* Chanos betting against alternative energy
* Ackman likes cheap stuff at Family Dollar
* Einhorn calls for MSFT board to replace Ballmer
* Falcone still likes LightSquared (Adds Einhorn's comments on Microsoft)
By Svea Herbst-Bayliss and Matthew Goldstein
NEW YORK, May 25 (Reuters) - Bet against solar energy, says famed short seller James Chanos. Squirrel away gems, advises bond guru Jeffrey Gundlach. Go long on discount retailer Family Dollar, counsels activist investor Bill Ackman.
These and other hot -- or unusual -- ideas emerged on Wednesday from an annual conference where top hedge fund managers pitch their best investment ideas.
Chanos threw cold water on alternative energy companies, saying that shares in wind turbine maker Vestas Wind Systems (VWS.CO) and solar panel maker First Solar Inc (FSLR.O) likely will fall.
Arguing that alternative energy may not create the jobs politicians predict, Chanos said he would likely offend the green movement with his bets.
"The cost of wind is 50 percent more expensive than natural gas," Chanos said, adding that Denmark-based Vestas would be a good company to bet against or sell short.
The environmental benefits of solar power are also questionable, he said.
Chanos said he is certain that he is on the right path on First Solar because top managers are leaving the company. "We advise you to heed their warnings," he said, drawing both applause and laughter.
Ackman, who has cemented his reputation as a polite activist, said his new idea is on the passive side -- indeed it is not even his own, but investor Nelson Peltz's idea. He likes retailer Family Dollar Stores Inc FDO.N for being accessible to shoppers and selling unique and inexpensive products.
While lagging behind chief rival Dollar General, its managers are trying to close the gap, and the company may be a buyout candidate for private equity firms, he said.
Retailers seem to be popular. HSN Inc (HSNI.O) which runs a home shopping television network, rose 5.3 percent after KKR's Bob Howard recommended it. Crosstex Energy Inc XTXI.O shares rose 11.3 percent after Harbinger Capital's Philip Falcone said the company's shares, which traded the day before at about $9.13, could rise to $18 to $20.
Most of the speakers touted what they already owned. Trian Fund Management's Peter May, who is Nelson Peltz's partner, talked about jeweler Tiffany and Co (TIF.N). He did not discuss Family Dollar, the idea Ackman presented, even though he owns it and his bid for the company was rejected in March. Dinakar Singh, who founded TPG-Axon Capital, likes telecom company Sprint Nextel Corp (S.N).
Greenlight Capital's David Einhorn, whose fund long has owned shares of Microsoft Corp (MSFT.O), again touted that stock, but he did it with a twist -- he called for the software company's board to oust CEO Steve Ballmer.
"Almost everyone agrees that it is time for the Microsoft board to tell Steve Ballmer lets give someone else a chance," he said.
The industry's elder statesman Carl Icahn plugged his own company and said the management is good and he would like to continue to acquire companies.
"We like to do it friendly," he added.
Gundlach, lacing his talk with slides of artwork by Pablo Picasso, Andy Warhol and others, forecast the U.S. economy's problems would escalate and that investors should protect themselves.
However, instead of recommending gold, a common safe haven, Gundlach urged investors to buy gemstones. "For real wealth preservation portability has got to be an issue."
But the bulk of speakers did not surprise.
Steve Eisman, who made his reputation with a bet against subprime mortgages, said investors may be down too much on financial stocks, and said there were some gems in property and casualty insurance.
He said there are three ways to play them, beginning with buying insurance brokers. Next, investors could buy large reinsurers, and the very brave could buy the bigger and more diversified property and casualty company stocks. He offered a chart of the companies, but did not pick any in particular.
"When the cycle turns, the upside in earnings could be considerable," he noted. (Additional reporting by Aaron Pressman. Read his tweets from the conference on Twitter at www.twitter.com/ampressman) (Editing by Gary Hill, Bernard Orr, Robert MacMillan and Andre Grenon)