Given that various leading hedge fund managers gathered at the Invest For Kids Chicago conference on October 27, Insider Monkey has put together a list of some of the stocks and associated thesis mentioned. Among the speakers that attended the event were John Lykouretzos of Hoplite Capital Management, Matthew Halbower of Pentwater Capital Management, Ed Garden of Trian Partners, and Josh Wolfe of Lux Capital.
Without further elaboration, let’s go over at some of the stocks that the speakers pitched at the conference, which include Bank of New York Mellon Corp (NYSE:BK), Turquoise Hill Resources Ltd (NYSE:TRQ), Sealed Air Corp (NYSE:SEE), NVIDIA Corporation (NASDAQ:NVDA), and Dell Technologies Inc (NYSE:DVMT).
Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track around 750 investors, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).
Ed Garden of Trian Partners, who is bullish on Bank of New York Mellon Corp (NYSE:BK). Trian has around $1.3 billion invested in the stock because the fund thinks that Bank of New York Mellon is underappreciated by the market, has good capital, scale, and provides essential infrastructure. In addition, Trian thinks that there are opportunities to improve efficiency and operations with cyclical upside as a potential bonus. In terms of improving operations, the fund notes that Bank of New York Mellon Corp (NYSE:BK) has a leaner expense structure than before, an action that has increased margins and earnings per share. Warren Buffett’s Berkshire Hathaway owned over 20.8 million shares of Bank of New York Mellon Corp (NYSE:BK) at the end of June.
Next on our list is Matthew Halbower, the manager of Pentwater Capital Management, who is bullish on Turquoise Hill Resources Ltd (NYSE:TRQ). Halbower likes Turquoise Hill Resources Ltd (NYSE:TRQ) because the stock is currently trading at an enterprise value of negative $3.1 billion when factoring in the miner’s balance sheet of $1.4 billion in cash, $4.1 billion in receivables from Rio Tinto, and no debt. As Phase 2 development of a massive underground mine in Mongolia nears completion in 2021, Pentwater estimates that the stock could trade for 7x EBITDA at that time, or roughly $8 per share. Halbower also thinks that there is a probability that Turquoise Hill could be taken private sooner, with Rio Tinto potentially participating. If that happens, the fund estimates a take-private price could be around $6 per share.
In addition to being bullish on Turquoise Hill, Pentwater Capital is also long Dell Technologies Inc (NYSE:DVMT), a tracking equity for VMware. Although tracking stocks typically trade at a 10% discount, Dell Technologies Inc (NYSE:DVMT) currently trades at 35% discount to VMWare due to the fact that Dell isn’t an investment grade issuer on the account of its debt. Pentwater is long because the fund notes that Dell is rapidly de-levering, and thus could be investment grade soon. If that happens, the tracker discount could narrow. In addition, there is the possibility that Silver Lake might IPO its Dell shares, in which case there is another probability that the tracker might be bought out at a premium.
On the next page, we will examine what John Lykouretzos had to say about Sealed Air Corp and what Josh Wolfe thinks about NVIDIA Corporation.