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High-profile investors bet on stocks tied to millennials - Sohn Conference

Stock Markets Apr 23, 2018 20:46
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© Reuters. Dylan Adelman, 2017 Sohn Investment contest winner, presents during the 2018 Sohn Investment Conference in New York

By David Randall and Svea Herbst-Bayliss

NEW YORK (Reuters) - Hedge fund managers at the high-profile 2018 Sohn Investment Conference in New York pitched stock ideas on Monday, ranging from online food ordering to homebuilders, that should benefit from the growing clout of the millennial generation.

John Khoury, founder and managing partner of $2.7 billion (£1.94 billion) hedge fund Long Pond Capital, revealed a long position in U.S. homebuilder D.R. Horton Inc (N:DHI), which he said should see a boost as more millennials age into the first-time home buyer market.

The country's largest homebuilder has been increasingly focused on its entry-level segment, which it told analysts in January should grow strongly over the next three years.

At least two investors, meanwhile, pitched online food ordering companies. Alexander Captain, who runs Cat Rock Capital Management, introduced Netherlands-based Takeaway.com NV (AS:TKWY) while Lin Ran, who runs Half Sky Capital, pitched GrubHub Inc (N:GRUB), the parent company of Seamless. She said GrubHub averages $30 per order and earns 15 percent of each order, as spending growth at restaurants is outpacing spending at grocery stores.

"I like to call this chart 'Millennials can't cook," Ran said, to laughter.

Millennials, a term for those born between 1981 and 1996, are expected to become the largest generation in the United States in 2019, according to estimates from Pew Research.

Jeffrey Gundlach, one of the world's most closely-watched investors, recommended a short position in social media giant Facebook Inc (O:FB) and a long position in the SPDR S&P Oil and Gas Exploration ETF (P:XOP).

"Facebook used to be a place people felt good going to," Gundlach said.

Facebook has come under pressure as the company acknowledged misuse of users' data.

Investors were confident about their stock picks at a time when the broad S&P 500 (SPX) has been lagging and retail clients have expressed nervousness about the durability of the stock market's long-running gains.

Khoury, from Long Pond Capital, suggested that D.R. Horton had more than 60-percent upside, while Ran, from Half Sky Capital, said that GrubHub could hit $160 a share, up nearly 55 percent from its Monday afternoon trading price of $103.25.

Among technology-focused investors, Glen Kacher, founder and chief investment officer at Light Street Capital, announced a long position in online security company Palo Alto Networks Inc (N:PANW), a stock he said has a 164 percent upside through 2020.

Chamath Palihapitiya, founder and chief executive officer at Social Capital LP, offered a bullish take on cloud management company Box Inc (N:BOX), predicting the stock could grow 10-fold over the next 10 years.

"If you believe in and if you care about A.I. [Artificial Intelligence] and its role in the world, be long Amazon (NASDAQ:AMZN), be long Google (NASDAQ:GOOGL), but be long Box," Palihapitiya said.

Organizers said they were expecting as many as 3,000 attendees at New York's Lincoln Center, making Sohn one of the most high-profile investment conferences of the year.

Against a background of more volatile markets and worries that some of the biggest hedge fund managers are nursing losses this year, many in the audience focused on the smaller, better-performing investors like Oleg Nodelman.

Nodelman, founder and managing Director of EcoR1 Capital LLC, whose fund returned a reported 53 percent last year, announced a long bet on drug company Ascendis Pharma A/S (O:ASND).

High-profile investors bet on stocks tied to millennials - Sohn Conference
 

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