Slower growth dominates picks at hedge fund conference

Wed May 4, 2016 6:42pm EDT
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By Svea Herbst-Bayliss and David Randall

NEW YORK (Reuters) - Against a backdrop of slower economic growth, prominent hedge fund managers, including Larry Robbins, Stanley Druckenmiller and David Einhorn, said it will take longer for stocks to rise and laid out best ideas that markets barely reacted to.

The remarks come as the hedge fund industry has come under fire for hefty fees, sluggish returns and even a lack of talent.

Robbins, whose Glenview Capital Management LLC has fallen on hard times with heavy losses early this year and last, kicked off the Sohn Investment Conference, an annual charitable event that raises money for pediatric cancer, with a confession and warning.

There would be no new and actionable ideas but his picks from last year, including drug companies AbbVie Inc (ABBV.N: Quote) and Brookdale Senior Living Inc (BKD.N: Quote), were still good bets, he said.

"While hedge funds play dodgeball, investors go tubing," he said, warning investors to stop getting caught up in waves of fear about growth in China, oil prices, public anger over drug pricing and the coming U.S. presidential election.

Stanley Druckenmiller, who now runs Duquesne Capital and rose to fame for engineering George Soros's bet against the British pound, hinted that it was time to short stocks and go long gold at a time central bankers were failing to act appropriately.

And Carson Block, whose Muddy Waters Capital has built a reputation of uncovering fraudulent businesses, laid out a bet against the Bank of the Ozarks Inc (OZRK.O: Quote), saying the Little Rock, Arkansas-based bank was making outsized loans relative to its assets and was too heavily concentrated in real estate lending. Housing starts fell nearly 9 percent in March, offering further evidence of a slowdown in U.S. growth in the first quarter.

David Einhorn, who runs Greenlight Capital, talked about construction and mining equipment maker Caterpillar Inc (CAT.N: Quote), saying there is little chance for a recovery in the mining industry. While he did not explicitly say that he is betting against the company, he has talked about short bets for the last two years at the conference. "We don't see a return of large scale capital investment in U.S. coal mining, maybe ever," he said.   Continued...

Stanley Druckenmiller, Chairman and CEO of Duquesne Family Office LLC., speaks at the Sohn Investment Conference in New York City, U.S. May 4, 2016.  REUTERS/Brendan McDermid