We were featured in Barron’s over the weekend! Excerpts below, with a link to the piece.
“The trick is to focus on the activist subset, says William Meade, co-founder of Billionaire’s Portfolio (billionairesportfolio.com). It usually takes big fund managers months to build positions and a year or more for their activist proposals to play out. Billionaire’s Portfolio, launched in August 2012, follows along, spreading a hypothetical $20,000 across 20 stocks held by the likes of Carl Icahn of Icahn Enterprises and Starwood Value’s Jeffrey Smith.
Meade follows about two dozen whales whom he describes as “true activists with a track record of taking a 5% position in a company and influencing change.” While many institutional purchases don’t show up on an SEC form for months, trades by 5% owners have to be reported within 10 business days. That usually bumps up share prices, but then they settle down.
For $297 a quarter, Meade alerts Billionaire’s Portfolio subscribers to entry and exit points through e-mail and on a private blog that details the rationale for every recommendation. Meade and aptly named co-founder Bryan Rich mirror those trades a day later in a $100,000 real portfolio they share. They buy on dips so subscribers realize about the same average share cost as activists. Positions adjust when activists do.
Meade only buys Russell 2000 issues he considers “undervalued.” But that assessment has less to do with price/earnings ratios and future cash flows than the — often, overtly stated — plans of activists to “unlock value.” “I only buy when there is an event or an influential investor positioned to reprice the stock,” he explains.”
“Meade’s backtesting shows that, whether their initiatives succeed or fail, his activists usually make money — a 31% annualized return over the past 12-years compared to the S&P 500′s 6.1%.”