The smart money gathered in Manhattan Wednesday didn’t spend their time pitching artificial intelligence venture bets or bitcoin-linked trading products.
At this year’s Sohn conference in New York, the biggest names in hedge funds — such as David Einhorn, Elliott’s Jesse Cohn, and Kirkoswald’s Greg Coffey — preached fundamentals and restraint.
Einhorn, the founder of Greenlight Capital, has long been known to use the Sohn stage to pitch bold short positions with colorful language, including a 2019 presentation when he said Tesla founder Elon Musk’s delivery promises were “a lot of horseshit.“
But on Wednesday, the long-time value investor chose to highlight a “boring essentials chemical business” from Belgium. Solvay, Einhorn said, has “a relatively high and stable margin, a high return on capital, and a good return of capital.”
Meanwhile, Greg Coffey — the macro trader dubbed the “Wizard of Oz” after his stellar run at GLG and Moore — advised younger traders to “trade smaller and let trends run longer.” As he reflected on the trading he did when he was starting out before and during the financial crisis, Coffey said he was once a “moneymaker” but has now shifted into being a “wealth manager.”
The Australian investor, who moved his firm Kirkoswald from London to New York in 2019 and is in the process of buying emerging-markets manager Emso to create a $13 billion manager, told the Sohn crowd that “we no longer take big swings now.”
“Most of our risk is in fixed income, a little bit of currency, and very little equities,” he said.
Even hedge funds that are constantly stirring the pot, such as Paul Singer’s Elliott Management and Bridgewater, were even-keeled. While Bridgewater founder Ray Dalio, who has transitioned out of the CEO position, got plenty of attention for a LinkedIn post Monday on why he’s still investing in China, the massive hedge fund’s co-CIO, Karen Karniol-Tambour, was less explosive in her comments at Sohn.
She told attendees that the firm favors US stocks over bonds and thinks gold and the dollar are somewhat overvalued, given the deficit in the US.
Jesse Cohn, the head of activism at Elliott, beat the drum for one of his firm’s holdings by focusing on the numbers and praising the management team. Etsy, which Elliott owns more than 10% of, will grow significantly just by “pulling a few levers” and staying on its path.
“There’s a lot of low-hanging fruit here,” he said and mentioned that Elliott partner Marc Steinberg, who is on Etsy’s board, helped Pinterest unlock its growth. The activist that has become a recurring nightmare for anxious CEOs across the country is not looking to burn anything down or start an M&A spree.
“You’ve got a durable business with real differentiation, you’ve got a strong management team executing,” he said.
“We see significant, multi-year upside here.”