Market Optimism at Sohn Investment Conference Meets Reality: ASML and Natera Shine, Etsy and Solvay Struggle


Top Sohn Conference Picks Reveal Growth Potential Amidst Market Challenges, Highlighting Sectors from E-Commerce to Aerospace.

By Bill Bullington

4/3, 17:42 EDT
ASML Holding N.V. - New York Registry Shares
Etsy, Inc.

Key Takeaway

  • ASML and Natera stand out with 29.5% and 47% YTD increases, respectively, highlighting potential in semiconductors and healthcare.
  • Etsy's 19.6% YTD loss contrasts with optimistic investment views, reflecting broader e-commerce challenges.
  • Solvay's dramatic 70% annual decline questions the stability of recommended European chemical investments.

Market Optimism Meets Reality

The 2024 Sohn Investment Conference in New York showcased a variety of investment ideas from top hedge fund managers, ranging from e-commerce platforms to semiconductor and chemicals companies. While the conference highlighted potential growth opportunities, a deeper analysis reveals underlying challenges and risks that could dampen investor enthusiasm.

Semiconductor Sector's Uncertain Future

Vijay Shilpiekandula of Duquesne Family Office presented ASML, a Dutch semiconductor company, as a top stock idea, citing its role as an "R&D powerhouse" and its attractive growth-adjusted basis. Despite ASML's impressive 29.5% year-to-date increase and its fourth-quarter earnings beat, Shilpiekandula's anticipation of future catalysts, such as high-bandwidth memory and generative AI, introduces a layer of uncertainty regarding the company's long-term earnings potential amidst a fiercely competitive semiconductor market.

E-Commerce's Struggling Giant

Etsy, highlighted by Jesse Cohn of Elliott Investment Management, is portrayed as an undervalued entity with a "really good business model." However, the platform's 19.6% year-to-date loss signals ongoing macroeconomic struggles and consumer spending challenges post-Covid. Cohn's optimism about Etsy's future growth potential seems to clash with the reality of its recent underperformance compared to the broader market.

Chemicals Company's Stagnant Performance

Seth Fischer of Oasis Management pointed to Kao, a Japanese global chemicals company, as an underappreciated buying opportunity. Despite Fischer's belief in the company's potential for growth through global marketing initiatives, Kao's flat performance this year, contrasted with the Nikkei 225's significant gains, suggests a disconnect between potential and actual market realization.

European Chemicals' Dim Outlook

David Einhorn of Greenlight Capital introduced Solvay as his top investment idea, emphasizing its market leadership and attractive valuation. Yet, Solvay's shares have fallen more than 3% year to date, with a staggering 70% tumble over the past year. This stark decline raises questions about the stability and future prospects of what Einhorn considers a higher margin and stable commodity chemical business.

Healthcare's High Hopes

Michael Buckley from Duquesne Family Office presented Natera, a medical diagnostics company, as having significant upside due to its oncology business. While Natera's shares have surged more than 47% this year, Buckley's optimistic view on the company's potential to improve patient outcomes and lower system costs must be balanced against the broader challenges facing the healthcare sector, including regulatory hurdles and market saturation.

Aerospace's Ambitious Bet

Mohammed Anjarwala of Advent Global Opportunities discussed Carpenter Technology as an underappreciated play in the aerospace industry. Despite Carpenter's position as a leading supplier and its 3.6% increase this year, Anjarwala's expectation for the stock to trade at $200 per share hinges on the uncertain future of global travel and the aerospace industry's recovery.