When New York-based hedge fund manager Ricky Sandler arrived in Australia a year ago to spend time with his son who was studying in Sydney, he didn’t expect to become the reigning champion of a philanthropic investor conference.
Sandler’s winning pick, New Relic, a US-based web tracking and analytics company, rallied nearly 70 per cent since he pitched it at the last Sohn Hearts & Minds conference, after the firm was acquired in a $6.5 billion all-cash deal in July.
But as he once again makes the 24-hour round trip, Sandler won’t be looking to repeat his standout performance.
“That’s an unrealistic expectation,” he says. “One of the things that goes back to the emotion of investing is that having unrealistic expectations is not good or helpful.”
Looking to the broader market, Sandler says the Russia-Ukraine conflict, which dominated headlines during the last conference, was no longer a major factor.
“I think today, the big themes will be AI disruption and interest rates,” he says. “It’s very early days for AI, so there’ll be more speculation than proof points, but it’s a big trend and something that everyone understands to be very important. And then, we’re still in this higher interest rate world where a lot of the impacts have yet to be seen.”
Meanwhile, Sandler says inflation is unlikely to return to levels seen before the pandemic. “I think the market is wanting to believe inflation is coming down, but to what level is still uncertain, as well as how that interplays with interest rates,” he says.
“My personal view is that inflation will come down but not quite to the levels that it existed pre-COVID. At least in the US, I don’t see inflation coming down to 2 per cent again.”
Sandler attributes this to long-term structural changes such as ESG infrastructure. “We’re building a whole new energy system, which we already have,” he says. “It’s not new productive capital, it’s capital that’s going in to rebuild something we have, similar to rebuilding supply chains for nearshoring.”
“Those two trends, plus the strength of labour in negotiating stronger contracts around the globe, I think means inflation will probably run closer to 3 per cent, and long-term interest rates, at least in the US, probably will remain north of 4 per cent for a while.”
Sandler won’t be the only one flying into the conference as it enters its eighth year in November.
Sohn Hearts & Minds co-founder Matthew Grounds says the conference, which has raised more than $60 million dollars for Australian medical research organisations since its inception, would welcome more international fund managers than ever before.
“Normally, we have about 60 per cent domestic fund managers and 40 per cent from offshore,” he says. “This year, it’s swung the other way. It’s about 80 per cent offshore.”
Grounds, who is the co-executive chairman of Barrenjoey, says longevity expert Peter Attia will be one of the key speakers at the event, along with 11 hand-picked fund managers.
“The fund managers basically pitch a stock, and they do it in eight minutes,” he says. “When I say that quickly, it sounds easy, but to actually distil the characteristics of a company and its valuation, and to be able to do that clearly while entertaining the audience is actually very hard.”
Sandler says while he doesn’t anticipate a repeat performance of his top stock pick, the conference would be a meaningful use of his resources.
“To come out here and change lives, and support medical research, I can’t think of anything more meaningful,” he says.
This masthead’s owner, Nine Entertainment, is a media partner of the Sohn event.
The Sohn Hearts & Minds conference will take place at the Sydney Opera House on November 17.
This article was originally posted by The Age here.
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