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Sohn Hearts & Minds Investment Conference 2020: full coverage

The SOHN Hearts & Minds Investment Conference 2020 was held on Friday 13. It brings top stock picks and market insights from the leading fund managers in Australia and the US.
The Australian
Nov 14, 2020


Stock picks for social good


Hearts & Minds Investments chair and prolific fund manager Chris Cuffe has thanked the participants of the 2020 Sohn Conference for sharing their time and stock-picking knowledge to help raise funds for medical research despite the conference having to occur online.


“Their stock pitches are what brings us together, it’s never easy getting up and pitching a single stock, let alone in the current environment and remotely to boot,” Mr Cuffe said.


“So thank you once again to all our speakers.”


Hearts and Minds Investments is a listed funds manager that invests on the advice of fund managers around the world, waiving an investment fee so 1.5 per cent of net tangible assets per annum can be donated to medical research.


This currently equates to an annual donation of $12m which goes to organisations like MS Research Australia, the Black Dog Institute and Brain Cancer Collective.



Galloway blasts big tech


NYU Stern School of Business Professor, serial entrepreneur and business podcaster Scott Galloway has blasted “sociopathic” big tech and the US government, while outlining the profound implications of COVID-19 for the US economy and its big players.


At the SOHN Hearts & Minds Investment Conference 2020, Professor Galloway detailed his views on some of the biggest investment opportunities from the pandemic.


Some of the changes include the penetration of e-commerce and online grocery shopping, which saw a respective 10 and six years’ worth of growth in the US, he said.


Meanwhile, the number of people working from home or living with their parents have hit record highs, while the savings rate and retail trading levels hit record highs due to government stimulus and trading platforms like Robinhood “addicting young men.”



CSL outlook still underrated


Paradice Investment Management’s David Moberley - Stock: CSL (CSL ASX)


It might be one of the biggest and best-known stocks on the ASX, but David Moberley strongly believes the market is underrating CSL.


The Paradice Investment Management portfolio manager said Australia’s largest health company has underperformed the market since March on what he says are overblown concerns about CSL not getting enough blood donations from consumers.



T-Mobile will ride 5G wave


Jericho Capital’s Josh Resnick - Stock: T-Mobile


In the 5G era, Jericho Capital founder and managing partner Josh Resnick sees T-Mobile leveraging its number one position in spectrum to become the market leader in US telecom. T-mobile will be the only carrier to deliver ubiquitous 5G across the US for years, he believes. “We think T-Mobile can trade up over 61 per cent from here”.


A second idea, US satellite TV provider Dish Network Corp, is about to use its vast spectrum holdings to deploy a state of the art 5G network, Mr Resnick said. It will have a “massive cost advantage” over incumbents and the value of its spectrum alone is worth more than its current market cap.



The ‘most sophisticated’ health stock


Prince Street Capital, David Halpert - Stock: Ping An Healthcare and Technology (1833 HKG)


Ping An Healthcare and Technology is the most sophisticated player in artificial intelligence and digital health and its share price could go up five to 10 times more in the next five years, according to founder and CIO of Prince Street Capital, David Halpert.


Telemedicine and AI diagnostics in particular are going to play an important role in lowering healthcare costs for providers all over the world, he said, as he noted the key risks: competition, technology and regulation.



Why Nintendo is ‘super cheap’


VGI Partners’ Robert Luciano - Stock: Nintendo (7974 TYO)


Nintendo is a valuable asset with global scarcity, VGI Partners’ Robert Luciano says.


The current metrics give no credit for the transformation taking place at the company and it is “super cheap”, given the business quality and underlying secular growth. There is also enormous untapped potential for Nintendo when it comes to IP. “We think Nintendo has over 100 per cent upside,” he said.



COVID-19 wins aren’t over


Milford’s William Curtayne - Stock: Fisher & Paykel (FPH ASX)


Milford Asset Management portfolio manager, William Curtayne is backing Fisher & Paykel Healthcare for his Sohn Hearts & Minds debut because of the company’s world leading position in two of the main product used to treat COVID-19.


While 40 per cent of its sales are through its Home Division – treating sleep apnea – 60 per cent of it sales are through its Hospital division and that’s where Mr Curtayne sees a lot of the upside.


Before investors dismiss it as “last year’s winner” as COVID-19 case numbers eventually decline with vaccination, Mr Curtayne says even when that happens, Fisher & Paykel Healthcare will be a winner.



The hot stock powering Nike, Adidas


Cooper Investors’ Qiao Ma - Stock: Shenzhou International (2313 HKG)


Cooper Investors Asian Equities portfolio manage Qiao Ma has backed the world’s largest sportswear maker, China based Shenzhou International, for her Sohn Hearts & Minds stock pick.


Shenzhou has a market capitalisation of over $US25bn ($34.6bn), and generates revenue of more than $US3.5bn per year, but it’s a tough business considering the challenges from automation, globalization, the US-China trade war and pressure to improve worker’s rights.


“No wonder even the great Warren Buffett couldn’t make it work,” Ms Ma says.


“Yet Shenzhou has been a thirty-year success.”


Key to that is the focus of CEO, Jianrong Ma.



Harness China’s payments market


Tekne’s Beeneet Kothari - Stock: Yeahka (9923 HKG)


Australian investors will be very familiar with potential gains that can be created from innovations in the payment system, think Afterpay. In China, the mobile payments market is both enormous and advanced in technical terms, that’s where Yeahka Ltd operates -- a top stock choice from Beeneet Kothari of New York-based Tekne Capital Management.


Put simply, Yeahka (pronounced yeek-ah) is a technology platform that sits smack in the middle of China’s flourishing mobile payment system where a string of competing payment services such as WePay or AliPay compete at the merchant terminal to service online shoppers.



Why Temple & Webster ‘could double’


Regal Funds Management’s Todd Guyot - Stock: Temple & Webster (TPW ASX)


Shares in ASX listed online furniture and homeware retailer Temple & Webster could double over the next three years as the online furniture market grows in Australia, according to Regal Funds Management’s small cap portfolio manager Todd Guyot.


Tipping the stock for the 2020 Sohn Hearts & Minds conference on Friday, Guyot said. Temple & Webster had benefitted from the big shift to online shopping during COVID-19 and the move by Australians to spend more money on homewares as they spent more time at home.



Value amid China trade threats


Tribeca’s Jun Bei Liu - Stock: Treasury Wine (TWE ASX)


Wine exports face Chinese threats

Wine exports face Chinese threats

Tribeca Investments Partners fund manager Jun Bei Liu has tipped Treasury Wine Estates at the Sohn Hearts & Minds Conference in Sydney on Friday.


Treasury Wines, which is caught in the middle of the trade tensions with China and is currently facing the prospect of tariffs on its products in the country, is a buying opportunity right now because it is so cheap, Ms Liu said.



Bills are where the money is


Cota Capital’s Babak Poushanchi - Stock: (BILL NYSE)


Founder and managing partner of Cota Capital Babak Poushanchi, past champion of Docusign, has continued on the theme of financial back office management by picking automates financial back office management for small to medium businesses and has a customer basis of around 100,000 businesses with a three-year revenue growth rate of 56 per cent.


Mr Poushanci said he believed the company could grow its revenue from $US200m ($276m) to $US2bn as the leader in an “under-penetrated” market with a potential customer base of six million in the US alone.


The company also has a number of financial and accounting partners including Bank of America and Xero.



Retailer of the future


Atreides Management’s Gavin Baker – Stock: Target (TGT NYSE)


Managing partner and CIO of Atreides Management Gavin Baker marked his first appearance at SOHN by picking retailer Target — but “through the lens of a venture capitalist.”


Mr Baker said that Target grew by 194 per cent in the third quarter of 2020 over the previous comparable period, making it one of the fastest growing companies over that period, with an overall revenue trajectory comparable to Amazon.


Noting that the company is only growing at 15x earnings, Mr Baker said the retailer was in an “incredible position” by building a solid e-commerce platform and by leveraging its stores for distribution on online channels instead of building a separate distribution network.


Consensus estimates that the customers Target gained throughout COVID-19 won’t be retained, but Mr Baker said customer data shows new customers were doubling their repeat purchases in September and spend more in stores.


He said that there is a belief that there is no future in brick and mortar, which is “strange” as online companies clearly believe in an omni-channel future, with Amazon opening physical stores.



The next big grocery winner


Munro Partners' Nick Griffin – Stock: HelloFresh (HFG ETR)


Founding partner and CIO of Munro Partners Nick Griffin has picked “under-appreciated” meal kit delivery service HelloFresh, believing it could come “the next big winner in e-commerce” by pivoting into the online grocery space.


Mr Griffin said that the German-listed company went from a “novelty to a solution” throughout the COVID-19 pandemic as fewer people ventured to supermarkets and started turning to online grocery shopping and food boxes as a way of purchasing groceries, doubling HelloFresh’s sales this year alone.


“It legitimised HelloFresh as a way of ordering your groceries online and what that has done, it has opened up a huge opportunity for them — and that opportunity is grocery sales.”



Slack has more room to grow


Hamish Corlett, TDM Growth Partners – Stock: Slack (WORK NYSE)


Founder and director at TDM Growth Partners Hamish Corlett has picked US$15bn communication platform Slack, saying he expects the share price to grow 25-30 per cent per annum, resulting in a 10-fold return over a decade.


At last year’s conference Mr Corlett picked the third-best performing stock, as he believed it both ahead of its competitors but still had room to grow.



Why telehealth is set to explode


Cathie Wood ARK Invest – Stock: Teladoc Health (TDOC NYSE)


The rise of telehealth and online medicine as a result of the COVID-19 pandemic has been behind the recommendation of New York based fund manager Cathie Wood, for US based telemedicine and virtual health care company Teladoc Health as her stock pick for the 2020 Australian Sohn Hearts & Minds Investment Conference.


Founded in Texas in 2002, Teladoc is now based in New York State providing online health care to more than 60 million people in more than 175 countries including Australia, with a turnover of more than $US550m ($761m).



“Go long in 2021”: Ackman


The CEO of activist hedge fund Pershing Square Capital Management, Bill Ackman, says 2021 will be a great year for the equity market and tells investors to “go long”, albeit Pfizer’s vaccine breakthrough will trigger complacency and difficulty in containing the virus.


“You’ve got low rates, you’ve got likely stimulus, you could see infrastructure spending, you’ve got still very well capitalised banks, you’ve got access to capital,” he said.


“So I think 2021 could be a very, very good year in markets, so go long I would say.”


But the Northern Hemisphere winter will be grim and the coronavirus is “out of control”.



How Bill Ackman hedged the virus


When Bill Ackman realised that coronavirus was going to run rife in the Western World he knew he had to do something to protect Pershing Square’s the $10bn of funds under management, much of it in restaurant brands. Rather than sell stock, he opted to hedge via credit default swaps.


The CEO of activist hedge fund Pershing Square Capital Management had coincidently just watched the Matt Damon film, “Outbreak” and was concerned not only by the asymptomatic spread potential of the virus and American’s resistance to social distancing and mask wearing, but also to the lack of concern about the virus expressed by his colleagues at that time.


In a keynote discussion for the Sohn Hearts & Minds Conference in Sydney, Mr Ackman explained how the portfolio hedge via credit default swaps turned out to be a 75 bagger.



The stock that returned 500%


Global stocks exposed to the technology boom, whose performance was partially fuelled by the coronavirus crisis, were the big winners from the calls made by top investment minds at the Sohn Hearts & Minds Investment Conference last year.


The wide dispersal of returns also indicated that active stock picking, a theme that is the bedrock of the event, remains alive and very well, particularly for investors that are invested in the NASDAQ.


The best pics were US car maker Tesla, which soared by 504 per cent, including reinvested dividends, followed by Trade Desk, which was up 242 per cent, and GDS Holdings at 121 per cent.



US tech will lock in its edge


Scott Galloway — entrepreneur, digital marketing guru and best-selling author of The Four, spoke to The Australian’s Ticky Fullerton ahead of his keynote speech at this year’s Sohn Hearts & Minds Investment Conference.


He says US tech giants are on track: not just to soar through the pandemic, but to structurally lock in their competitive edge well beyond COVID-19. What is more, there will be a tsunami of reallocated capital across the economy, creating huge winners and losers that investors should get ahead of if they don’t want to miss out.



This article was originally posted on The Australian here.

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