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Morgan Stanley Investment Leadership Conference – Altimeter Bets

Notes from the Morgan Stanley Investment Leadership Conference which took place on the 28th of June, 2018. There was a killer line up and we have notes on the full conference stay tuned for more – below is the panel consisting of Brad Gerstner of Altimeter Capital Management.

The full list of speakers as follows

List of Speakers

  • David Craigen, Partner at Lansdowne Partners
  • Joshua David Samuelson, Vice Chairman at PointState Capital
  • Robert S. Pitts, Limited Partner at Steadfast Capital Management
  • Keith Meister, Corvex Management
  • Parag Vora, HG Vora Capital Management
  • Richard McGuire, Marcato Capital Management
  • Nitin Saigal, Kora Management
  • Vikram Kumar, Kuvari Partners
  • Vivian Lau, One Tusk Investment Partners
  • Jasjit Rekhi, Sandro Capital
  • Brad Gerstner, Altimeter Capital Management
  • Nathaniel August, Mangrove Partners
  • Alex Gleser, TPG Public Equity Partners
  • Simon Hillary, Lancaster Investment Management
  • Seth Rosen, Nitorum Capital
  • David Rosen, Rubric Capital Management
  • Josh Clark, Southpoint Capital Management
  • David Thomas, Atalan Capital Partners
  • Tomoko Fortune, Criterion Capital Management
  • Dennis Puri, Hunt Lane Capital
  • Gil Simon, SoMa Equity Partners
  • Christian Leone, Luxor Capital
  • Leon Shaulov, Maplelane Capital
  • Munib Islam, Third Point

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Morgan Stanley Investment Leadership Conference Altimeter

The panelists for the fourth discussion were:

  • Brad Gerstner, Altimeter Capital Management
  • Nathaniel August, Mangrove Partners
  • Alex Gleser, TPG Public Equity Partners

Altimeter gave the following suggestions:

The stocks of the technology companies hold a good value if they can be held for more than 3 years. The tech company stocks that should be bought are Facebook, trading at 13 times free cash flow and Google, trading at 16 times free cash flow. In terms of the industrials segment, the companies that have competitive advantages over their competitors are reducing and not growing as expected.

Altimeter recommends buying the stock of United Airlines, as the company has a breath of fresh air due to the new Board and new officials like the President and CFO. United promises 20% growth in earnings in the next three years and is also expected to buy back 15% shares in the next three years, along with 20% bought back in the last three years. The stock is expected to double in price by 2020, and the earnings are expected to be $14 by 2020, compared to the current $11. The carriers industry has undergone consolidation, due to which the competition has reduced and pricing power has gone up. The entire industry has made more money in the last three years, compared to the last 15 years combined.

Altimeter also has a negative outlook towards the stock of Tesla, Inc. The shares are currently trading at a high of $350 when the ideal price is $150. Also, the demand has gone down in comparison with the sales forecast of 500,000 in 2020. The sales forecast is based on the expectation that electric sedan penetration increases from 4% to 22%, which is unrealistic. The company is also facing strong competition and the tax credit of Tesla of $7,500 is soon to expire. Tesla shows multiple yellow flags by buying cousin company Solar City for $4 billion, whose sales are down by 70%. The bonds of Solar City were held by a venture capital fund named SpaceX, the Board of which is the same as Tesla and Solar City. The management of Tesla is also deteriorating with about 40-50 top executives departed and Elon Musk, the CEO, not performing up to the mark. He is concentrating more on SpaceX and does not wish to combine Tesla and SpaceX.

Read the full article here.