Mayfair’s ultra-private and highly competitive hedge fund industry gathered to hear leading managers give their top investment ideas for 2025.
Managers including famed short-seller Carson Block and Diego Megia, founder of this year’s biggest London launch, spoke at the Sohn London Investment Conference, an annual charity event.
The ballroom of the Marriott on Grosvenor Square was packed with investors, rival managers and students of the industry for an afternoon of 14 investment pitches — three short and 11 on the long side.
Of the back of that, here’s Spear’s round-up of the key hedge fund calls for 2025, plus a look back to three from last year.
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Elf Beauty: short
Carson Block, Texas-based short-seller and founder of Muddy Waters Capital, made his third successive appearance at Sohn London. After joking that he was surprised to see not everyone in the audience had moved to Dubai, he revealed a short position in Elf Beauty, a US cosmetics firm.
‘The reason for the overstatement of inventory is because they have been overstating revenue and profit,’ he said in a punchy presentation, after which shares in the Californian company fell. Shares are now slightly up on when Block made his call.
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But Elf should not be complacent. Shares in Block’s last two targets at Sohn London, Blackstone Mortgage Trust and DLocal, a South American payments company, remain down compared with when he spoke.
EU bonds: long
Diego Megia, founder of London-based Taula Capital, sees a positive case for EU bond investments in the only non-equity call of the day.
Megia said EU bonds, used by the European Commission to fund fiscal spending on major projects, from green energy to Ukraine, should be counted as part of sovereign indices. They would then trade cheaper as a result, by 40 basis points or so.
Megia tipped buying EU bonds and selling bonds with the same rating. His appearance came as it was reported his $5 billion macro firm was in talks to bring in a further $1 billion.
Cargojet: short
Edgar Allen, founder of London hedge fund High Ground Investment Management, made an entertaining presentation on their short position in Cargojet, a Canadian freight airline.
Taking aim at the operator’s ageing fleet, accounting practices and ‘flamboyant lifestyle’ of the founder, Ajay Virmani, including a photograph of him alongside popstar Drake.
Their low prices ‘weigh on returns,’ Allen said. Cargojet refuted the presentation, but shares remain down since Allen spoke.
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Vivendi: Activist stance
Vivendi, the French entertainment group, was the focus for Anne-Sophie D’Andlau, co-founder of French activist group CIAM. CIAM, a minority shareholder, was against listing the Canal+ broadcasting business in London, partly because listing a French company in London would not give it the same appeal. The Havas advertising agency would be listed in Amsterdam under the plans which she opposed. Her calls were not heeded and shareholders overwhelming backed the break-up plan earlier this month.
‘CIAM contends that the proposed spin-off is not a good option for creating value and is therefore not in the interest of minority shareholders,’ the firm said in a statement.
Spotify: long
David Semenza, of Islander Capital Partners, a San Francisco hedge fund, went long on Spotify.
The Swedish music subscription service, his firm’s biggest holding, was a proven disruptor and had beaten expectations, he said.
‘The music space has historically been a very challenging one to invest in,’ he said, but expressed full support for the management approach of Daniel Ek. ‘He wanted to create the best product in the market and he did that integrating things like podcasts, audiobooks… to create a better product than Apple Music and Amazon Music.’
It can now boost margins by increasing prices, which it is position to do because of the quality of the product.
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How successful were last year’s hedge fund tips?
How did the key calls from Sohn London 2023 fare?
- Michela Ferrulli, partner and head of wealth management at Calibrate Partners in London, pitched a long call in Lloyds Banking Group. The UK bank dipped in January but is comfortably up in the 12 months since her presentation. (Success rating: 7/10).
- Another UK blue-chip, BT, was the focus of Chris Dale, the founder of Kintbury Capital. He said shares could drop as much as 45 per cent. That was partly the case as they descended until May — but have been on an upward trajectory since. (Success rating: 5/10).
- Carson Block pitched a short call in Blackstone Mortgage Trust, a real estate investment trust. A year on, its share price is down by double-digits. (Success rating: 9/10).
Top 4 hedge fund launches of 2024
Arrowpoint Investment Partners
Founder: Jonathan Xiong
AuM: $1 billion
The biggest launch in Asia this year got going with $1bn in the summer. Backing from Blackstone, Canada Pension Plan Investment Board (CPPIB) and Singapore’s Temasek Holdings gave it global institutional credibility, as did Xiong’s background as the regional co-CEO with Millennium, one of the world’s top hedge funds.
Freestone Grove
Founders: Todd Barker & Daniel Morillo
AuM: $3.5 billion
The ex-Citadel duo launched their unique multi-manager firm in January. It has been billed as the “anti-pod-shop” – still running teams of investors across different strategies, but on a much smaller scale and with greater cooperation between teams.
Jain Global
Founder: Bobby Jain
AuM: $5.3bn
Founder Bobby Jain is the only person to have ever been appointed as co-CIO at Millennium alongside founder Izzy Englander. He left to start New York-based Jain Global, which raised $5.3bn on its mid-year start. The biggest launch of the year but fell short of fundraising expectations.
Taula Capital
Founder: Diego Megia
AuM: $5bn
Diego Megia, the highest-profile speaker at this year’s Sohn London event, started trading with his new macro firm in June. His day-one raise of $5bn made Taula the biggest London launch in years. Megia, whose former firm Millennium put up most of the money, is reportedly reopening now to bring in a further $1bn.
Sohn London 2024 was raising money for charities to fund critical pediatric cancer research and treatments.
Will Wainewright is the founding editor of Alternative Fund Insight.
