Whenever the annual Sohn Investment Conference comes to town, it brings along many interesting investment ideas from some of the most brilliant minds and rising stars in the investment world. The 2024 Sohn New York Conference was no different featuring well-known names like David Einhorn of Greenlight Capital, Karen Karniol-Tambour of Bridgewater, Seth Fischer of Oasis Management, Michelle Ross of StemPoint Capital, Scott Goodwin of Diameter Capital, and many others.
Gabe Plotkin, chief investment officer and portfolio manager of Melvin Capital Management LP, speaks … [+]
Here are some of the best ideas from the 2024 Sohn New York Conference.
Rising star: Michelle Ross on Crinetics Pharmaceuticals
Like in many other years, this year’s Sohn New York conference kicked off with several “Next Wave” speakers, which are some of the rising stars in today’s hedge-fund scene.
StemPoint’s Michelle Ross started off by highlighting GLP-1 drugs, a hot investment idea that’s been circulated for a while and used it as a jumping-off point for her idea: Crinetics Pharmaceuticals. The company is developing treatments for a broad range of endocrine diseases, a health area in which she sees multi-billion-dollar potential just in the U.S. alone.
GLP-1 drugs were developed to treat diabetes, but their use has since been expanded to include obesity. Ross also mentioned Lipitor, perhaps the most well-known statin drug used to treat high cholesterol. She believes the demand for GLP-1 drugs will play out similar to the demand for statins — a drug class she estimates that nearly 40% of U.S. adults are prescribed.
Ross described Crinetics Pharmaceuticals as “a pioneer in endocrine medicine” and a “GLP-1-adjacent investment” that should benefit from the tailwinds of the growing obesity market. In the coming months, she’s anticipating Phase 2 clinical data on the company’s treatments for congenital adrenal hyperplasia and Cushing’s disease. She also expects Crinetics to file an application with the FDA for a treatment for acromegaly, seeking launch approval in 2025.
Ross’ target price for Crinetics is $88 a share, suggesting 92% upside, with a long-term target of $339 a share.
Rising Stars: Nikhil and Krish Daftary on Alimentation Couche-Tard
Nikhil and Krish Daftary of NK Capital pitched the convenience-store operator Alimentation Couche-Tard. Despite its Canada stock listing, most of the company’s profits come from the U.S., where it runs the second-largest convenience-store chain.
Nikhil Daftary described the company as “one of the greatest success stories in public markets priced like a value stock.” He expects Alimentation Couche-Tard to become one of the largest retail chains in the world.
More broadly, he discussed the gas-station industry, which he said has done incredibly well since 2007, with returns in line with Microsoft
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David Einhorn on Solvay
The well-respected Greenlight Capital chief David Einhorn presented his idea for Solvay, a Belgian chemicals company. He said the company is a prime example of why now is such a great time to be a value investor. Einhorn explained that there’s less competition for value stocks like Solvay, so there is a larger number of value names to choose from, versus in past years when the investment world was flooded with investors seeking value stocks.
Solvay recently went through a restructuring that Einhorn believes made it stronger. The company sells soda ash, which is less volatile than most commodities. With soda ash rising over time, he believes Solvay is a great play on this idea. Company management believes soda ash prices are or will reach a trough in 2024, and Einhorn agrees.
Solvay also holds a 17% share of the peroxide market, for which it is the lowest-cost producer. Einhorn also believes the company has above-average management for a European chemicals company. He thinks Solvay is also less cyclical than competitors.
Scott Goodwin on New York Community Bank
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Scott Goodwin of Diameter Capital explained why he’s long on the distressed New York Community Bank — or what’s left of it anyway. Most of the firm’s $32 billion pool was sold to JV partners and Blackstone
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NYCB acquired deposits from the now-defunct Signature Bank, 9% of which were uninsured. Two days before the FDIC took control, 20% of the bank’s insured deposits were left. The bank now has about $60 billion in assets, half of them in CRI loans and the other half in capital loans. In September, NYCB sold to Goldman Sachs
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Goodwin explained how the failure of Silicon Valley Bank had a major impact on New York Community Bank, and a lot of assets were sold later. While many of the bank’s loans have maturities in the next few years, most are five to seven years out. He also expects an 8% default rate on NYCB’s CRE loans, versus the average firm at 2%.
Goodwin emphasized that this idea is a long-duration play over the next five years.
Jesse Cohn on Etsy
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Jesse Cohn of Elliott Investment Management shared his thesis for Etsy, which he said has significantly higher customer-loyalty scores than comparable companies. Etsy operates a marketplace for unique, creative, handmade goods, which means “it doesn’t compete on price or cheaper shipping.” Cohn also noted that Etsy’s storage also works differently than Amazon’s
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He highlighted the retailer’s cash flows and noted its past problems. According to Cohn, Etsy stumbled in 2017, but when Josh Silverman was appointed as CEO in May 2017, he turned things around. He added that the online retailer recorded booming sales during COVID but has since experienced a post-COVID slowdown, just as many e-commerce companies have.
Cohn did note that Etsy is still out of favor now, with an EBITDA multiple of only 11 times. Nonetheless, he believes the company is still the same Etsy, which is what makes him an exciting pick for him, especially due to its uniqueness.