Big hedge funds reveal their likes and dislikes

Date: Friday, May 13, 2011
Author: Svea Herbst-Bayliss, Reuters

* Many like energy companies

* E*Trade, Transocean, El Paso, precious metals also eyed

By Svea Herbst-Bayliss

LAS VEGAS, May 12 (Reuters) - Hedge fund managers are known to be secretive, but this week several opened up about the bets they like -- and many U.S. companies were high on their list.

Leon Cooperman, who runs Omega Advisors, describes himself as a value investor who likes to get more for less. One of the names he likes right now is E*Trade Financial Corp (ETFC.O: Quote)., which he called a "great consolidation candidate."

Cooperman also told the estimated 1,700 attendees at the SkyBridge Alternatives Conference in Las Vegas that he likes General Motors (GM.N: Quote), which he expects can return cash to investors.

The conference drew some of the world's most prominent hedge fund managers ranging from Steven Cohen to Daniel Loeb to Israel Englander, and hundreds of lesser-known investors listened intently to the themes these men are seeing in the market now and the names they are favoring.

One common theme among the top managers was an appetite for energy stocks at a time many said demand is sure to keep rising.

Cooperman said his fund is overweight these types of stocks and cited Transocean (RIGN.VX: Quote) as a play he likes.

Steven Cohen, who oversees $13 billion at SAC Capital Advisors, said the recent commodity sell-off has created an "interesting entry point for energy stocks."

And Loeb, who runs Third Point, said El Paso Corp's (EP.N: Quote) share price has room to rise, according to people who heard him speak at the conference. Loeb prohibited the media from quoting his comments directly.

Maverick Capital's Lee Ainslie repeated a view he has expressed for several months now -- he likes technology stocks -- but was mum on which names are among his favorites.

Passport Capital's John Burbank cautioned investors to look outside the United States as he worried that Western countries would face serious trouble ahead. "Most Americans have been betting everything on America and equities, and they think it will work out."

What was notably absent among the calls from top managers were the big financial stocks that have featured prominently in some hedge fund managers portfolios for months but have recently weighed on performance.

Indeed, Eric Sprott, who heads Sprott Asset Management said investors' persistent fears about banks and the economy -- banks stocks have dramatically underperformed the stock market this year -- would drive people back to commodities, particularly precious metals.

"If you have a fear of the banking system, you go into things like gold and silver," Sprott said. "You have to find something that retains its value."

"Precious metals are the way to survive the oncoming Armageddon," Sprott said.

Last week's dramatic drop in the price of silver, he said, was perhaps due to some unnatural circumstances. "My personal feeling is that it was manipulated. The price went down six dollars in 13 minutes."