'Fast Money' Recap: Fund Manager Surprises

NEW YORK ( TheStreet) -- NEW YORK ( TheStreet) -- Equities popped slightly higher on Wednesday's trading action following Federal Reserve Chairman Ben Bernanke's testimony on Capitol Hill.

On Wednesday's CNBC "Fast Money" show, the traders were reviewing some of the top picks from the Delivering Alpha Conference in New York. The conference hosted several big-name fund managers who revealed their top picks.

Jim Chanos created one of the biggest headlines by revealing he's short Caterpillar ( CAT). The fund manager cited weakness in China and in the mining industry as his reasoning behind remaining short the equipment maker.

Not so fast, said Pete Najarian. He added that while there is weakness in China and mining, Caterpillar has a lot more going on, particularly with construction in the United States. A lot of people seem to be forgetting that CAT is still a construction company and that should help to offset weakness in other areas and support the stock near $85.

Guy Adami agreed with Najarian's fundamental view, but thought the stock could potentially go lower, perhaps somewhere between $78 to $80. For that to happen, he said, the broader market would also have to have a moderate selloff and that he can't really see the stock going lower than that.

Leon Cooperman also created some buzz when he revealed his "Top 10 Picks," some of which included Express Scripts ( ESRX), Qualcomm ( QCOM), and SandRidge ( SD). Cooperman, who nailed all his picks last year, doesn't think the overall market prospects are as bright this year. However, he attempted a similar approach by picking several different stocks.

The panel immediately jumped on the Qualcomm call, with Adami saying he absolutely loved the company but that the stock action has been a little dicey of late. With an earnings report next week, he'd rather wait until then to hear from the company's management.

Najarian agreed, although he did question the company's margins in the future. While they're not under attack yet, they likely will be as Intel ( INTC) looks to become a more dominant player in the mobile chip market.

Finally, Nelson Peltz's idea was for PepsiCo ( PEP) to take over Mondelez ( MDLZ) to add to its portfolio of household snacks.

That said, shortly after Peltz spoke PepsiCo said that it was very satisfied with the performance of its own brands. But as Karen Finerman pointed out, what was the company supposed to say without looking weak? She added that Peltz was a good activist investor and worth the listening.

During the program, CNBC anchor Scott Wapner spoke to famed hedge fund manager Carl Icahn, who spoke about Dell ( DELL), which holds a shareholder meeting Thursday. Icahn said he felt "good" about the company's prospects although he called Dell's board one of the worst he's ever seen.

Icahn couldn't say much but he said as an activist investor he is trying block the company going private by trumping founder Michael Dell's share offer. Icahn said he sees value of $15 to $18 per share. His proposed deal would include four warrants for every share of common stock.

Icahn, the company's second-largest shareholder, said the board should just leave it up to the shareholders. He added that should he win the bidding war, he already has a CEO candidate in mind. Icahn told Wapner he doesn't chase "great" businesses and pay "retail" for them. Instead, he tries to uncover companies that are being left for dead but still have value.

Shifting focus to Netflix ( NFLX), Icahn noted that he hasn't sold one share yet. He also added that his son, who is a partner in his fund, threatened to quit the company if his father sold any of the fund's position. Since then Netflix has rallied about $100 per share.

Another stock Icahn hasn't sold is Herbalife ( HLF), which sparked a war of words stock between Icahn and Pershing Square Fund Manager Bill Ackman. Icahn still expects the shares to move higher in the future.

A recent report by the Federal Trade Commission has claimed some of Herbalife's practices are "disturbing," but it didn't seem to shake Icahn, who has made approximately $250 million so far on the trade. Icahn joked that he now likes Ackman because he's made Icahn a lot of money. He noted that he never would have looked at Herbalife if it weren't for Ackman.

Of the panelists, Adami thinks there's upside left in Netflix, but there's nothing wrong with taking a little profit off the table ahead of earnings. He also added that he's not really buying what Icahn is saying about wanting to own all of Dell and that he would remain neutral on it until everything has played out.

Finerman said she doesn't think you can play Herbalife to the short side, even if you do think it's overvalued.

Also during the conference, John Paulson, fund manager of Paulson & Co, said he is extremely bullish on residential housing and is mostly long through a private equity firm. Although the market is off its lows, there is still a lot of upside, he said, because real estate moves tend to play out for about seven years at a time.

Adami said he thought the best way to play housing is with Home Depot ( HD), and that Lumber Liquidators ( LL) is interesting ahead of earnings. He noted there is a large amount of short interest in the stock.

Finerman said she likes Realogy ( RLGY) because of its solid business model in the housing market.

With shares of Yahoo! ( YHOO) up 10% after reporting earnings on Tuesday, Najarian said the move might not be over. He said that in the options pit, it looks like a lot of traders are rolling up positions in order to lock in gains, while still remaining long the name.

For their final trades, Adami likes Celgene ( CELG) ahead of earnings, after it made another new all-time high Wednesday. Najarian is a buyer of Bank of America ( BAC), citing strong options trading after its earnings release Wednesday. Taking the opposite side, Finerman says to sell BofA after the nice upside run.

-- Written by Bret Kenwell in Petoskey, Mich.

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Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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