Rising hedge fund stars at Sohn give their top investment ideas, including one that can rally nearly 50%

CNBC

14-05-2025

A handful of hedge fund founders took the stage Wednesday at the 2024 Sohn Investment Conference in New York to share their best investment ideas.
The conference — one of the most anticipated hedge fund events of the year — kicked off with "Next Wave Sohn," a session that features ideas from leaders in the hedge fund industry.
Here are their picks:
Alexandra Engler, managing partner of Arene Capital, pitched Celanese as a top pick primed for sharp gains ahead.
Celanese is the world's largest producer of acetic acid and the most vertically integrated large Western producer of the compound, which drives a "durable cost advantage" for the company, according to Engler. Her fund focuses on what she called "idiosyncratic dislocations," or situations where securities experience sudden sell-offs due to secular disruptions.
Celanese shares have suffered a nearly 24% decline this year as the price of methanol — a substantial input cost in acetic acid prices — has been spiking for about 18 months due to global supply shortages.
Engler sees the stock rising to $79 per share, implying 45.9% upside from Tuesday's close. The hedge fund founder is betting on a global deficit of methanol to increase over the next three years, requiring the U.S. to increase production and drive higher methanol prices. That, in turn, should lead to a 30% price increase in U.S. acetic prices by 2028 from current levels, according to Engler's forecast.
"We believe acetic acid capacity utilization in the U.S. has bottomed," Engler said. "With capacity stabilized, we believe higher methanol will drive higher acetic acid prices."
Robinhood is what Kristov Paulus calls a "hypercompetitor," a company that builds products fast, has a strong vision and bold leaders that he believes are underestimated by Wall Street. Robinhood is Kultura Capital Management's largest position.
"Even in a more negative macro situation, this is quite reasonably priced," said Paulus, the fund's founder and CIO. "Underwriting this business is a hypercompetitor. This is betting on the organizations that are more likely to surprise us on the upside with products that not even we are thinking of."
Robinhood has plenty of growth catalysts and "considerable room to grow as they close the gap with incumbents," Paulus said. "This organization is executing better than they ever have before, and we see many different ways that they can be successful."
Paulus said Robinhood's product velocity has picked up in the last 18 months after stalling in 2021 and 2022, and that the company also has seen its customer retention rate rise since the GameStop mania in 2021.
Another durable tailwind for Robinhood is the expected wealth transfer from "baby boomers" to millennial and Gen Z individuals. Paulus said the company is the the most popular brokerage among millennial and Gen Z investors in the U.S.. Robinhood also stands to grow from its highly accretive crypto offerings and expansion into retirement and international verticals, he said.
Robinhood shares have jumped more than 65% this year, rallying 25% just this month.
Fintech company nCino, which provides cloud-based software used by banks and financial institutions, is at a unique growth inflection point, according to Felis Advantage founder Connie Lee.
Lee said nCino shares are attractively valued, trading at a 50% discount to vertical software peers due to challenges she views as being temporary. For example, nCino is currently changing its pricing to be based on a bank's asset size, rather than loan officers employed. This, she said, should help accelerate the business given that the company has a significant market share of U.S. banks with $1 billion or more in assets.
"nCino is a high quality business with a dominant position in a large underpenetrated market, yet it trades at a steep discount compared to peers due to a confluence of one-time events," Lee said, adding that the company "presents a particularly asymmetric risk-reward."
"For nCino customers, nCino is one of the most important pieces of software within the technology stack. It literally drives their revenue engine. So as you can imagine, nCino is very sticky, deeply embedded and mission-critical for those customers," Lee said.
What's more, Lee views nCino as a tariff and recession-proof stock and named the stock an "AI winner" in a world of dynamic complex banking regulations.
Shares of nCino are down 28% this year.
VictoryArc Holdings founder and CIO Joseph Talia believes Tel-Aviv Stock Exchange, or TASE, is an under-the-radar play that can triple over the next five years.
"TASE is a monopoly financial infrastructure asset that we think can compound intrinsic value in the mid-20s for many years to come, aided in part by a margin expansion opportunity," Talia said. "TASE' products are still priced at a massive discount to global peers."
"In many ways, it is a supermarket for the capital markets of Israel — except it is the only game in town," he added, noting that Israel's real GDP has compounded 4% over the last 35 years and is home to underdeveloped capital markets.
Talia believes that TASE offers a diversified and durable revenue stream, and said that exchanges, such as TASE, act as essential infrastructure assets with earnings streams that are generally uncorrelated to the market and broader economy.