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From Fannie Mae to Warren, Here’s the Robin Hood Round-Up

Anisha Sircar, Melissa Karsh and Katia Porzecanski

(Bloomberg) -- Robin Hood, which dubs itself “New York City’s largest poverty-fighting organization,” drew more than 40 investors and policy makers to speak at its two-day annual investor conference.

From Paul Tudor Jones expecting the election of Elizabeth Warren to spur a 25% drop in the S&P, to Steve Cohen predicting next year will be a tough one to make money, to Whitney Tilson billing Fannie Mae as a “six bagger,” here are some of the biggest calls. All of the comments came from people familiar with the presentations, which ended Tuesday.

Paul Tudor Jones, Steve Cohen Are Wary of Warren

Billionaires Paul Tudor Jones and Steve Cohen joined hedge fund managers Rob Citrone and Jeff Vinik in warning that the stock market would plummet on the prospect of an Elizabeth Warren presidency. The S&P 500 Index will drop about 25% if the Democratic senator wins the 2020 election due to concern over her proposed wealth tax, Jones said.Her self-described “democratic socialist” opponent, Bernie Sanders, would cause the markets to tumble about 20%, he said.Citing an internal poll at his $8 billion macro hedge fund, Jones also said economic growth in the U.S. would fall to 1% from estimates of more than 2% this year.Steve Cohen said the market would begin pricing in a Warren victory much sooner, tumbling 10% to 15% if she wins the nomination. Cohen added that despite the market’s concern surrounding Warren, some of her more extreme proposals will be difficult to achieve.Cohen sees 2020 as a challenging year to make money given the unpredictability of trading around the election. “You’re probably going to have to grind it out next year,“ he said. “That’s just the way it is.”

Bill Ackman, Whitney Tilson on Fannie, Freddie

Pershing Square’s Bill Ackman said Treasury Secretary Steve Mnuchin and Federal Housing Finance Agency Director Mark Calabria should be even more motivated to revamp Fannie Mae and Freddie Mac, now that President Donald Trump’s re-election odds are somewhat lower.Separately, Empire Financial’s Whitney Tilson sees Fannie Mae’s intrinsic value reaching $18.50/share, more than six times its recent price. “Don’t get faked out by their congressional testimony last week that spooked investors,” Tilson said, calling it “Kabuki theater.” He also expects an IPO sometime next year, in which Fannie exits conservatorship and raises ~$25 billion, but a Democratic president could halt that plan, he said.

Lakewood’s Bozza Pitches Shorting Goosehead, Enphase

Lakewood Capital’s Anthony Theodore Bozza pitched shorting Goosehead Insurance, Enphase Energy and Kirkland Lake Gold.Bozza set his target for Goosehead at $24/share, less than half of its current value, saying the insurer’s model doesn’t scale and that Texas, its home market, is nearing saturation.Said Enphase’s shipments exceed installations, which isn’t sustainable.On Kirkland, Bozza expects costs to rise and earnings to fall.

Bayberry’s Angela Aldrich Sees Upside to WillScot

Aldrich pitched WillScot long, seeing upside to earnings from its merger with Modspace, and further upside from rolling out value-added products. She predicts 93% upside over two years.

Bluegrass Capital’s Cornell Pitches Black Knight

Joseph Cornell pitched Black Knight as a long, saying Wall Street underappreciates the opportunity in loan origination software. The stock can double in the next three years, he said. The business has limited cyclicality and grew its Ebitda even during the Great Recession, Cornell added.

Sachem Head’s Ferguson Is Long on Flex

Scott Ferguson pitched Flex as a long idea, saying the stock is not an activist position for him. He attributed the stock’s recent weakness to the U.S.-China trade war.

Other Takeaways:

Whale Rock’s Alex Sacerdote sees the potential for Carvana to triple over the next four to five years.Hunter Capital’s Grant Bowman pitched LexinFintech Holdings as a long, expecting the Chinese online consumer finance firm to earn more than $5 in 2022.Evince Asset Management’s Alberto Musalem suggested a long XLP versus short XLY trade.Nokota Management’s Matthew Knauer pitched IAA as a long, saying he sees upside to $64/share. Long Pond Capital founder John Khoury pitched Vornado as a long, saying he sees 40% upside in the stock. Local market headwinds should be reflected in rents, which have been flat, Khoury said.Center Lake Capital’s Adam Parker made a long call for Coupa Software, saying it could be a $500 stock in five years. The company is likely to trade at least 30 times free cash flow per share, according to Parker, who thinks customers should get immediate cost savings as the average spend per customer has consistently grown.One Tusk’s Vivian Lau was said to pitch Synopsys as a long idea, calling it a “hidden gem” in software integrity. The stock has a high-growth total addressable market, she said, expecting shares to hit $170 next year.AltraVue’s DeShay McCluskey was said to pitch the “undervalued” Ferrovial, citing the company’s infrastructure assets.

(Updates with comments from Cohen, Ackman, Bozza, Aldrich, Cornell, Ferguson, Musalem, Bowman and Knauer.)

--With assistance from Joshua Fineman and Scott Deveau.

To contact the reporters on this story: Anisha Sircar in New York at asircar@bloomberg.net;Melissa Karsh in New York at mkarsh@bloomberg.net;Katia Porzecanski in New York at kporzecansk1@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Will Daley

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