Delivering ALPHA is a major financial conference in New York City, annually. This year it took place on Wednesday July 18, 2018. This is the 8th conference of its kind, and has been supported by two main sponsors, CNBC and Institutional Investor. It brings many of the world's top hedge fund managers together, in order to clarify trade ideas and market trends. Many of the year's best trading opportunities are presented here for the first time. However, not every idea is a 10-20X winner, in fact, some are indeed money losers. Part of the challenge is trying to figure out which is which. This year was no different. The future of Cryptocurrency and Solar energy plays were at the forefront. See our conference highlight notes below and do your own research. Enjoy the following ideas from the top 8 speakers at this year's event, they may become money makers!
1) Jim Chanos, founder of Kynikos Associates, explained how his views on Tesla as a short target are still strong in conviction. A public allegation, that came out of Twitter had CEO Elon Musk accuse Business Insider journalist Linette Lopez, of working for Kynikos partners and delivering insider information. Live on camera, Jim Chanos denied any involvement with Linette, and stated that "he speaks to many journalists all the time. However, he never pays these same journalists for any information. This includes never paying for insider information." If you have serious charges, you should follow up with serious evidence. Elon Musk so far, has not done this. In a similar manner previously, they were sued by Tesla for liable, but they were just repeating what was already public record in the 10K statements. The cases against Kynikos Associates were all won.
2) Ken Griffin, founder of Citadel, spoke on China trade and the future of cryptocurrencies. Live on stage he said "there is no need for cryptocurrencies. They are a solution in search for a problem". No a single portfolio manager at Citadel has said they should be investing into crypto. He further stated, "I wish the 27 year olds were not buying Bitcoin. I wish they were investing capital that would create jobs and increase our economy". Clearly, he is not convinced if there is really a case for cryptocurrencies long term. he also mentioned views on large banks. He feels many of the largest banks in the US need to be broken up. The "Too Big to Fail" system, is still in place, so we need to address that.
3) Howard Marks, co-chairman of OakTree Capital, had a more specific view on Bitcoin and other cryptocurrencies. "It is a trade, not an investment". He is so far not convinced that it will be a new and permanent capital market asset class. Time will tell but at least he does recognize that retail players have put it on the radar. ETFs have been heavily weighted towards the FANG components, this may hurt investors in future. Liquidity and momentum will have an impact when there is a clear change in financial markets. Right now, we like emerging markets more than the S&P 500 right now. However, right now there is no place to invest, that is easy right now.
4) Steve Bannon, former White House Advisor, spoke on his views around Bitcoin and China. "I like Bitcoin, I own Bitcoin, I think 90% of ICOs were a disaster. People did not think them through. I am working on a utility token with global implications." They have to be quality. He feels that China for the first time ever, do not know what to do with President Trump. He is an economic counterpart that they do not know how to handle well yet. After 25 years of economic war with China, the next move is not clear for China. President Trump is not easy to figure out with traditional diplomacy. As a result of this new international diplomatic style and global leadership, the US is going to win any trade war with China.
5) Samantha Greenberg, CIO of Margate Capital Management, made a great stock picking case. She formerly worked at Paulson & Company, made a compelling case for Take-Two Interactive. In the US today, over 60% of teenagers play video games over 3.5 hours per day. The live streaming network Twitch that showcases video games has a larger audience than major television networks like CNN. She feels that although the stock has gone up 60% this year to $126.81 per share, it could go up another 41-62% from current levels. That means a stock price target of $176-202 per share. Previously, customers would buy a single hit game. Currently, due to the internet connectivity of video games, extension offerings and special upgrades continue the purchase and the revenue stream for video game users.
6) Jeremy Allaire, CEO of Circle thinks Bitcoin will bounce back from current $6000-7000 per coin levels. He represents a crypto themed startup that got investment from Goldman Sachs. It later acquired a crypto exchange called Poloniex. After this M&A was absorbed and incorporated, Circle is now valued at over USD3 Billion. More growth is expected to come and a possible IPO in future.
7) David Rubenstein, co-founder of Carlyle Group, had big picture economic views to share in 2018 & 2019. He said that "Out of the 275 companies that we own, most are all doing well. We do not see any major change in any of our holdings. I just do not see any recession in the short term." He feels that this year or next year seems to be reasonably in good shape as far as our corporate holdings. "As far as trade and China, the global economy is now USD80 Trillion. Global tariffs amount to no more than USD150 Billion, so it very modest, it doesn't really affect anything."
8) Barry Silbert, CEO of Digital Currency Group, had curious comments on Bitcoin bottom and it future pricing. When the head of the Fed, or major fund heads talk about how Bitcoin is of no value, but the price does not move, that is a very bullish sign. "Swimming upstream is when you make a lot of money". Barry started buying Bitcoin in 2012 when it was $10, not the much higher $7,333 currently. During the conference, they announced that they raised USD250 Million for Grayscale Investments, their crypto asset management firm. "Some 56% of that capital came from Institutional Investors. A year ago, that same percentage was non-existent." He said that he has invested in 130 companies involving crypto. They have 5 core holdings in the company portfolio, that is all. Bitcoin is 50%, Ethereum Classic 25%, Zcash 15%, Decentraland 5% and Zencash 5%.
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