The conference often attracts managers who rarely speak to the public.
We attended the event, held on May 27, so you didn’t have to. Exclusivity, however, does not guarantee great results. As Barron’s notes in its current issue, the performance of nearly all the picks presented at last year’s conference was dismal. Perhaps that explains why so few of last year’s speakers came back for another go-around this year. Only David Einhorn, of Greenlight Capital, managed to earn a return worthy of his pay. Last year, Einhorn told attendees to sell short shares of investment bank Lehman Brothers. Less than four months later, Lehman filed for bankruptcy. Anyone who acted on Einhorn’s advice earned a return of nearly 100%. Activist investor Bill Ackman, who is best known for his quest to get seated on Target Corp.’s board of directors, has taken a shine to a troubled owner of shopping malls. Ackman, whose hedge fund is called Pershing Square Capital Management, says he thinks General Growth Properties (GGWPQ.PK) will emerge from bankruptcy reorganization in a strong enough position to benefit investors daring enough to buy its shares. Stockholders “can make a lot of money in a bankruptcy as long as the assets are worth more than the liabilities,” Ackman says. General Growth’s properties, which include more than 200 shopping malls in 44 states, are still generating plenty of cash, he says. General Growth sought bankruptcy protection because it couldn’t refinance its mortgages during the financial crisis, not because its business is unsound. Shares of the real estate investment trust closed at $1.31 on May 27. Ackman thinks the stock is worth $10 a share in a bankruptcy-court decision that does not involve liquidating the company — his most pessimistic scenario — and as much as $30 if court rulings favor General Growth. Jim Chanos, of Kynikos Associates, the short seller who famously uncovered fraud at Enron in 2001, now has a bone to pick with for-profit educators and health-care companies. “There’s a new sheriff in town,” Chanos says, referring to President Obama. He thinks the administration views health care and education as rights that should be available to all citizens. Therefore, the government will squeeze profitability out of for-profit education and health-care companies. Chanos is bearish on national for-profit educators, such as Apollo Group (), owner of the University of Phoenix chain. And he says that Lincare (LNCR), which provides oxygen services to patients in their homes, is “the poster child” of the type of company that will suffer as the administration seeks to curb health-care costs. Apollo closed May 27 at $50.85 and Lincare closed at $22.60.
David Sokol, chairman of MidAmerican Energy Holdings, a subsidiary of Berkshire Hathaway and one of a handful of men who is in the running to succeed Berkshire’s Warren Buffett, was the only presenter who was not a hedge-fund manager. Sokol says that the housing market won’t stabilize until 2011.