In this current market environment of volatility and uncertainty, there is no shortage of ideas available to those looking for them. And earlier this week, the annual Robin Hood Investment Conference brought together a group of widely known investors -- most of them activists -- who were happy to share with the paying patrons their stock market picks.
David Einhorn, in true Einhorn fashion, called CONSOL Energy (CNX) his new "best idea" after holding the stock through a difficult period. After Einhorn's presentation, shares in Consol leapt 9%, but today are settling around $8. A year ago, shares traded as high as $42. The big-picture thesis on CONSOL, which is also held by the respected Longleaf Funds, is that the company is no longer a coal company, yet the market keeps seeing it as one.
Two very public activists of late, Third Point's Daniel Loeb and Pershing Square's Bill Ackman, had two differing, yet overlapping views. Loeb was bullish on Action Alerts PLUS portfolio holding Allergan (AGN) and suggested that a merger between it and biotech giant Amgen (AMGN) would be a nice marriage. Ackman, who has taken a recent pounding with his stake in Valeant (VRX), now thinks that Allergan should buy Valeant. Allergan seems be the darling in all this. Pfizer (PFE) wants the company as well.
To me, the more interesting ideas came not from an investor, but rather from one of the more astute businessmen today -- Jamie Dimon. The JP Morgan CEO wasn't pitching investment ideas (maybe that is why I value them a bit more), but in his comments about the overall economy, Dimon noted Boeing (BA), Union Pacific (UNP) and Yum! Brands (YUM) as names he thinks will do very well in this environment.
There is no shortage of investment conferences out there. Some are better than others. In the end, I don't believe any respected conference does anything less than truly provide a quality idea to explore further. After all, the one litmus test that matters most -- do those recommending the idea own it -- is passed, and that matters a great deal. Still, an idea is just that, and we've seen how the market can punish even the best investors ruthlessly, for extended periods of time.
Take these ideas and proceed with the next rational step -- conducting your own analysis as to whether or not you understand the business, are comfortable with economics of the business, and most of all, possess the ability to have a patient holding period.
