(Bloomberg) — Hedge fund managers and other investors are gathered at a conference in Montreal to pitch the next big thing, and everything from artificial intelligence, biotech and gold mining was on the table Thursday.
Whale Rock Capital Management LLC founder and chief executive officer Alex Sacerdote said he expects Anthropic PBC to be headed towards half a billion users.
“We are so so early. This is an L curve going straight up,” he said at the Sohn Montreal investment conference, without providing a time frame for the prediction.
He added that Anthropic, which makes the Claude chatbot, has jumped from 2 million users to daily active users 14 million quickly.
Whale Rock was a “significant investor” in Anthropic’s Series G round earlier this year, the Boston-based firm had earlier disclosed.
“Enterprise is the real prize. It hasn’t really started,” he said, adding that the first three years of AI were like a search engine “on steroids.”
The Sohn Montreal Investment Conference is the second annual gathering of well-known hedge funds and alternative asset managers such as KKR & Co., Blackstone Inc., Third Point Management and Bridgewater Associates, where they discuss trends and share investment ideas. High-level corporate executives and Canadian pensions funds were also present with all eyes on the jumbo initial public offerings coming out of the US.
Also Thursday, StemPoint Capital LP pitched French biotech company Abivax SA in a “best idea” presentation on Thursday, pointing to it as a potential M&A target.
Chief Investment Officer and Managing Partner Michelle Ross said that Abivax’s drug obefazimod can be compared to Humira as a treatment that could be a “pipeline in a product for another company.”
Abivax shares plunged earlier this week after cancer cases in a crucial clinical trial for a bowel disease drug threw the French biotech’s future into question. The stock was up as much as 16% Thursday in Paris on analysts saying the concerns over the trial were overdone.
“It may be an understatement that biotech possesses one of the strongest M&A tailwinds that I believe we’re going to see over the next six to 12 to 18 months,” Ross said. “This is also a very high conviction M&A target.”
Then Toronto-based hedge fund Waratah Capital pitched Artemis Gold Inc., the Canada-based gold miner that operates the Blackwater mine in British Columbia. The mining company is a bet on the idea that one of Canada’s newest gold mines is only beginning to show its earning power and the market has yet to fully value its future production profile, according to Brad Dunkley, chief investment officer and co-founder at Waratah.
Dunkley noted that Artemis trades at a discount to comparable Canadian gold producers despite having a long runway of growth and insiders owning roughly 36% of the company. His analysis suggests that, at current gold prices, Blackwater could generate more than C$2 billion (US$1.4 billion) of annual free cash flow by 2029, while a re-rating toward peer valuation multiples could deliver upside of more than 50% from current levels.
Dunkley added that the company’s Blackwater mine in British Columbia combines three attributes that are rarely found together: a large-scale asset in a top-tier jurisdiction, low operating costs and fully funded growth.
Anthropic IPO – Threats to AI
On Monday, Anthropic confidentially submitted draft paperwork for a public listing, potentially leapfrogging longtime rival OpenAI in the race toward a Wall Street debut as soon as this fall. Anthropic, once viewed as an underdog to OpenAI, raised $65 billion in a funding last month at a $965 billion valuation.
Despite concerns that soaring valuations have created an AI bubble, Sacerdote dismissed comparisons to the dot-com era. Unlike 1999, when companies such as Cisco traded at more than 100 times forward earnings, today’s AI leaders are generating substantial profits and trade at far lower multiples, Whale Rock’s Sacerdote said.
The biggest threat to the sector is not economics but regulation, he added, warning that governments could slow innovation if public fears surrounding AI translate into restrictive policies.
“Americans don’t seem to like AI,” Sacerdote said. “There’s a lot of not in my backyard. But you won’t be able to stop the trend.”
Whale Rock, based in Boston, focuses on tech, media and telecommunications investments.
Seth Fischer, founder of Oasis Management, revisited his campaign to put pressure on Tokyo-based gaming company Kadokawa Corp., which he had spoken about last month. He was spotted wearing a “Japan is back” cap at the conference.
Many headlines have sparked concerns about defaults and valuations in the private credit market in the past year, particularly the software sector due to AI disruption putting pressure on business models. Third Point’s head of private credit, Christopher Taylor, argued the asset class remains strong.
“That concentration risk is a product of how those platforms were built, not an indictment of the asset class itself,” he said, adding that diversification among borrowers adds protection. “Private credit is not broken.”
Pembroke Management Ltd.’s founder and chair Jeffrey Tory said Canada has “lost its status among investors,” and that “significant outflows of capital over the last decade have led to compressed valuations and higher cost of capital.”
That has created a “Made in Canada” discount in many industries which provides a greater margin of safety and opportunity, he said. He gave the example of Calgary-based Black Diamond Group Ltd., which specializes in workforce accommodation and modular spaces in remote areas such as Alberta’s oil sands. The company stands to benefit from demand in resources and higher spending in infrastructure, Tory said.
Yacov Arnopolin, a managing director and portfolio manager for emerging markets at Pacific Investment Management Company LLC, pitched a trade in Nigerian treasury bills. He said Africa’s most populous country has “huge potential” as a large oil producer and a stable and appreciating currency in the naira. At the same time, he acknowledged the country has security risks with terrorism in the north.
(Updates with comments on investment in Canada and Nigeria in the last three paragraphs)
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