Rising hedge fund stars at Sohn moving markets

Published Wed, May 4 20164:26 PM EDTUpdated Wed, May 4 20164:29 PM EDT

The Sohn Investment Conference in New York kicked off with a bang Wednesday as one hedge fund manager sent shares of Kraton Performance Polymers , a chemical producer, soaring by more than 10 percent. Another manager recommended shorting a wireless internet provider, sending that stock significantly lower. Sohn is the most widely anticipated hedge fund event of the year, where the world's most successful managers volunteer their time and best investment ideas to raise money in the fight against childhood cancer. This year the conference began with Next Wave Sohn, featuring the "next generation of talent" among hedge fund managers. The picks from these rising stars are below. Kraton Performance Polymers (KRA) "Kraton is a high-quality chemical company and is substantially undervalued," the former Point72 manager said. Cariflex, the company's synthetic rubber product, should continue to grow by double digits annually, according to Rosen. The company's "earnings are masked by complex GAAP accounting" and with significant cost cutting it can generate more than $450 million in free cash flow from 2016 to 2018, said Rosen. Moreover, the recent Arizona Chemical acquisition will result in significant cost savings. Rosen believes the stock is worth $65 to $97 a share. Kraton shares surged 15 percent to $25.95 Wednesday. TripAdvisor (TRIP) "TripAdvisor is the toll booth for the global travel market," said the former managing director of Blue Ridge Capital. "Their business is impossible to replicate and instant booking is the game changer." Danaher believes instant booking will increase conversion rates going forward, similar to Amazon's one-click buying feature. Plus, the company has the "broadest and deepest travel content in the world." "We think TRIP can at least double over three years and has multi-bagger potential," he said. TripAdvisor shares spiked just after the Danaher mention, but closed lower on the day. Short Gogo (GOGO) "Gogo is a compelling short opportunity," said the former partner at Jericho Capital. "Their network is overstretched and consumers are not exactly loving the service today." Kahr said the firm's relationships with airline customers are deteriorating. Furthermore, a "huge number of competitors are coming in and are going to destroy Gogo's market share and margins," she said. "The bull case doesn't hold water. We think Gogo is worth $4 a share," Kahr concluded. Gogo shares fell 3 percent to $10.15. Bullish Oil "We believe the lows are in," said D'Alessandro, who used to manage a commodity portfolio for Ziff Brothers Investments. "In the past two years, we've cut hundreds of billions of dollars of capex. U.S. crude oil production is falling rapidly as a result of declining activity." Oil supply will be down "substantially" this year, while gasoline demand is growing at "a very healthy clip," he added. Plus, the money manager believes shale producers won't be able to get bank financing until oil enters the $50 range. He sees oil "considerably higher" in the coming years. Crude oil futures prices were little changed Wednesday. Royal Dutch Shell (RDS/A) A "compelling case can be made to own Shell equity," the former S.A.C. Capital manager said. "We believe the synergy with their recent BG Group acquisition will be greater than what the company has let on." Tiller projects the company's annual production growth will be 10 percent, versus the 8 percent Wall Street estimate. And after the company cuts capital expenditures, free cash flow will significantly improve, according to the manager. The U.S.-traded shares of Royal Dutch Shell are worth between $80 to $90 a share, according to a sum of the parts valuation chart Tiller presented. The stock fell 2 percent Wednesday.

Sohn is the most widely anticipated hedge fund event of the year, where the world's most successful managers volunteer their time and best investment ideas to raise money in the fight against childhood cancer. This year the conference began with Next Wave Sohn, featuring the "next generation of talent" among hedge fund managers.

The picks from these rising stars are below.