Investing Ideas from Hedge Fund Manager Stars

July 23, 2013 PJ Moore In the News

Last week some of the most talked-about hedge fund managers were brought together to discuss their latest ideas about investing at the CNBC/Institutional Investor “Delivering Alpha” conference.

On hand at Wednesday’s conference at the Pierre Hotel in New York were Jim Chanos, founder of Kynikos Associates; Leon Cooperman, Chairman of Omega Advisors; founder of The Children’s Investment Fund Management Chris Hohn; and Mark Kingdon of Kingdon Capital Management. Together they formed a panel to talk about “My Best New Idea.” Here’s what they had to say:

Jim Chanos said that his fund is shorting the Caterpillar Company, manufacturers of heavy duty building machinery, due to the slow-down in China’s construction sector. “I believe that the commodity supercycle built on the back of the Chinese construction boom is coming to an end,” he said. “They (Caterpillar) have cheap stock that trades at about 12 to 13 times earnings, and earnings are not expected to grow reasonably at all,” he added. “The company doesn’t have the financial flexibility for buybacks that others do.”

Chris Hohn is enamored with Airbus Porsche and the Australian rail freight company Aurizon. Hohn said he predicts that Aurizon could double earnings during the coming three years as a result of the skill set of its excellent management. Hohn said that Aurizon’s success is a “fantastic asset-backed turnaround story.”

Mark Kingdon is excited about Japan, especially cars manufactured there. He is expecting the economic policies of Shinzo Abe, the Japanese Prime Minister to bring returns to investors especially in the cases of Mazda about which Kingdon said had “the shakiest history but the biggest upside; Fuji Heavy which makes Subaru and has a reputation for emphasizing safety; and Toyota. Why is Kingdon excited by Japan’s auto sector? “They produce cars with fewer workers and more robots than any other country,” was his answer.

Leon Cooperman expressed his approval of three names in the quality growth market: Express Scripts, Qualcomm, and Thermo Fisher Scientific. For those institutional investors ready to take a risk, Cooperman said that Sandridge Energy could either double its value in the coming year, or simply go bankrupt. “So, you know, risk reward!” Cooperman added that he also has his eyes on the private equity company KKR.

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