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 John Lykouretzos, who runs $2.8 billion Hoplite Capital Management
Lp, disclosed his negative case against American Airlines, which
helped push the stock down as much as 4.7 percent on Thursday.
Calling the company the "most compelling short in the U.S. airline
industry," Lykouretzos said American's costs are too high, that it
is the most exposed airline to rising oil prices, and it has the
highest leverage compared to its peers.
An American airlines spokesman, Josh Freed, responding to
Lykouretzos, referred Reuters to recent comments from Chief
Executive Doug Parker on a company earnings call.
Parker on that call said American was “purchasing our shares because
we are bullish on the stock," and said “the industry is well
undervalued," adding, "We think American Airlines has more upside
than anyone else in the industry.”
Lykouretzos was one of a handful of prominent managers speaking at
the annual SkyBridge Alternatives Conference in Las Vegas, four
months into a difficult year where the average hedge fund has lost
money and some big-name investors are rethinking their commitment to
them.
The managers did not provide details on when they invested in
particular companies or at what price.
Fears about a possible recession in the United States and slower
growth in China have contributed to unpredictable markets that have
left many managers nursing losses.
But there are still good opportunities, the managers told the
conference where about 2,000 investors, managers and others crowded
in to hear who is picking what.
John Burbank, who runs $4.1 billion Passport Capital and has often
invested abroad, said he is betting on Tencent, calling it the
"dominant Internet play" with six of the most popular smart-phone
apps.
Clifton Robbins of $3.5 billion Blue Harbour Group said he likes
Xilinx and was buying more as recently as Thursday. He noted that
the company has some $2 billion in cash and said the stock is
undervalued, which would make a case for the company buying back
some of its own stock.
Activist investors like Blue Harbour have called on many chief
executives to buy back their own stock. Robbins also said Xilinx is
the last independent chip company after Intel Corp and Altera
merged. Xilinx's unique standing could prompt takeover bids, he
said.
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Jim Chanos, who runs Kynikos Associates and built his reputation on a successful
bet against Enron, spoke again about his short play on Cheniere Energy Inc,
saying the stock is still "crazy expensive."
Burbank said he's betting against large Chinese companies via the iShares China
Large-Cap ETF to hedge out some of what he called "old China risk."
Meanwhile, Scott Ferguson, who runs $4 billion Sachem Head Capital Management,
said his activist firm exited its bet on animal healthcare company Zoetis Inc in
the first quarter.
Sachem brought the idea on Zoetis to the attention of Pershing Square's William
Ackman and both made an investment in 2014. Ferguson said his fund had made
money on the bet and Zoetis was very responsive to the activists' suggestions,
but it was time to move on and find other opportunities.
Pershing Square recently reduced its holding in Zoetis.
Teresa Barger, chief executive officer of Cartica Management, repeated that her
firm is invested in Taiwanese company Voltronic Power.
Jeff Smith of Starboard Value spoke again about his firm's most prominent
investment, Yahoo Inc. Starboard recently reached an agreement with Yahoo under
which Starboard will get board seats. Smith said his job as a new board member
is to improve the strength of Yahoo's core business.
(Reporting by Lawrence Delevingne and Svea Herbst; Editing by Chris Reese, Tom
Brown and Leslie Adler)
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