An Easy Trade I Missed: XTXI

This is one of those “JEEZUS – I’m a frickin’ IDIOT for not seeing this one” trades.

The Ira Sohn Conference is going on today – it’s an annual event where big name hedge fund managers get up and talk about their “best ideas.”  Market Folly, DealBreaker, and NYT DealBook all have good coverage of the event, but I want to take a minute to talk about a specific trade that, in hindsight, seemed obvious.

Phil Falcone of Harbinger Capital talked about $XTXI – Crosstex Energy.  Now, he’s their largest shareholder.  In addition, XTXI is basically Harbinger’s second largest holding (behind Spectrum Brands, according to a screen a colleague ran for me).  The point, of course, is that it should have been foreseeable that Falcone might talk about XTXI – a $500MM market cap company which is a huge weight in his fund and of which he is the largest shareholder.

Note: I’m making no statement whatsoever about the validity of XTXI as an investment idea, and am positively not faulting Falcone in any way for “talking his book” – I’m just saying that we know that people react to the ideas touted at Ira Sohn and that a little research could have uncovered a strong likelihood that XTXI might be mentioned by Falcone.  If you believe that people go out and buy the stocks that get mentioned (which, in general, I do believe), then this one should have been a layup in terms of positive expected value.  Oh, by the way, the stock is ripping:

XTXI - After Falcone's Ira Sohn Conference Pitch

-KD

disclosure – no position in $XTXI

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