12:20 Ryan Heslop, Co-Founder & Portfolio Manager, Firefly Value Partners, LP: In 2006, Ryan Heslop co-founded the value focused long-short equity hedge fund Firefly Value Partners. Prior to Firefly, Ryan Heslop cut his teeth at Elm Ridge Capital Management, Fidelity Investments, and Putnam Investments. Ryan Heslop received a BA degree in Economics from Harvard University and an MBA from the Kellogg School of Management at Northwestern University. David Einhorn’s Greenlight Masters Fund is an investor in Firefly Value Partners.
Idea: Short Community Health Systems (CYH)
Benchmark: Short position in S&P 500 ETF
Thesis: Ryan Heslop thinks Community Health Systems will file for bankruptcy in the next few years and its equity will be worthless. According to Heslop CYH management’s compensation was based on revenue and EBITDA which led to a debt fueled acquisition spree where net debt grew from $2 billion to $16 billion. CYH is a rural hospital company and has been experiencing declining admissions, rising unit costs per bed, and declining profitability. Currently the company burns cash and the market believes the company will fail as its short ratio is above 41% of its float.
This would have been an impressive recommendation if Heslop pitched it 4 years ago when the stock was trading above $50 and hedge funds were tripping over each other to buy its shares. I remember Larry Robbins recommending this stock along with other hospital stocks at another investment conference. Currently the stock trades less than $3.50 and its market cap is below $400 million.
12:35 Laura Deming, Managing Director, Longevity Fund: Laura Deming is a venture capital fund manager investing in early stage companies that focus on therapies that could increase healthy human lifespan.
Idea: Long Precision BioSciences Inc (DTIL), ALX Oncology and Navitor Pharmaceuticals
Benchmark: Long position in S&P 500 ETF
Thesis: Pie in the sky. Research shows that certain worms and animals that went through certain gene mutations lived longer lives. An extension of this is that we may be able to extend human lifespan using gene editing technologies. If you are interested in this sort of stuff, you can check out Laura Deming’s website. Deming is invested in multiple early stage companies. DTIL is one of these companies that’s publicly traded.
I don’t think it is a good idea at all to initiate a long position in DTIL. I’d rather short this stock than go long. We cured cancer in animals 40 years ago, and yet we are still spending tens of billions of dollars in cancer research today.
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