, it finally picked up steam this month and has ended Tuesday’s session at $136.87 per share, up by roughly 8% since Ackman’s presentation.
Bill Ackman’s Pershing Square held a little over 4.7 million shares of Howard Hughes Corp (NYSE:HHC) at the end of 2017, but has sold 2.5 million shares in January. As of the latest 13D filing, the fund holds roughly 2.2 million shares and has further economic exposure to another 5.4 million shares through swaps. Murray Stahl’s Horizon Asset Management is not far behind, as it holds 2.45 million shares of Howard Hughes according to its latest 13F filing.
Larry Robbins of Glenview Capital Management was bullish on several post-merger companies: FMC Corp (NYSE:FMC), IQVIA Holdings Inc (NYSE:IQV) and DXC Technology Co (NYSE:DXC). DXC Technology was formed in 2017 when Hewlett Packard Enterprise Co (NYSE:HPE) spun-off its services unit and merged it with Computer Sciences Corporation. FMC had picked up one of the businesses DuPont had to divest in order to complete its merger with Dow Chemical, while Quintiles had merged with IMS Health and later changed its name to IQVIA Holdings. “A lot of stocks were left for dead because they were in regulatory purgatory, they were in Armageddon land and no one wanted to touch them. Those losers can become winners. Those winners have far to run,” said Robbins.
Robbins nailed them all. Since his presentation at the conference, FMC Corp (NYSE:FMC) shares have appreciated by more than 10%, IQVIA Holdings Inc (NYSE:IQV) rose by 25% and DXC Technology Co (NYSE:DXC) shares rallied 37%. Throughout 2017, Glenview Capital has been slowly cashing in on all three of these bets. According to its latest 13F filing, the fund still holds 6.9 million shares of DXC Technology, 8.57 million shares of IQVIA Holdings and 10.7 million shares of FMC. Among the most prominent hedge funds, Stephen Mandel’s Lone Pine Capital holds 9.87 million shares of IQVIA Holdings Inc (NYSE:IQV) and Lee Ainslie’s Maverick Capital is invested in DXC Technology Co (NYSE:DXC), having reported ownership of 3.45 million shares in its latest 13F filing.
Disclosure: none.
