By Matthew Radman
Money and Investing Writer
Tuesday, September 13th marked the annual Delivering Alpha investment conference. The overarching message of the investors present was more filled with fear than fortune.
For six years CNBC, the Institutional Investor, and First in Business Worldwide has gathered the most experienced and influential investors, hedge fund managers, executives, and politicians to predict the economic future and live up to the conferences names’ optimistic promise of return on investment. This year’s forecast, however, seems one of the bleakest in the conference’s proven history.
Prominent investors such as Carl Icahn from Icahn Enterprises (NASDAQ: IEP), Paul Singer from Elliott Management, and Ray Dalio from Bridgewater Associates all referred to the overall markets as “dangerous.” Icahn lacks much optimism about the market environment when he warns “you’re walking on the ledge and you might make it to the end, but you fall off that ledge and you’re really going to see trouble”.
Singer sees similar dangers in global markets. He remarked about the waning independence of international banks, and noted that Japan’s economy is lacking significant growth despite the Bank of Japan’s massive stakes in Japanese companies.
Ray Dalio offered up some optimism with his convictions that even in today’s climate, he would still be comfortable opening a fund. He is not in favor of the Fed raising rates right now, explaining, “There’s only so much you can squeeze out of a debt cycle”. The overall message conveyed is that the global economy is in a “dangerous” spot, still.
A usual highlight of these conferences is always investors’ top stock picks and tips: the fun part. Carl Icahn’s tone quickly went from fearful towards the overall economic state to hopeful about his likely increase in investment in Herbalife (NYSE: HLF) remarking on their good products. Other investors, such as Bill Miller (LMM), has positive views on the growth rate and margins of Amazon (NASDAQ: AMZN) and Facebook (NASDAQ: FB) in comparison to Google’s parent company Alphabet (NASDAQ: GOOGL).
Another stock that has a large amount of his confidence right now is Valeant Pharmaceuticals (NYSE: VRX). Jim Chanos from Kynikos Associates lacks faith in Chinese e-commerce company Alibaba (NYSE: BABA) due to their loosely-disciplined spending habits. He also is not a fan of the proposed merger of Tesla (NASDAQ: TSLA) and SolarCity (NASDAQ: SCTY). His reasoning is the still unsure relationship between the two companies as evidenced by Tesla refusing to provide the financially porous SolarCity with a bridge loan while merging.
Inevitably, and especially in an election year, the topic of the presidential candidates’ economic policies was an important discussion to be had.
One of their names dominated the conversation: Republican presidential nominee, Donald Trump. Institutional Investor’s Bailey McCann wrote about the sobering account of 26-year-old Christine Condos, a cocktail waitress at Trump Taj Mahal, an Atlantic City casino currently owned by Icahn Enterprises that is reported to close early next month. She came to Delivering Alpha hoping to get answers and reassurance about her economic future , and the futures of others in similar situations, from the owner of the failing business at which she works.
Her situation drives home that although this conference centers around high-powered investors with massive stakes in massive businesses, small downturns in an investor’s portfolio can reap massive destruction on real people.
While the closing of the casino is devastating to many, Icahn did comment during his interview that “If Trump gets elected, this economy will be a lot better than if Hillary Clinton gets elected.”
This year’s conference delivered in terms of providing the general public with a glimpse into the minds of the most successful investors in the country.
The tech industry and companies such as Amazon and Facebook still have room to grow, just as long as they can manage their equally inflating expenses like SolarCity is struggling to do. Regarding the investment feasibility of a SolarCity and Tesla conglomerate, more official news must surface from both companies to be able to set sound judgment on it.
Valeant and Herbalife are two companies gaining investor confidence. Donald Trump and the presidential election are issues that carry a mixed bag of feelings from all in attendance at the conference.
Overall, the world economy is “dangerous” and rightfully gives all investors qualms.
While a bleak theme, there are companies to put on your watch list as we head into the economic future.
Only at next year’s conference will we be able to see the accuracy of the investors’ outlooks and see if it the annual meeting lives up to its name on Delivering Alpha.
A version of this article appeared in the Tuesday, September 27th print edition.
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