Some of the world's most successful hedge fund managers gathered in Manhattan on Monday to share their investing strategies on everything from the U.S. housing market to when to do business with Vladimir Putin.
Many attendees at the 19th Annual Ira Sohn Investor Conference plopped down $4,000 a piece to hear tips from these titans of finance. Here are five top tips you can follow in case you weren't able to swing that ticket price.
1. Einhorn still hates tech stocks
Billionaire David Einhorn isn't backing off from his recent claim that soaring tech stocks are in bubble territory.
The founder of Greenlight Capital sought to illustrate his point by focusing on athenahealth (ATHN), whose shares have skyrocketed 120% since November 2012.
The provider of technology services for medical practices is "caught up in a bubble and could easily" plunge 80% or more from its recent peak, Einhorn said.
The hedge fund giant draw laughter by showing a series of video clips that poked fun at Jonathan Bush, the animated athenahealth CEO and a cousin of former president George W. Bush.
Einhorn said athenahealth's lofty valuation doesn't match up with its disappointing financial results, and he knocked Morgan Stanley for overly optimistic expectations for the stock's performance.
"This is what passes for conservatism during a bubble," Einhorn said, whose call sent athenahealth tumbling 12%.
2. There's money to be made in Russia
While many investors are slashing their exposure to Russia, James Grant believes there's good reason to kick the tires of Gazprom, Russia's state-owned energy behemoth.
In a decidedly contrarian call, the founder of Grant's Interest Rate Observer told the crowd: Gazprom "may or may not be a bad company," but low valuations suggest its "many imperfections seem to be priced in."
Geopolitical concerns have hammered Russian assets, with investors fearing punishing sanctions from the U.S. and an escalation of violence. But Grant quoted from Baron Rothschild, who famously said "the time to buy is when there's blood in the streets."
Grant knocked Gazprom's corporate governance structure, which gives Russia's government control of 50% of the London-listed company.
"There is no more reviled business than Gazprom," Grant said, calling it "Herbalife without Carl Icahn" and suggesting it's the "polar opposite investment" of Tesla Motors (TSLA).
Still, he noted Gazprom is the world's largest gas producer, it owns 17% of global gas reserves and trades at a hefty discount to average analyst price targets.
3. Oil prices are heading South
Surging U.S. oil production should send crude oil prices sharply lower in the coming quarters.
That was the message from Point State Capital's Zach Schreiber, who believes U.S. crude will continue to trade at a sharp discount to global prices.
"U.S. crude oil is being drilled for by the same cast of characters that oversupplied the U.S. natural gas market. We just saw this movie. Why should we expect a different outcome," said Schreiber.
He noted the bullish oil bet has become awfully crowded, with a $33 billion net long position in U.S. crude contracts.
"If you're long, I'm sorry for you. Maybe this makes you comfortable. At least you've got friends," Schreiber said. "Or it could make you feel scared. I'm sure it will be a very smooth exit when all these clowns get out of the Volkswagen."
4. Housing market bouncing back? Think again
Jeffrey Gundlach believes housing prices are set to tumble to new lows because affordability is a myth, borrowing costs will spook potential home buyers and young people may continue to rent instead of buying.
"This is a generational preference. Young people were shocked and scarred by the housing collapse," said Gundlach, founder of Doubleline Capital.
He pointed to the high percentage of people who moved back in with their parents amid the poor job market and high levels of student debt.
"The kids aren't alright," he said. "There are no first-time buyers. Where are they?"
Gundlach also cited the large amount of homes that have been purchased with cash by investors and other speculative buyers.
"This is not exactly indicative of organic growth in the market from real buyers," said Gundlach.
Gundlach urged investors to short the SPDR S&P Homebuilders exchange-traded fund (XHB), which he believes "looks very tired." He said this ETF should correlate very closely with lumber prices, which have tumbled.
5. Ackman's still likes Fannie and Freddie
Bill Ackman took a break from his campaign against Herbalife (HLF) to make the case for keeping Fannie Mae and Freddie Mac alive despite their enormous crisis-era losses.
Instead of unwinding Fannie and Freddie, Ackman believes it would be far wiser for Congress to reform them. He suggested jacking up required capital ratios, forcing the entities to exit risky businesses and improving corporate governance.
Fannie and Freddie have an "80-year track record, global market acceptance for their paper, a workforce that knows the business and earnings stream that generates capital even in bad times," he said.
Ackman said Fannie and Freddie are conservatively worth $23 and could be valued at as much as $47, compared with just $4 now (these two do trade, but only "over the counter," not on a national stock exchange).
"It's time to get off our fanny," said Ackman, whose hedge fund owns about 10% of Fannie and Freddie's common stock.
Fund managers are barely paying attention to the drama in Washington, because they say it's impossible to make bets ahead of a debt resolution. And nearly every fund manager expects a resolution, even if it goes down to the wire.
"I'm still of the camp that this will get solved at the very last minute, and until then, there's nothing to do," a manager of a $6 billion hedge fund MOREMaureen Farrell - Oct 7, 2013 3:44 PM ET
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.
Hedge fund manager Bill Ackman is having a rough year. But don't shed too many tears for him ... not that you probably would anyway, given that he's a billionaire and all.
Yes, Ackman's Herbalife (HLF) MOREPaul R. La Monica - Aug 13, 2013 12:57 PM ET
As the housing market heats up, so is competition among home improvement retailers.
A day after Home Depot (HD) delivered earnings and revenue that were much better than forecasts and raised its guidance, Lowe's (LOW) reported a weaker-than-expected quarterly profit for the first-quarter on declining sales.
Lowe's CEO Robert Niblock blamed "cooler than normal temperatures and greater precipitation" for the soft sales figures. In contrast, Home Depot CEO Frank Blake said his company continued to MOREHibah Yousuf - May 22, 2013 1:14 PM ET
Hedge fund managers might like Chipotle's burritos, but some are betting against the company's stock.
Last October, Greenlight Capital's David Einhorn revealed a bet against Chipotle Mexican Grill (CMG). On Wednesday, bond fund manager Jeffrey Gundlach of investment firm DoubeLine Capital joined him in talking down the fast food chain.
"I like the products," Gundlach admitted. Yet, he said, "A gourmet burrito is an oxymoron. All you need to compete with its MOREMaureen Farrell - May 9, 2013 12:16 AM ET
The gold bugs have come out to play.
Gold bounced back Monday after taking a massive beating over the past week or so.
Early Monday, gold prices popped back above $1,400 for the first time in a week. Prices are still a far cry from their record $1,900 level but the modest bounce is encouraging for gold bugs.
It was exactly one week ago that gold prices plunged more than 9% in their MORECatherine Tymkiw - Apr 22, 2013 12:02 PM ET
It's a tough week to be a retailer in search of customers. First, the shares of J.C. Penney (JCP) cratered after the Ron Johnson-led retailer reported abysmal fourth-quarter numbers Wednesday night.
Next up: Sears (SHLD). The iconic retailer can't turn a profit or get customers excited about its merchandise or Kmart's. After reporting yet another quarter of steep losses early Thursday, Sears' stock dropped nearly 5%.
Releasing results so close to JCPenney at least makes MOREMaureen Farrell - Feb 28, 2013 3:15 PM ET
It's Herbalife's turn.
As hedge fund titans Bill Ackman and Dan Loeb square off over the company's sales practices, the company's top executives played defense.
"We are confident that you will see that we're a legitimate company with legitimate customers," Herbalife CEO Michael Johnson told investors and analysts gathered at the Four Seasons in midtown Manhattan Thursday. Johnson called the opportunity to address the crowd "unusual but incredible."
Ackman, who runs Pershing MOREMaureen Farrell - Jan 10, 2013 10:31 AM ET
This article was published in the December issue of Money magazine.
The world of hedge funds may be shrouded in secrecy. But savvy investors can profit handsomely by following the public moves of some of the industry's high-profile players, especially as many are taking a more active role in cleaning up troubled companies.
In July 2011, Carl Icahn, one of the most famous "agitator" investors, put pressure on cellphone maker Motorola Mobility MOREPaul R. La Monica - Nov 28, 2012 9:45 AM ET
Hedge funds are betting on a disaster hitting the financial markets within the next several quarters, with managers holding onto historic levels of cash.
That so-called dry powder gives them the cash they need to quickly jump in if markets sell off, according to numerous hedge fund managers and industry consultants.
"Most hedge funds I see are carrying lower market exposure than I've seen in some time," said Brad Balter, MOREMaureen Farrell - Aug 23, 2012 8:01 AM ET
|Egyptian billionaire offers to buy island for refugees|
|Princess Charlotte: Four months old, worth $5 billion|
|Jessica Alba's Honest Company sued for alleged false labeling|
|Google: New Chrome is faster and will save your battery|
|Apple beaten on rumored iPhone 6S feature by an orange September 04|