Real Money's Carleton English and James Passeri will be keeping readers up to date with the latest news from Wednesday's annual Sohn Investment Conference, with the market outlook of some of Wall Street's most influential investors.
Highlights from the morning's "Next Wave" segment included a presentation by David Rosen, a former investor with SAC Capital, on his firm's long position in Kraton Performance Polymers (KRA) - Get Report . Nick Danaher, founder of Domando Capital, and Precocity Capital's Nick Tiller presented their bull takes on TripAdvisor (TRIP) - Get Report and Royal Dutch Shell (RDS.A) , respectively. Meanwhile, Genevieve Kahr of Ailanthus Capital Management went short on inflight Internet provider Gogo (GOGO) - Get Report , citing mounting competitive headwinds, and characterizing the company as "a minnow swimming with sharks."
The first session of the Sohn Conference was highlighted by a dismal outlook on Bank of the Ozarks (OZRK) by Muddy Waters' Carson Block, which quickly sent shares into a tailspin after Block argued the company could not sustain its earnings growth, primarily on the inherent risk in construction lending.
Larry Robbins of Glenview Capital Management advised investors to "get a grip" of fundamentals as markets increasingly appear unpredictable.
The session closed with venture capitalist Chamath Palihapitiya presenting a bull case for Amazon, arguing the company has a monopolistic position on the roiling Silicon Valley market with Jeff Bezos' proprietary cloud technology.
The next session will include Starboard Value CEO Jeffrey Smith, VR Capital's Richard Deitz, Duquesne Family Office's Stanley Druckenmiller, and DoubleLine Capital CEO Jeffrey Gundlach.
The final round of speakers kicks off at 4 p.m. and includes PointState Capital's Zachary Schreiber, Commonwealth Capital's Adam Fisher, and David Einhorn, founder and president of Greenlight Capital. And the day will wrap up with a presentation by Kynikos Associates' James Chanos.
The Sohn Conference is often a hub of market-moving intelligence, such as last year's presentation by David Einhorn, in which his bearish take on the fracking industry helped send shares of Pioneer Natural Resources (PXD) - Get Report into a 4% slide on the day.
3:30 p.m. ET
- Gundlach: The Awful Art of Negative Interest Rates; Pondering a Trump Presidency
Jeffrey Gundlach, founder of DoubleLine Capital, opens by comparing negative interest rates to the works of Bridget Riley, whose art has a disorienting effect, similar to seasickness, which he says makes one wonder why anyone would gaze upon it. He attacks negative interest rates and the $7.8 trillion in negative-yielding bonds outstanding, which has turned central bankers into Bridget Rileys, Gundlach says.
The hedge fund manager's main investment idea is shorting the utilities index while going long mortgage REITs, as the former has a higher price-to-earnings yield than the latter. Also, the dividend yield on REITs is more advantageous, according to Gundlach's analysis. He also refuted the common belief that utilities are a safe bet by sharing a chart that tracked volatile returns over the last roughly 20 years.
Finally, Gundlach got to the heart of an issue weighing on Americans' minds following the Indiana primary: the increasing likelihood of a Trump presidency. The Republican candidate has not shown restraint in attacking opponents, and Democratic candidate Hillary Clinton provides a bottomless well of material for Trump, he says. If there is one bright side to a Trump presidency, Trump has proven in his business dealings that he is not adverse to debt and many of his presidential policies will surely involve debt, Gundlach says.
2:50 p.m. ET
- Dietz: Clear Path Ahead for Greek Banks and Bonds
Richard Deitz's presentation was both surprising and not at all surprising when you consider what his fund, VR Capital Group, does.
When a fund says it focuses on distressed debt in emerging markets, the options will likely not be desirable to your average retail investor. With that in mind, Deitz presents a long case of Greek banks and Greek government bonds. He didn't shy away from his choice being controversial.
"In short, Greece seems to be to financial risk what Steph Curry is to the three point shot," Deitz says.
Before Dietz delved into the details, he gave a brief history lesson. Few will remember when Greece's real GDP grew at 7% in the years between 1999 and 2008, as cheap money flew into the country. Unfortunately, we all remember what happened next. The party stopped at the end of 2008 and into 2009, and Greece was severely affected. Greece received a bailout from the International Monetary Fund in 2010, another one in 2012, and it received a third in 2015. (The third bailout occurred after former Greek Finance Minister Yanis Varoufakis, an "erratic Marxist," played a high stakes game of poker against his German counterpart, Wolfgang Schäuble, and the German called his bluff, Deitz says.)
As for the upside to Greek banks, Deitz says the third bailout provided VR Capital's entry point. Provisions of the bailout program consisted of conservative assumptions layered on top of each other to create a good margin of safety, Deitz says. He notes that the banks are better capitalized today and are reducing their operating costs through consolidation and other right-sizing measures. The path and timing of Greek banks and Greek debt meting Deitz's projections may be uncertain, but Deitz believes the path is clear.
2:35 p.m. ET
- Druckenmiller: The Fed Has 'No Endgame'
Stanley Druckenmiller, CEO of Duquesne Family Office, argues that U.S. central bankers have been "stumbling" in a shortsighted course of maintaining low interest rates.
"If we have borrowed more from our future in any time in history, we should be selling at a discount, not at a premium of valuations," Druckenmiller says, adding that the country's "myopic policymakers have no endgame."
1:55 p.m. ET
- Smith: It's Time to Buy Depomed (DEPO) and WestRock (WRK)
Jeffrey Smith, CEO of activist hedge fund Starboard Value, emphasized his firm's bullish stake in two companies at the 2016 Sohn Investment Conference Wednesday: Depomed and WestRock. (For the full story, click here.)
See full coverage from the Sohn Investment Conference here. The event brings together some of the top minds in the financial world for a day of sharing investment ideas. It is held in honor of Ira Sohn, a Wall Street professional who lost his battle with cancer when he was 29. Proceeds from the New York conference, as well as other conferences the Sohn Conference Foundation holds, are dedicated to the treatment and cure of pediatric cancer and other childhood diseases. The foundation has so far raised more than $65 million.