From Gundlach to Sundheim: Sohn Convention's 2019 Commerce Concepts

By Saijel Kishan, Hema Parmar, Katia Porzecanski and Alexandra Stratton

(Bloomberg) -- Daniel Sundheim mentioned he sees Netflix Inc. surpassing $1,000 within the subsequent 4 to 5 years. Jeffrey Gundlach mentioned to wager on interest-rate volatility. And Scott Goodwin mentioned the solar is setting on the age of plastics.

These are among the many concepts shared on the Sohn Funding Convention, one of many hedge fund trade’s largest annual occasions, in New York on Monday. In a fast-talking presentation, Larry Robbins talked about a wager in opposition to 3M Co., whereas after Cormorant Asset Administration’s Bihua Chen described Reata Prescription drugs Inc. as a possible “10-bagger,” its shares rose. Different presenters advisable trades together with Brazilian rates of interest and foreign money and Las Vegas Sands Corp.

“Respect everybody. Know life is unfair. Take threat. Step up within the powerful instances. Face down bullies. Carry the downtrodden,” Gundlach advised the Lincoln Heart crowd. “And by no means, ever surrender.”

Right here’s a listing of the convention’s largest takeaways:

David Einhorn, Founding father of Greenlight Capital

Einhorn, whose commerce concepts are carefully adopted as a result of they typically transfer costs, says he’s betting on plane leaser AerCap Holdings NV and in opposition to rail-car leaser GATX Corp. Each firms have market-leading positions with low double-digit market share, Einhorn mentioned. “All else being equal, we want AerCap,” he mentioned. “Higher returns, higher trade fundamentals.”

Larry Robbins, Founding father of Glenview Capital Administration

Robbins mentioned shorting Publish-it notes maker 3M and chemical maker Chemours Co. due to potential authorized points. Robbins, who has traded health-care shares for a very long time, mentioned hospitals are a “great” place to speculate, and that for-profit operators would thrive even when Medicare-for-all have been ultimately accredited. Pharma shares are riskier, he added. He advisable shorting “any form of pharma ETF.”

Daniel Sundheim, Founding father of D1 Capital Companions

In a wide-ranging dialogue, Sundheim, whose hedge fund was among the many largest launches of 2018, mentioned valuations are the largest challenge he sees proper now. If inflation have been to choose up or China commerce talks have been to fall by means of, there isn’t a sufficiently big cushion, he mentioned. Sundheim additionally mentioned the Canadian hashish trade has “huge” draw back due to a provide glut. “We predict the enterprise fashions are challenged and valuations are absurd,” he mentioned. Sundheim additionally mentioned Tesla Inc.’s Elon Musk is difficult to wager in opposition to.

Gabe Plotkin, Founding father of Melvin Capital Administration

Plotkin, who had beforehand labored for billionaire Steven Cohen, mentioned “total it’s a fairly good surroundings for shares.” The cash supervisor additionally mentioned he likes Las Vegas Sands and Worldpay Inc. That mentioned, Plotkin mentioned he has an “intense focus” on the quick facet and that the majority of his hedge fund’s earnings have come from betting in opposition to firms. Plotkin mentioned he’s skeptical about mall REITs in addition to Tesla.

Scott Goodwin, Managing Associate, Diameter Capital Companions

Goodwin described Plastipak Holdings because the “huge loser” as demand shifts away from plastics, and mentioned he’s shorting its unsecured bonds as spreads ought to widen because the market digests its debt. Traders are staying away from weapons these days, and plastic may very well be subsequent, Goodwin mentioned. “The solar is setting on the age of plastic packaging and Plastipak is one of the simplest ways to precise this quick.”

Jeffrey Gundlach, Chief Govt Officer, DoubleLine Capital

Gundlach, who famously advised attendees three years in the past to arrange for a Donald Trump presidency, spent most of his presentation denouncing Joe Biden, Elizabeth Warren and different Democratic hopefuls. Quick all of them, he mentioned of a dozen contenders polling at round 1 %. Then he turned to the economic system, saying rates of interest can't preserve the low volatility they’ve skilled up to now eight years, and advisable shopping for interest-rate volatility on long-maturity U.S. Treasuries by way of a put-call straddle on the exchange-traded fund TLT.

 

--With help from Sarah Ponczek.To contact the reporters on this story: Saijel Kishan in New York at [email protected] ;Hema Parmar in New York at [email protected] ;Katia Porzecanski in New York at [email protected] ;Alexandra Stratton in New York at [email protected] To contact the editors accountable for this story: Margaret Collins at [email protected] Josh Friedman, Paul Panckhurst