Sohn Conference Highlights Diverse Investment Insights and Short-Selling Strategies

Key Takeaway

• Eric Wolff sees Pason Systems with a potential 45% to 180% upside, highlighting its dominant market position.
• Michelle Ross identifies Crinetics Pharmaceuticals as a top pick, with potential to nearly double, outperforming the biotech sector.
• Short-sellers target Sealed Air and Globe Life for significant debt and questionable practices, predicting substantial stock declines.

Investment Insights from Sohn Conference

The 2024 Sohn Investment Conference in New York brought together hedge fund managers to share their top investment ideas. The event, known for its market-moving potential, featured both established and rising stars in the hedge fund industry. Eric Wolff of Gumshoe Capital Management highlighted Pason Systems, an energy company with a significant market share in electronic drilling recorder solutions. Wolff sees a potential upside of 45% to 180% for Pason, emphasizing its near monopolistic status and superior service. Pason's shares have seen a 4% increase this year, with a notable 19% jump over the past month.

Michelle Ross from StemPoint Capital presented Crinetics Pharmaceuticals as a promising investment, with the potential to nearly double due to its focus on weight loss drugs and endocrine health. Ross pointed out Crinetics' significant market opportunity and its 200% outperformance over the last three years compared to the SPDR S&P Biotech ETF. The stock has risen by more than 31% this year.

Nikhil Daftary of NK Capital discussed Alimentation Couche-Tard, a Canadian convenience store operator with a strong presence in the U.S. Despite a 4.4% decline in stock value this year, Daftary praised the company's success and growth potential, likening it to major retail chains like Starbucks and McDonald's.

Short-Selling Perspectives

The conference also featured insights into short-selling strategies. Chris Drose of Bleecker Street Capital targeted Sealed Air, describing it as a company with a significant debt burden. Nate Koppikar from Orso Partners chose Globe Life as a short pick, criticizing its business practices and predicting a potential 50% drop in stock value due to regulatory actions. Fahmi Quadir of Safkhet Capital expressed a high conviction in shorting Adtalem Global Education, citing poor student outcomes and financial inefficiencies.

Street Views

• Eric Wolff, Gumshoe Capital Management (Bullish on Pason Systems):

  "Pason offers a superior service that is hard to duplicate. ... We think this is an excellent business that deserves to trade a healthier multiple than it does today... even if the multiple doesn’t expand, we can achieve 18% returns through cycle just based on the calendar for business."

• Michelle Ross, StemPoint Capital (Bullish on Crinetics Pharmaceuticals):

  "Crinetics... can tap into a multibillion-dollar potential U.S. market opportunity as it targets therapeutics for Cushing’s Disease and Congenital Adrenal Hyperplasia... She has a one-year price target of $88 for the stock, implying 92% upside, while her long-term price target of $339 suggests a whopping 665% upside for the company."

• Nikhil Daftary, NK Capital (Bullish on Alimentation Couche-Tard):

  "We believe Couch-Tard is one of the greatest success stories in public markets priced like a value stock... We believe the company can grow EPS in mid-teens growth rate for many years to come"

• Chris Drose, Bleecker Street Capital (Bearish on Sealed Air):

  Described Sealed Air as “a melting ice cube hiding in plain sight.”

• Nate Koppikar, Orso Partners (Bearish on Globe Life):

  Called Globe Life “one of the sleaziest businesses” he’s ever come across.

• Fahmi Quadir, Safkhet Capital (Bearish on Adtalem Global Education):

  Pointed out that Adtalem received nearly $2 billion in taxpayer funded subsidies last year but generates “horrendous student outcomes” with graduates unable to pay their debt back.