SALT 2015: Top Investment Ideas From Bass, Burbank, Chanos & Cooperman

Some of the top investment managers in the United States presented some of their best investment themes and ideas at SALT Conference 2015 on Thursday.

The panel was moderated by Omeed Malik and panelists consisted of Kyle Bass, John Burbank, Jim Chanos, Leon Cooperman and Michael Karsh.

Leon Cooperman

Cooperman, a well-known value investor and founder of Omega Advisors, opened his presentation with a review of the current state of the market.

Cooperman sees a seven to nine percent return in equities for the year, but he's very negative on most areas of fixed-income. "There is nothing that typically precedes a recession that is evident now. I hear lots of discussion on interest rates and I don't get it. On average, the market rises over nine percent within twelve months following a rate hike."

"I think I can find a lot more companies that offer attractive valuations in equity markets than the fixed-income space. I recommend reducing all fixed-income positions and move to shorter durations."

Some of Cooperman's best ideas for 2015 are ACT, AER, Citigroup (NYSE: C), Dow Chemical (NYSE: DOW), Google (NASDAQ: GOOGL) and Priceline (NASDAQ: PCLN).

Jim Chanos

Fanatic short Jim Chanos of Kynikos Associates recommended a short against Royal Dutch Shell (NYSE: RDS-A). It is still pending a merger with BG. According to his model, free cash flow is negative after dividends, and even more after share buybacks.

Related Link: SALT 2015: Fighting The Fed, Activists And The Loeb-Buffett Rant

The bet Shell is making is on LNG and oilfields operated by Brazilian Petrobras. Unfortunately for future prospects, LNG demand is flat and most of the demand that does exist is coming from Asia. More plants are expected to come online in the coming years, "causing capacity to skyrocket."

Currently, LNG trades at $7 and needs to trade at $10 to $12 for a long bet on Shell to payoff.

Kyle Bass

Kyle Bass of Hayman Capital is taking a long interest in pharma company Perrigo (NASDAQ: PRGO). He followed his announcement with, "Lord knows we're short enough pharma."

The thesis is that Perrigo is a takeover target. Most of Mylan's revenue before interest and taxes is a result of selling the epipen, a decades old device carrying a drug that came off patent in 1951, yet prices still increase twice per year.

As a result of the TEVA, Myland, Perrigo battle, Bass believes most of the value lies in favor Perrigo and he recommends a long position.

As for the other two, he said, "No idea what happens to the others."

John Burbank

John Burbank of Passport Capital brought one of the more unique ideas SALT this year recommending National Commercial Bank, NCB AB – a Saudi Arabian Bank. It's the second largest global bank and Saudi Arabia will be entering the EM in June this year. He called it, "the banking giant you've never heard of in the country you're too afraid to invest."

Burbank said, "we looked at 19 markets since 1994 to see what happens before and after EM inclusion." What he found is that median returns before is very positive, while afterwards, there is a negative return.

Why Saudi Arabia?

He likes that the nation isn't levered, has a young population and high growth rate. Specifically, he likes NCB because of its size, market cap, amount of deposits and ROE. In the case of Saudi Arabia, it will pay to own the bigger stocks.

As for the risks, he believes that most of the risks are pretty well known now. "The Middle East is one of the fastest growing regions in the world."