Sohn Conference

Winning and losing picks from 2014 Ira Sohn conference

The Sohn Conference celebrates its 20th

Musicians are giving way to money managers at New York's Lincoln Center on Monday, when Wall Street's top players gather at the annual Sohn Investment Conference.

They'll be doling out their best ideas to a crowd of eager investors who pay top dollar to gain entry to the day-long charity event.

2015 marks the 20th anniversary of the conference, and the lineup of presenters includes David Einhorn, Barry Rosenstein, David Tepper, Bill Ackman, Larry Robbins and Leon Cooperman.

With the advancing an impressive 11 percent from May 5, 2014, the day of last year's event, here's a rundown on the winners and the losers from 2014 (as determined by who outperformed the broader market):

The big winners

Taking the top spot among the winners is Robbins with three "long" calls, two of which have far outperformed markets.

Robbins focused on the health-care sector, specifically two HMO companies—which he identified as the only subsector within health care that hadn't yet recovered: Humana and WellPoint (WellPoint changed its name to Anthem in August and started trading on the NYSE under ticker ANTM in December). Humana shares have surged 54 percent, while Anthem shares have gained more than 50 percent since May 5.

Robbins, founder of Glenview Capital Management, also recommended going long the agricultural biotechnology company Monsanto on the premise that with an estimated 9 billion people in the world by the year 2050, the best option for meeting demand would be GMO seeds. Robbins said you "simply can't solve world hunger on an organic basis." Monsanto shares are up more than 5 percent since Robbins' long call.

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The runner-up spot goes to Zach Schreiber, who correctly predicted the imminent crash in crude prices with his short call on domestic oil, telling the audience, "it's going lower, much lower."

It was a counterintuitive call—at the time, there was a $33 billion net long on benchmark West Texas Intermediate, with prices hovering consistently in the $90-$100 a barrel range—but, the bearish bet paid off in a big way, with crude oil tumbling 40 percent from May 5 and Schreiber reportedly making $1 billion on his short.

Schreiber, who co-founded PointState Capital in 2011, also laid out his long case for Valero Energy and Marathon Petroleum—based on a high probability of a WTI-Brent disconnect. He pointed out that U.S. refiners would benefit from a durable spread since they buy at WTI prices and sell at Brent crude prices.

Schreiber's long on U.S. refiners hasn't played out as well as his short on crude. Marathon shares have gained only 3 percent, while Valero shares are down 2 percent since May 5. To be fair, though, all the details are not available on how his thesis may have changed as the year progressed.

Chris Shumway, founder and managing partner of Shumway Capital, provided a winning pick with Moody's—which he identified as a "global duopoly," along with S&P, within the credit-rating and analytics space. Shumway noted MCO's potential to increase its revenue by 10 percent to 13 percent annually if the company expanded internationally. Moody's shares have gained more that 36 percent since his long call.

Additional winners include Philippe Laffont of Coatue Management with a long call on Liberty Global which is up 27 percent, and Mariko Gordon, founder and CEO of Daruma Capital, who had one of her long picks, Electronics for Imaging, gain nearly 12 percent since last year's conference.

On the losing end

The 2015 Sohn Investment Conference takes place on Monday May 5th in New York.
Chris Goodney | Bloomberg | Getty Images

Two high-profile presenters took opposite sides of the housing trade: Ackman making the long case for Fannie Mae and Freddie Mac and Jeffrey Gundlach recommending investors short single-family housing and specifically the SPDR S&P Home Builders exchange-traded fund. None of those calls panned out, with the ETF up 9 percent from last year. Gunlach's loss stands out since his against-consensus calls on interest rates falling were highly successful.

And, despite registering an impressive 2014—Ackman's Pershing Square netted a more than 40-percent return for the year—his long picks at Sohn were both big losers.

A year ago, Ackman made the bullish case for Fannie and Freddie—whipping through a 110-slide presentation during his 15-minute time slot—calling the mortgage guarantee companies phenomenal businesses that are "like owning a royalty on the housing finance market".

Ackman has been vocal in that conviction—reiterating his long call for the mortgage servicing companies as recently as February, when he spoke at the Harbor Investment Conference. This, despite the stocks being one of the few losers in his portfolio last year—Fannie Mae and Freddie Mac shares fell 32 percent and 34 percent, respectively, since May 5.

According to FactSet, Pershing Square is the No. 1 institutional investor in both equities, with a 10 percent stake in each of the mortgage servicing companies.

Stuck in the middle

Some managers had longer-term calls that have yet to play out, with Paul Tudor Jones focusing on the "macro manic-depressive trading" environment and when to short the U.S. bond market. The Tudor Investment founder told the audience to look no further than the central banks for the cause of the manic depression in markets, and said the only cure for the lack of volatility would be for "a macro doctor to prescribe the central bank Viagra."

Tudor Jones' message to bond bears was "to wait till you see the whites of their eyes before you sell fixed income," with his takeaway being "don't short the U.S. bond market until April 2015," three months ahead of a possible rate hike in July 2015.

Einhorn made the short case for one of his "bubble basket" stocks, which he unveiled as athenahealth. The Greenlight Capital CEO ripped into athenahealth CEO Jonathan Bush and said the stock was "simply at the wrong price," predicting it could fall 80 percent or more from its peak price. The stock is relatively flat from last year, but is up about 2 percent since May 5.

Now, for the bonus...

The winner of last year's contest for best idea was Michael Guichon, a Columbia University MBA student. His bullish case for Fiat was selected by a panel of judges, including Ackman, Einhorn, Michael Price, and Seth Klarman, and has proven to be a profitable play. Fiat, which debuted on the New York Stock Exchange in October, is up 65 percent since its IPO.