Harbor Investment Conference 2013: Picks from Ackman, Feldstein, McGuire and others

By Lawrence Delevingne

Thu Feb 14, 2013

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The charity fundraiser returned after stellar predictions last year.

Bill Ackman used his own charity investment conference yesterday to again recommend his much-followed positions, reiterating his contention that nutrition company Herbalife is a pyramid scheme, real estate group Howard Hughes Corp. was highly undervalued and retailer J.C. Penney was on the verge of a turnaround.

The Harbor Investment Conference in Manhattan was hosted by Ackman and Mark Axelowitz of UBS Private Wealth Management to benefit the Harlem-based education non-profit Boys & Girls Harbor.

Other speakers included Andrew Feldstein of BlueMountain Capital Management, who recommended shorts in the steel industry; and Mick McGuire of Marcato Capital Management, who recommended a diverse group of undervalued companies. Investors would be wise to listen: Marcato International gained 28.8% in 2012 and was U.S. equity fund of the year at the Absolute Return Awards this week; BlueMountain's Credit Alternatives vehicle was a finalist for credit and high yield fund of the year and was also nominated for an award measuring funds' five-year track records.

Specific recommendations at the Harbor conference last year did well, especially Bow Street Partners founder Howard Shainker's Rentech and Rentech Nitrogen Partners picks, which were up 101% and 71%, respectively, in the past 12 months. Saba Capital founder Boaz Weinstein also revealed what became known as the London Whale trade, a bet that become one of the most covered stories in the financial press in 2012 (See Looking back on one whale of a prediction by Saba).

The 2013 recommendations:

Name Firm Recommendation
Bill Ackman Pershing Square Capital Management Go short Herbalife (HLF). Go long Burger King (BKW), J.C. Penney (JCP) and Howard Hughes (HHC). Arbitrage opportunities continue with the Hong Kong Dollar. Long credit default swaps on European defaults. Not investing in Apple (APPL) given the difficultly predicting future cash flow.
Mark Cohen Stone House Capital Management Go long A.M. Castle (CAS)
Andrew Feldstein BlueMountain Capital Management Go short JFE Steel via CDS and short Fortescue Metals Group (FMG:AU) via equity and equity put options. Go long US Steel Corp. (X) equity while shorting its credit via CDS in a 1 to 6 ratio. Generally good to go long securitized credit and short unsecuritized credit, especially the bonds being bought by large mutual funds. Also go long volatility by going long cyclical stocks or using call options.
Mick McGuire Marcato Capital Management Go long GenCorp (GY), CyrusOne (CONE) and ProSafe SE (PRS:NO).
Howard Shainker Bow Street Partners Go long Nordion (NDZ).
Mona Sutphen UBS / former Obama aide Warned investors about underestimating several geo-political macroeconomic risks in 2013: increased friction between U.S. and China, more drama and lack of resolution from U.S. budgetary political showdowns, and international conflict spurred by cyber attacks.
David Weinreb The Howard Hughes Corp. Go long Howard Hughes Corp. (HHC)

ISSN: 2151-1845 / CDC10004H

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