2nd UPDATE: Hedge Fund Manager Tepper Thinks BofA Shares Could Go To $27

Sallie Mae and American International Group Inc. (AIG) 8.175% junior subordinated debt were some of the picks hedge fund managers touted at a widely followed industry conference in New York on Wednesday.

Manager David Tepper, who made headlines last year for his outsized success betting on a comeback in bank stocks and debt, told attendees at the annual Ira Sohn Investment Research Conference that he still likes Bank of America Corp. (BAC) and predicted shares, which closed Wednesday at $15.47, could go to $27. Also getting Mr. Tepper's thumbs up, Spanish bank Banco Santander (SAN.MC, STD), which has been battered amid the European debt crisis.

He said shares could double in price. He's also bullish on a $4 billion issue of AIG junior subordinated debt, with an 8.175% coupon.

Jonathon Jacobson, founder of hedge fund manager Highfields Capital Management, said he thinks SLM Corp. (SLM), known as Sallie Mae, should be worth $15-$25 a share, thanks to the shakeout in the student loan industry and what he called the company's ability to acquire the servicing rights of student loans being relinquished by companies exiting the business.

The stock was up 5.5%, to close at $10.96.

Some managers were downbeat. In a presentation called "For Profit Goes To College," FrontPoint Partners hedge fund manager Steve Eisman said he remains bearish on for-profit education companies like Apollo Group Inc. (APOL) and ITT Educational Services Inc. (ESI). These companies are "marketing machines masquerading" as educational institutions, said Eisman, who was a predictor of the subprime mortgage woes. Apollo in a statement said it "supports the U.S. Department of Education's efforts to enhance accountability within higher education and is striving to play a leadership role in continuously improving and transparently reporting the outcomes and achievements of students served by our educational institutions." ITT didn't immediately respond to a request for comment.

David Einhorn, still known for his bearish call at the 2008 conference on Lehman Brothers Holdings Inc. (LEHMQ), which shortly thereafter headed into bankruptcy protection, said long term budget problems will affect current generations, not their grandchildren's. Debts will come due sooner than people think, he said. Einhorn also reiterated that he thinks the system of how credit ratings agencies assign ratings should be looked at by regulators. Last year, Einhorn at the Sohn conference said he was shorting shares of Moody's Corp. (MCO).

Jeremy Grantham, co-founder of investment management firm GMO LLC, said he thinks the housing bubble in the U.K. and Australia haven't yet deflated, and will eventually cause "pain" just like the collapse of the U.S. housing bubble.

Jamie Dinan of York Capital Management says his firm likes the equities of companies coming out of bankruptcy, like LyondellBasell Industries (LALLF, LALBF), which came out of bankruptcy in April and is looking to list on the New York Stock Exchange later this year.

Also slated to speak Wednesday was manager Bill Ackman. At the 2007 conference, he rightly predicted that bond insurers would be hurt by the subprime mortgage crisis.

The unusual conference, at which 12 hedge-fund managers present their favorite investment ideas in concise 15-minute presentations, was founded 15 years ago in honor of Ira Sohn, a Wall Street analyst who died of cancer at 29-years-old. The conference raises funds for pediatric illnesses. It is followed keenly by investors looking for new perspectives from top hedge-fund names.

Now the foundation is launching a new conference in San Francisco, to raise money for a not-for-profit organization that runs a network of charter schools in the Bay Area. The first event, scheduled for Oct. 6., is being organized by Patrick Wolff, a managing director at hedge fund firm Clarium Capital who is also a two-time U.S. chess champion and International Grandmaster.

-By Joseph Checkler; Dow Jones Newswires; 212-416-2152; joseph.checkler@dowjones.com

(Alistair Barr and Melissa Korn contributed to this article.)

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