Merrimack Pharmaceuticals. (PRNewsFoto/Merrimack Pharmaceuticals, Inc.)
By Robert Lakin
Sitting in the audience at last week’s Sohn Investment Conference in Tel Aviv, we got to wondering just how the ideas being presented will turn out, looking at how they match up against the objective algorithms that drive TipRanks’ financial information engine.
The conference–part of the global expansion of the heavy-hitters event held annually in New York that features headliners such as David Einhorn and Bill Ackman–offers participants a close look at celebrated investors’ market insights and their best investment ideas. Billionaire hedge fund managers attend the conference that benefits the Sohn Conference Foundation’s work to end childhood cancer and share their big investment ideas for the coming year.
So what were some of the ideas presented last week and how do they measure up against analysts followed by TipRanks? We thought you’d never ask.
Chinese online travel giant Ctrip.com (CTRP) was the top idea presented by Jonathan Jacoby, portfolio manager at O’Connor, a multi-strategy hedge fund manager that is part of UBS Asset Management. On TipRanks, the Best Performing analysts following the stock agree. Five-star ranked analyst Fawne Jiang, who follows China consumer and internet stocks at Brean Capital, reiterated a Buy rating on CTRP last week.
Jacoby likes online travel agents in general, also highlighting Expedia (EXPE) and Priceline (PCLN). Most of the 14 Best Performing analysts whose PCLN coverage is tracked by TipRanks recommend investors buy the shares of the online price comparison and booking platform. Their consensus target, a whopping $1,631.07, represents 11% upside from current levels.
The compelling buy idea presented by Leon Wagner was Dycom Industries (DY), which provides specialty contracting services for telecommunications providers, underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities.
The chairman and chief executive officer at LWPartners told investors the share price could double or triple as strong cash flow, growth in fiber optics and consolidation in the communications industry create upside. AT&T’s (T) planned $85.4 billion acquisition of Time Warner would create “massive opportunity” for Dycom.
Wagner’s call is echoed in the Strong Buy consensus rating of five analysts on TipRanks, including 4.5-Star rated analyst Jennifer Fritzche of Wells Fargo. While not as optimistic as Wagner’s prediction for share price, the average 12-month price target of the five is still 46% higher than current levels, at $109.75.
There was some dissonance between analysts followed by TipRanks and the big idea from Daniel Schwartz, managing partner at York Capital Management. He recommended investing in beauty company Coty (COTY), highlighting a low valuation and high growth prospects.
The hedge fund manager said that Coty, the third-largest beauty company behind L’Oreal and Estee Lauder, has the ability to change the “margin paradigm in the beauty space,” making it a “multi-year growth story.”
Analysts see the story a bit differently, with a Hold on the shares shown in the top analyst consensus of the five Best Performing analysts, according to data compiled by TipRanks. Four-star rated analyst Lauren Lieberman at Barclays reiterated her Hold rating on the shares in mid-October. Schwartz’s hedge fund peers are also negative on the shares. Gotham Asset Management’s Joel Greenblatt, himself a presenter at previous Sohn events, liquidated his holding in Coty in the last quarter and following the general trend of hedge funds, according to the data.
Also notable is the spread–from a high of $32 to a low of $23–supporting in the consensus price target of $26.80. The shares closed at $22.90 on October 28.
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