Mala Gaonkar, Co-Portfolio Manager, Lone Pine Capital LLC is the next speaker at the 2015 Ira Sohn Conference. Lone Pine is one of the most famous Tiger Cubs and is run by the shrewd investor, Steve Mandel. In the hedge fund’s recent letter to investors, Mandel noted that investors face a quandary right now related to interest rates. He stated:

We continue to find many other outstanding businesses globally where we can commit capital. However, valuations are stretched, with earnings and cash flow multiples toward the upper end of historical averages. If future cash flows are discounted at today’s interest rates, stock prices are quite reasonable. Discounting those same cash flows at more “normal” interest rates, however, yields a different answer. This is the investment conundrum: rates will eventually return to normal levels. When they return is the big unknown.

Lone Pine noted that despite the “big unknown” the fund is bullish on Actavis, Charter Communications, Constellation Software, Energy Transfer, Endo International, Fleetcor, Mohawk Industries, Transdigm, Valeant Pharmaceuticals and Walgreens Boots Alliance, Fanuc and Vivendi.

Lone Pine Mala Gaonkar

Mala Gaonkar speaks at Sohn investment conference 

Mala the first female PM to speak at the conference this year, is pitching tech giant Microsoft corporation.

She thinks that the company has new and strong management, which is producing strong revenue growth and achieving  revenue growth, operating cost cuts and returning capital to shareholders.

Mala believes that legacy old tech is misunderstood and Microsoft is a company where there is still value.

Gaonkar thinks that Microsoft Corporation’s subscription and /licensing offerings will keep growing, adding to revenues and the bottom line. She compares Microsoft to a “super tanker” ship which is hard to turn, but “turn it will” eventually.

Furthermore, Windows 10 – Office 16 willbe a huge sales cycle for Microsoft, with Mala calling it “a a juicy lemon”.

MALA Gaonkar LONE PINE – we have a debated idea at lone pine

MSFT – there is an enormous potential an installed base on msft strong management solid revenue greoth

MSFT has gone cloud new strong management doesn’t worry about saving windows first. They are largely an enterprise business

Ibm new mainframe 13 mission critical as long as it works people don’t move it. Enterprise is steady it has only flattente in the 08 09 crisis

Cloud revs are doubling every year. Enterprise software is growing also and cloud is going gangbusters. The incubants dominate cloud good for MSFT

Sales growth

Cloud platform services is growin 20 percent a year

Newfeatureslike ONE drive reducing piracy

Product refresh cycle

Enterprise licensing

Very juicy lemon that they have to squeeze

Capital return is still going well and can’t rule out M and A

They have limited downside for an old tech slow grower