The annual conference, which raises money to benefit the Michael J. Fox Foundation for Parkinson's Research and Vickery Meadow Youth Development Foundation, has featured prominent investors like Mario Gabelli (Trades, Portfolio) and Chuck Akre (Trades, Portfolio), who usually give several stock ideas to holders of high-priced tickets. Ackman recommended some of most aggressive activist investments, ADP (ADP, Financial) and a short sell of Herbalife (HLF, Financial), as well as Fannie Mae (FNMA, Financial) and Freddie Mac (FMCC, Financial).
On Herbalife, Ackman doubled down on his conviction that the company is a pyramid scheme, although it is up roughly 40% from the price at which he bought it. “Short-selling is risky,” he said, eliciting laughter from the audience. He also said that Carl Icahn (Trades, Portfolio) taking an opposite bet on the stock was not part of his list of potential negative events.
Ackman called ADP, the payments company on which he has publicly shared his thesis, a simple, predictable, not capital-intensive, high-quality business with secular tailwinds that is automating employees. “It’s an industry with a lot of growth behind it,” he said.
Regarding the company’s problems he wants to correct, he listed low margins and inefficiency, as well as management resistant to change.
“I think it’s a buy,” Ackman said, telling the audience he believed they would double their money on ADP.
Ackman pitched Fannie Mae and Freddie Mac, two government sponsored entities whose fate hovers in limbo, at the conference three years ago. This year, he said he saw the company trading five to 10 times its present price in the future and investors should still buy it.
Ackman highlighted the systemic importance of the two companies and that they had already repaid their debt to the government, though the government retained ownership. He said he saw bipartisan support to return the companies to the public market.
“I don’t think they’ll need to go there,” Ackman said, referring to lawsuits currently leveled against the government by financial managers such as Bruce Berkowitz (Trades, Portfolio), founder of Fairholme Fund (Trades, Portfolio)s. Instead, he expects the question of returning the mortgage lenders to private ownership to be settled in Congress.
“Trump likes to make deals,” he said, jokingly.
Ackman shared the stage with a panel of local money managers and moderator Gretchen Morgenson, a New York Times journalist. Celebrated investors Tom Russo (Trades, Portfolio) of Gardner, Russo & Gardner and David Einhorn (Trades, Portfolio) of hedge fund Greenlight Capital followed him as fellow headlining speakers.