Friday’s $3500-a-head Sohn Hearts & Minds conference at the Sydney Opera House will be the latest chance to hear from some of the world’s leading fund managers about where they are putting their money at a time when world markets are the most volatile they have been for some time.
Leading New York fund managers Daniel Loeb, founder and chief executive of the $US12bn ($18.4bn) global hedge fund Third Point, and controversial Ark Invest founder and chief executive Cathie Wood will deliver the heavyweight view from Wall Street.
Both are very different fund managers with very different takes on the world.
Wood has carved out her own path, known for taking big bets on tech companies such as Elon Musk’s Tesla, Zoom Video Communications, US sports betting company DraftKings, and Roku, a Silicon Valley-based company that manufactures streaming devices, smart televisions and smart home products.
Wood is a “bet the farm” – some might say high conviction- style – investor with Tesla, Coinbase, Zoom, Roku and New York-based robotic process automation software company UiPath making up almost a quarter of Ark’s total holdings.
Her top 10 stocks also include Block, parent company of Square (famous in Australia for its $US29bn purchase of buy now, pay later company Afterpay), online game platform Roblox, communications company Twilio and cancer detection company Exact Sciences.
Wood is best known for her early support of Tesla, which she still predicts could reach as much as $US2000 a share by 2027 – almost 10 times its current levels.
But the fall in US tech stocks has seen many of her picks take a dive this year, and brought out the critics – some of whom have noted that her fund recently has been a seller of Tesla, despite her cheerleading.
But has the big fall in tech stocks, precipitated by the global tightening of interest rates, had its day? Is the worst over? Is it time to get back into the tech sector?
Investors will be analysing her words, but will need to be aware of her well known biases to the sector – and be ready for a wild ride if they back her stock tip.
Loeb will have a more conventional, but highly informed view of the markets. His comments on Friday will come after his latest quarterly investor letter, released on Wednesday, noted that investors currently had an “obsession” for companies with balance sheet strength, which he says could put pressure on more leveraged companies to sell assets.
“This is a growing area of focus for the investment team, as major systematic moves generally create great idiosyncratic opportunities that can only be uncovered through old-fashioned fundamental research,” he says in the letter.
He says investment returns are to be had by working out which companies had real debt problems and which ones had “perceived leverage problems”.
Loeb’s message is one for our times – a recognition that investors now have to reshape their thinking for an era when interest rates can be expected to remain high for the foreseeable future, driven by ongoing inflationary pressures around the world.
While growth stocks were all the go during the long period of low interest rates, focus on corporate debt levels and the ability of companies to service them are a hallmark of current-day investors.
But Loeb’s more conventional approach to investing has seen his fund miss the boom in stocks related to artificial intelligence this year.
Loeb’s best-performing stocks over the third quarter included UBS, Vistra, Shell and Danaher. His top five losers over the period included Pacific Gas and Electric Co, Microsoft, rental car company Hertz and luxury brands business LVMH Moet Hennessy Louis Vuitton.
The role of artificial intelligence is expected to be one theme of discussion on Friday, both in its potential to create winners in specific stocks and its broader implications for the corporate world.
Originally founded in New York, the Sohn conferences see investors pay up – in this case $3500 a head – to hear the stock tips of leading fund managers, with the money raised going to medical research.
The conferences started in Australia in 2016, with backers including former UBS chief investment banker Matthew Grounds, his former UBS colleague Guy Fowler, and Sydney investor Gary Weiss.
The Australian is a media partner of the conference.
For more information go to sohnheartsandminds.com.au
More Coverage
ASX 200 falls; MinRes, Nuix tank as CBA slips
Embattled MinRes' decision to stop Bald Hill mining operations to impact 300 jobs. Nuix down despite CEO assurance. Magellan top executive exits. CBA results meets expectations. Aristocrat lifts dividends. James Hardie outlook better. WiseTech hit with class action.
Why Dr Doom isn’t so gloomy on Trump
Nouriel Roubini may be known as ‘Dr Doom’, but he believes the incoming Trump Administration will choose to moderate its economic policies rather than face the bond market vigilantes.