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Jeffrey Gundlach Copyright Matt Winkelmeyer, Getty Images
DoubleLine Capital CEO Jeffrey Gundlach

From Gundlach to Sundheim: Sohn Conference's 2019 Trade Ideas

The biggest takeaways from one of the hedge fund industry's biggest annual events.

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

(Bloomberg) -- Daniel Sundheim said he sees Netflix Inc. surpassing $1,000 in the next four to five years. Jeffrey Gundlach said to bet on interest-rate volatility. And Scott Goodwin said the sun is setting on the age of plastics.

These are among the ideas shared at the Sohn Investment Conference, one of the hedge fund industry’s biggest annual events, in New York on Monday. In a fast-talking presentation, Larry Robbins mentioned a bet against 3M Co., while after Cormorant Asset Management’s Bihua Chen described Reata Pharmaceuticals Inc. as a potential “10-bagger,” its shares rose. Other presenters recommended trades including Brazilian interest rates and currency and Las Vegas Sands Corp.

“Respect everyone. Know life is unfair. Take risk. Step up in the tough times. Face down bullies. Lift the downtrodden,” Gundlach told the Lincoln Center crowd. “And never, ever give up.”

Here’s a list of the conference’s biggest takeaways:

David Einhorn, Founder of Greenlight Capital

Einhorn, whose trade ideas are closely followed because they often move prices, says he’s betting on aircraft leaser AerCap Holdings NV and against rail-car leaser GATX Corp. Both companies have market-leading positions with low double-digit market share, Einhorn said. “All else being equal, we prefer AerCap,” he said. “Better returns, better industry fundamentals.”

Larry Robbins, Founder of Glenview Capital Management

Robbins discussed shorting Post-it notes maker 3M and chemical maker Chemours Co. because of potential legal issues. Robbins, who has traded health-care stocks for a long time, said hospitals are a “wonderful” place to invest, and that for-profit operators would thrive even if Medicare-for-all were eventually approved. Pharma stocks are riskier, he added. He recommended shorting “any kind of pharma ETF.”

Daniel Sundheim, Founder of D1 Capital Partners

In a wide-ranging discussion, Sundheim, whose hedge fund was among the largest launches of 2018, said valuations are the biggest issue he sees right now. If inflation were to pick up or China trade talks were to fall through, there isn’t a big enough cushion, he said. Sundheim also said the Canadian cannabis industry has “enormous” downside because of a supply glut. “We think the business models are challenged and valuations are absurd,” he said. Sundheim also said Tesla Inc.’s Elon Musk is hard to bet against.

Gabe Plotkin, Founder of Melvin Capital Management

Plotkin, who had previously worked for billionaire Steven Cohen, said “overall it’s a pretty good environment for stocks.” The money manager also said he likes Las Vegas Sands and Worldpay Inc. That said, Plotkin said he has an “intense focus” on the short side and that most of his hedge fund’s profits have come from betting against companies. Plotkin said he’s skeptical about mall REITs as well as Tesla.

Scott Goodwin, Managing Partner, Diameter Capital Partners

Goodwin described Plastipak Holdings as the “big loser” as demand shifts away from plastics, and said he’s shorting its unsecured bonds as spreads should widen as the market digests its debt. Investors are staying away from guns lately, and plastic could be next, Goodwin said. “The sun is setting on the age of plastic packaging and Plastipak is the best way to express this short.”

Jeffrey Gundlach, Chief Executive Officer, DoubleLine Capital

Gundlach, who famously told attendees three years ago to prepare for a Donald Trump presidency, spent most of his presentation denouncing Joe Biden, Elizabeth Warren and other Democratic hopefuls. Short them all, he said of a dozen contenders polling at around 1 percent. Then he turned to the economy, saying interest rates cannot maintain the low volatility they’ve experienced in the past eight years, and recommended buying interest-rate volatility on long-maturity U.S. Treasuries via a put-call straddle on the exchange-traded fund TLT.

 

--With assistance 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 responsible for this story: Margaret Collins at [email protected] Josh Friedman, Paul Panckhurst

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