The Ira Sohn conference -- one of the most closely-watched
investor conferences of the year -- kicks off Monday afternoon.
Some of the biggest names in the hedge-fund world -- Greenlight
Capital's David Einhorn, Omega Advisors' Leon Cooperman, Pershing
Square Capital Management's William Ackman, and many more -- will
take the stage to deliver a mix of stock picks, companies they're
betting against, and macro investment ideas. All of this is for the
benefit of the Ira Sohn foundation, which finances initiatives to
cure and treat pediatric cancer.
Stock prices will rise and fall as these investors state their
opinions. MoneyBeat will bring you all the presentations live from
Lincoln Center.
12:28 pm | Not just Pioneer | by Juliet Chung
Concho, Continenal Resources are other companies he compares to
Pioneer. And he's out.
12:27 pm | Long oil | by Juliet Chung
Pioneer is "dramatically overvalued," Einhorn says. "Many people
are buying frackers because they want to bet on higher oil prices."
But there's a simpler way, he says: buy oil.
12:25 pm | Details | by Juliet Chung
The company's stock is basically an option play, he says,
something faster drilling won't help. (His firm, Greenlight
Capital, will post more details on its website later.)
12:24 pm | Sell-side | by Juliet Chung
Fracking analysts are guilty of taking this bullish view too, he
says.
12:23 pm | Well-conomics | by Juliet Chung
Now he's talking about where Pioneer spends its
capex--horizontal drilling, but also a bunch of other stuff. He's
saying Pioneer and others are "cherrypicking" by drilling their
best areas first. But "the problem with exploiting your best
prospects are you are left with your other prospects."
12:22 pm | Transparency | by Juliet Chung
Pioneer ought to stop touting estimates based on stale pricing,
he says.
12:21 pm | Lower oil | by Juliet Chung
If oil is $95, Pioneer would be worth $41 per share, the company
said in a filing Einhorn references. But if oil drops big, even
taking into account 20% cuts in key areas, its shares would be
worth significantly less.
12:19 pm | Stock taking a hit | by David Benoit
Pioneer's stock is dropping as Einhorn talks. Down 3.2% to $166
and bouncing around as he goes on.
12:18 pm | If oil goes up.. | by Juliet Chung
What happens with Pioneer when oil prices rise? "Pioneer earns a
positive margin, but it's not a positive value," he says.
12:14 pm | Pioneer | by Juliet Chung
Now he's talking about Pioneer Natural Resources, which owns up
in the Permian Basin and is a big shale producer--a "mother
fracker," he says.
12:13 pm | Shale | by Juliet Chung
He says investors should continue looking at traditional metrics
that get ignored in fracking: capex and depletion. "A business that
burns cash and doesn't grow isn't worth anything." He clarifies
he's talking about shale frackers, not nat gas frackers
12:11 pm | Poof | by Juliet Chung
"Investing for growth is a fiction" in this sector, he says.
"Here the capex goes toward reducing the assets one barrel at a
time. Once you extract a barrel of oil from the ground, that's it,
poof, it's gone."
12:10 pm | Cash burn | by Juliet Chung
Frackers should have been awash in cash as the price of oil
rose, he said, but instead they spent more. "Higher oil price led
to even greater cash burn." Last year, he says, "the group burned
$20 billion."
12:09 pm | Fracking | by Juliet Chung
He says the banks are incentivized to finance the "frack
addicts" and quotes a billionaire investor, who said that if you
give a driller money, they'll drill a hole.
12:08 pm | Fracking | by Juliet Chung
"The best results come from combining fracking with horizontal
drilling," he says. Frackers have found success in Bakken, the
Permian and Eagle Ford. But "fracking is expensive, buying the
land, setting up infrastructure and drilling the holes takes money,
lots and lost of money. So the frackers took their story to Wall
Street."
12:07 pm | Einhorn at Bat | by Juliet Chung
Investment in fracking companies will "contaminate" investment
returns, Einhorn says. "Over the last few years they've led a
production boom that has helped make our country energy
independent."
12:05 pm | Einhorn at Bat | by Juliet Chung
Some energy companies have "negative development economics," he
says, that they don't earn a positive return on capital outside "a
few choice" areas--"meet the focker--frackers," he says
12:04 pm | Parallels | by Juliet Chung
He wants to draw parallels between St. Joe, the Florida-based
real estate company he publicly announced a short on, and his idea
today.
12:03 pm | Einhorn at Bat | by Juliet Chung
Einhorn takes the podium. Doubtless there are more than a few
management teams that will breathe a sigh of relief when his time's
up and he hasn't taken aim at their companies.
12:03 pm | Einhorn Track Record | by Maureen Farrell
The Sohn conference will kick off with David Einhorn's
presentation. There's a good chance he'll share a new short bet on
a stock. In a recent investor letter he said he's added more short
positions to his portfolio.
This time last year, he outlined why he thought that
athenahealth, Inc.'s stock could "easily fall 80% or more." Shares
in the company, which is a technology company that helps doctors
and hospitals with billings and record keeping, fell immediately
after Mr. Einhorn delivered his presentation. But it's rebounded
somewhat since, and sits far above where he predicted.
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