3/21/2014

Today is quadruple witching day tread carefully. This means that the markets will be extremely volatile and directionless due to the fact that stock options, index options, single stock options and stock index futures all expire today.

Will Meade
President of The Billionaires Portfolio

3/19/2014

I love biotech stocks, not only are they non correlated to the stock market and economy, but a lot of the companies are actually improving the world by creating drugs that are curing serious diseases. As a student at The Johns Hopkins University I became very familiar with the Biotech Industry and have been enamored with it ever since.

Even better biotech stocks are red hot, the sector has been one of the best performers this year up 17% YTD and 66% in 2013. Small cap biotech stocks have performed even better, last year alone there were 14 biotech stocks that went up more than 500% and 4 that went up more than 1000%.

So how do you find the best small cap biotech stocks, the ones that go up 500% a 1000% in a year. Its simple you piggyback the stocks owned by the best biotech hedge funds in the world.

There are about 6 to 8 superstar biotech hedge funds, and all of them invest in the small cap homerun type biotech stocks. These hedge funds are run by managers with PHDs, MDs from the top schools in the world Stanford, Harvard and Johns Hopkins. Moreover these managers have medical and research experience at hospitals universities and labs, so they really know how to analyze biotech companies and their drugs. Furthermore many of these hedge funds were up 80% or more in 2013 and are up 25% YTD.

In our Billionaire’s Portfolio Service we own 4 biotech stocks, all of which are owned by some of the top biotech hedge funds as well. Our Biotech portfolio has crushed the market YTD with one biotech stock that has almost tripled.

Will Meade
President of The Billionaires Portfolio

3/19/2014

Bloomberg had an article this morning on the best performing mutual fund over the last 10 years its run by the 71 year old Mario Gabelli and its (no joke) called the Mighty Mites Fund (no joke). The fund has been the best performing equity mutual fund over the last 10 years yet is has only averaged 11% a year.

This is sad, basically the best mutual fund or investment product offered to retail investors can only produce 11% a year over the last 10 years versus an 8% return in the S&P 500. Even worse the Mighty Mites fund holds more than 450 stocks making it basically a closet index fund, on top of that Cornball Gabelli charges you a hefty 1.41% management fee.

Investors should be upset at this I am, and that’s one of the main reasons I started The Billionaires Portfolio to give the everday investor access to hedge fund type returns.

I have published many times my exhaustive performance study of piggybacking the world’s best billionaire investors and hedge funds.

If you would have simply purchased every stock owned by what I call the ‘Activist Master Select Group” which includes managers like Carl Icahn, Bill Ackman you would have returned 24.5% annualized over the last 10 years.

That 24.5% is more than double the return of the best performing mutual fund (11.4% annualized) and it costs less than a mutual fund at only $299. To get a copy of my study and to subscribe to the Billionaires Portfolio visit us at Billionaires Portfolio

Will Meade
President of the Billionaires Portfolio

3/19/2014

A trader paid almost $8 million for a trade that will pay off if the VIX (Volatility) Index rallies at least 60 percent by May.

The trader bought 150,000 bullish contracts on the VIX expiring in May with a strike price of 22.

This could be a hedge for a big fund or an outright bet, if its an outright bet it would be an incredible asymmetrical trade in that the $8 Million could easily turn into $100 Million or more if the VIX Spikes to 30 or above by May.

Will Meade
Billionairesportfolio.com

3/18/2014

I have written a lot lately on this blog about my stock replacement strategy. As you remember the stock replacement strategy is buying deep in the money call and put options to replace buying the actual stock. The advantage of using options is that gives you free juiced leverage 10 to 20 times, with limited downside and low capital requirements (you only have to put 1/10 or 1/20 of the amount compared to buying the actual stock).

And this stock replacement strategy allows you to trade with an account as little as $5000 to make a $1000 a day swing trading and day trading stocks.

The key to this strategy is to find highly volatile, liquid stocks that have options with high trading volume so that you have a very small spread when you buy the option. What this means is when you are day trading or swing trading stock options, you only want to buy puts and calls that have very tight spreads, (the spread is the difference between the bid and ask). You want the spread to be pennies.

Next, you need to understand that in the short term (anywhere from 1 to 5 days) price action, money flows and technicals drive 95% of the stock price in the short term. So you need to know what chart patterns work in the short term and luckily there are a few great ones that work almost all of the time.

Lastly, you need to use my secret stock replacement technique, that is only buy options that are deep deep in the money, so that the option moves almost one for one with the stock.

So to use this secret stock replacement technique of day trading swing trading options you need the follow these rules every time:

1) Only trade stocks that have options that are very liquid with high volume, so that you when you buy the put or call the spread is very low, (it should be pennies) so that you are not paying a big premium on every trade.

2) Only trade volatile stocks with great short term chart patterns. Like Lululemon (LULU) today.

3) And most importantly, you want to use my secret stock replacement strategy of only buying deep in the money calls and puts, in which the options moves almost one for one with the stock.

Will Meade

President of The Billionaires Portfolio

3/18/2014

His name is “J”, and he runs a $40 million fund which has generated an incredible 54% annualized return over the last five years. To put this in perspective if you would have invested just $15,000 in J’s fund in 2009 you would now have more than $130,000 dollars!

J returned 264.38% in 2009 and had 2 stocks that went up 1000% or more. Even more impressive his fund only lost 9% in 2008 versus a 37% loss in the S&P 500. J has not only crushed the market indices but he has done it with less risk.

To put J’s 54% annualized return in perspective, no other mutual fund or hedge fund in the world has a better 5 year track record. This means over the last 5 years not one fund (over 18,000 funds) has better performance than his.

The name of this fund and the manager is…

I give you a lot in this blog, but this one … I won’t give everything away for free. To get the rest of this post you must subscribe to The Billionaire’s Portfolio.

Will

3/14/2014

I called the bottom in Apple on CNN and fortune.com. Below is the link to my article: An Apple Bear Calls The Bottom.

So I called the bottom, now I am telling you Apple is going to $700.

Technically you can see from the chart below that Apple is ready to break out of a bullish inverse head and shoulders pattern, if it closes above $545, this pattern projects a price target of $700 for Apple.

Furthermore every stock needs a catalyst to move it. I believe Apple has two catalysts that will move its stock price up. First according to trim tabs research Value Based Mutual Funds have been purchasing Apple stock at a record pace, this has not always been the case as many value managers never purchased Apple during its big move over the last couple of years.

Secondly Apple will come out with a smart watch, many analysts think this will be released around September of 2014. This will be a game changer as it will be the first product in years that will actually get people excited about Apple the company again. More importantly it will increase Apple’s growth prospects which will cause sell side analysts to raise their earnings/revenue estimates as well as their price targets.

3/13/14

So what is the secret to hedge funds bringing in so much money?

Its simple, the best hedge funds do exactly what their name implies – they hedge and when you have bumps in the market like this year, hedge funds will outperform all the indices and those dinosaur mutual funds as well.

But its 2014 so no need to lock your money up with a fund of funds or hedge fund simply follow the: BillionairesPortfolio.com.

We piggyback the world’s best hedge fund’s stock picks, and we opportunistically hedge those positions with put options and inverse leveraged etfs, all for just $297 dollars.

3/11/2014

My former boss, a former Goldman Sachs Fund Manager and Harvard MBA who managed money for some of the biggest pension funds and endowments in the country, had a special formula for investing in stocks during volatile times.

The formula had the following criteria:

1) A Market Cap greater then $10 Billion
2) Five Year Projected Annualized Earnings Growth greater than 5%
3) A dividend yield greater than the 10 year treasury bond.

The reasoning behind the screen is simple, you want a stock whose earnings are growing because it offers protection against inflation, secondly large brand name companies are less volatile and more recession proof than smaller unknown companies and buying stocks with dividend yields higher than the 10 year treasury bond allows you to get stock like returns with bond like risk.

Will Meade
President of The Billionaires Portfolio

3/10/2014

What is the number 1 trading secret of the most successful and wealthiest hedge fund managers? Its Asymmetrical investing. What is asymmetrical investing? Its a low risk trade that also has the potential for huge or unlimited upside. Think John Paulson in 2007.

Paulson bought cheap credit-default swaps on subprime-mortgage assets, his capital risk was relatively small but the potential payout, huge. Paulson’s asymmetric trade made an almost 700% gain in 20007.

Another example, Jeffrey Altman of Owl Creek, in 2008 Altman purchased millions of Fannie Mae and Freddie Mac preferred shares for 2 cents on the dollar, today the preferred shares of Fannie Mae and Freddie Mac sell for almost 40 cents on the dollar, a 2000% return.

At Billionairesportfolio.com all we do is look for asymmetric trades, in fact right now we have two stocks in our portfolio that I think have the potential to return 300% or more by the end of 2014.

Will Meade
President of The Billionaires Portfolio

3/5/2014

Back in 2010, Perry Capital a distressed and event driven hedge fund purchased $500 Million of Fannie Mae (FNMA) and Freddie Mac (FMCC) shares at $2 cents on the dollar

Today, both companies Fannie and Freddie are selling at over $5 a share and Perry Capital’s $500 million dollar investment is now worth more than $33 Billion a 6700% return.

That means if you would have invested $1500 into Fannie Mae’s or Freddie Mac’s stock back in 2010 you would now have an more than $100,000 dollars!

These type of home run trades are exactly what we look for in our premium research service The Billionaires Portfolio.

We are the first and only research service that actively manages a portfolio of stocks owned by the world’s best billionaire investors and hedge funds that also have the potential to make multiples of returns, (200% 500%, 1000%, even 6700%.)

Will Meade
President of The Billionaires Portfolio
www.billionairesportfolio.com

3/4/2014

I think before anyone writes an article, there should be a preface or introduction with the author’s background explaining why he is qualified to offer advice on the topic.

So before I give my opinion on the most overrated and underrated hedge fund managers, as well as the best hedge fund strategies, I will give you my bio.

I have over 15-years of experience in the hedge fund industry. I started my career working for what they call on the street “the Big Ugly’s.” These are hedge fund managers with the classic pedigree: Harvard MBA- Goldman Sachs (alums).

The fund I worked for managed around $1.5 billion dollars and used all the numerous classic hedge fund strategies: Long-Short Equity, Convertible Arbitrage, Distressed and M&A.

After that I worked for an $11 billion dollar fund of funds, where I basically had the opportunity to see the performance numbers and investment styles of the best hedge fund managers in the world.

Along the way, I have interviewed and had meetings with some of the top hedge fund managers in the world.

Through this experience I have gathered some insight on the best performing hedge fund strategies and managers.

The Best Hedge Fund Strategies:

1) Long-Short Healthcare- This strategy has proven to provide the best alpha (meaning returns are not determined by beta –an underlying benchmark — rather, purely skill-driven). Basically the top manager in the biotech and pharma space have delivered some of the best 10 and 15 year returns, while keeping drawdowns and losses to a minimum. There are two multi-billion dollar healthcare hedge funds that have 10-year plus track record of 40% annualized returns without a losing year. Also I happen to know a good deal of talented analysts in this space from my years spent at The Johns Hopkins University.

2) Activist Investing- is by far the best long only strategy available. Biotech and activist are the only two long-only strategies that have little or no correlation to the overall stock indices. Why? Activist investors create news and they create value. Think Carl Icahn, Bill Ackman, Dan Loeb … they create news and value in stocks regardless of what the overall stock market is doing. Change is the recipe for revaluing a stock. And these guys are change-makers.

3) Distressed- This strategy is simple, and offers by far the best returns of any strategy out there. Basically hedge funds and private equity funds loan money to companies on the verge of (or in) bankruptcy. If they can keep the company alive there are huge, and I mean huge, returns to be made. Some of the biggest returns I have ever seen have come from distressed investments. I am talking about 10,000% plus returns. But you have to have patient, as these types of investments do take time to play out. David Tepper is the best hedge fund manager I have ever seen in this space. He has generated almost 40% annualized returns for more than 20 years.

The Worst Performing or Overrated Hedge Fund Strategies

1) Convertible Arbitrage- This worked for years in the 1990′s and early 2000s but is completely dead now, as the markets have become too efficient, with so many hedge funds trading in this space.

2) Long Short Equity- Basic long-short equity has performed horribly over the past 5 years. Shorting has always been a very difficult strategy. There are a litany of forces working against you, not the least of which are short selling restrictions and government policy responses (in times of turmoil). Moreover, there has been incredible growth in ETF’s where even bad stocks are purchased and bid up by index funds and ETF companies.

3) M&A- Again another strategy that has been hurt by the huge number of funds and trading desks that are involved in this space now.

If you are looking to invest in a hedge fund, I would start with the first three categories, and then narrow it down to a mix of some of the best established managers — only managers with strong track records of generating market beating returns and avoiding annual losses and huge drawdowns.

If you don’t have $10 million (a common minimum to participate in the top performing funds) and you don’t want to pay the huge 2% management fee and 20% performance fee, you can just join our online service for self-directed investors, The Billionaires Portfolio.

Our Billionaires Portfolio, consists of 20 of the best stocks from the best hedge fund managers in the activist, biotech and distressed space all equal weighted and hand selected by me. I only pick stocks from the best hedge fund managers (both established and emerging managers) that have the biggest potential return combined with the lowest downside risk. It’s like an actively managed fund of funds for just $297 a quarter.

Through our Billionaires Portfolio the average/everyday investor can co-invest with the top hedge funds in the world for only $297. That my friends is a pretty good deal!

Will Meade
BillionairesPortfolio.com

3/2/2014

Our article on Forbes.com, Stocks That Billionaires Are Buying

Forbes released the newest World’s Billionaires List this week. Now that you know who they are, let’s talk about what stocks they are buying.

At billionairesportfolio.com we track all of the stock holdings of the top billionaire investors. Here are the most recent stock purchases by some of the world’s richest, most powerful investors, including the richest man in the world, Bill Gates.

1) Bill Gates, through his Gates Foundation, recently purchased a stake in Air Products and Chemicals (APD).

2) Warren Buffett, number four on the new Forbes World’s Billionaires list, recently purchased Goldman Sachs (GS), Exxon Mobil (XOM), Liberty Global (LBTYA) and Suncor Energy (SU)

3) Carl Icahn, the 25th wealthiest man in the world, recently purchased Hologic Inc (HOLX), Talisman Energy (TLM) and Apple (APPL).

4) George Soros, another hedge fund icon, is the 26th richest man in the world. He recently purchased JP Morgan (JPM) Essent Group (ESNT), Barrick Gold Corp (ABX), Citigroup (C) and Leucadia National (LUK).

5) John Paulson comes in at number 78 on the Forbes World’s Billionaires list. He recently purchased Extended Stay America (STAY), American Airlines (AAL), Compuware Corporation (CPWR) and Digital Realty Trust (DLR).

Will Meade
President of The Billionaires Portfolio

3/2/2014

I have been blessed in that I have worked for and had clients who were Billionaires. But there is one Billionaire I met during my hedge fund days that I will never forget, because he was one of the best options traders I have ever seen.

He had a 5 Step system for trading options that I use for my all my options trading today. I am going to share this with you today and I call this ” The Billionaires 5 Rules of Options Trading”

1) Never ever buy an Option (a Put or a Call) unless there is a catalyst or event. This means you only buy an option when there is an event that will dramatically move the price of the stock up or down. These events or catalysts can be anything from: Earnings Announcements, Fed Meetings, Economic Releases, an Activist Hedge Fund buying a stock to any type of corporate change, CEO, sale of a business unit, merger or acquisition. The key is to buy the option before this event occurs, you never ever want to buy an option after the catalyst or event. So in summary only buy an option when there is catalyst or event that will dramatically alter the price of the stock.

2) This Catalyst or Event must occur before the option expires. An easy example of this is Earnings, you only want to buy an option that expires more than a week after the earnings date. Again this means when you buy an option make sure you leave yourself enough time so that your option does not expire before the catalyst or event occurs.

3) The Option must be Cheap. This can be hard to measure but I like to keep it simple, I personally don’t like paying more than a $1 for any option. But if its a high priced stock, I will only buy the option it gives me at least 25 times leverage or more on the stock. Meaning divide the price of the stock by the actual option price. For example if the stock of XYZ is $100 do not pay more than $4 for the option on that stock, that’s the easiest way to make sure the option is cheap.

4) Only buy options in stocks that have low volatility. This means you want to buy options on stocks that have moved sideways of flat for months at a time. Look at a chart if there has not been a significant uptrend or downtrend in the last 3 to 4 months, there is a good chance that the volatility in the stock is low and the options are cheap. Also if you have options software, you can compare the stock and its options implied volatility and underlying volatility to its historical implied and underlying volatility. This may sound confusing but its the same premise value investors use, they buy stocks when they are cheap in comparison to what they historically sold for, so you want to buy options when the volatility is low or lower than what it historically has sold for.

5) Only buy options if you can make 300% or more on the option. This is very important, too many people buy options with no exit plan or profit target. You have to set a goal or sell point when you buy an option and to make it worthwhile from a risk reward standpoint. The option should have at least a 300% or more upside. Why 300%? because there is a good chance when you buy an option, you will lose the entire value or premium of the option (or 100% of your investment in the option) therefore to be rewarded for that risk you need to be able to make 300% or more in that option. Simply stated only buy an option when you have at least a 3 to 1 reward to risk scenario.

Will Meade
President of the Billionaires Portfolio

3/1/2014

Hedge funds have been getting a lot of negative press due to their mediocre performance but one hedge fund has quietly been blowing the doors off the industry. The Marlin Fund run by Michael Masters, who was once profiled in the book Stock Market Wizards, has quietly averaged 44% a year since 1995.

That means $1000 invested in the Marlin Fund would now be worth $1 Million dollars today!

In 2012 he more than doubled the return of the S&P 500 with a 39% return then in 2013 he returned an incredible 100%.

Let me repeat that Michael Masters of the Marlin Fund returned 100% last year.

How does Masters produce these eye popping returns? He does it by simply trading call options on blue chip stocks. Last year Masters made 100% by simply buying call options on Apple, Chevron, Citigroup and Delta Airlines stocks that everyone in the world has heard of and he did this while managing more than a billion dollars.

Even more interesting is that Michael Masters is not some quant PHD or Wall Street trader. Michael Masters is just a regular guy from Marietta, Georgia who graduated from the University of Tennessee (a school not even ranked in the top 100 Universities according to US News). In fact his only experience in investing was working as a local stock broker before he started his hedge fund at 27.

Yet Master’s fund has beaten almost every single hedge fund and investor in the world. Masters currently manages more than $2 billion dollars and has one of the longest track records of any fund I have ever seen.

I have spend the last month studying all of the filings and interviews on Michael Masters, and I have finally figured out how he trades options so successfully and trust me you will be amazed at how simple and easy it is.

By subscribing to the Billionaires Portfolio today you will not only get the same trades that these incredible billionaire use, but you will also learn the strategy behind their trading as well.

Will Meade
www.billionairesportfolio.com

2/28/2014

Warren Buffett held his annual Berkshire Hathaway annual meeting last Saturday and of all the advice that he gave out, one thing really stood out. Buffett suggested that investors should allocate 90% of their entire net worth to stocks — and only 10% in short term treasuries.

This is incredibly important because this absolutely flies in the face of conventional wisdom.

So Buffett said when he dies he will put all his money into a trust for his wife. And he had advised the trustee to put only 10% of it in short term treasuries and 90% into the S&P 500 index fund.

Listen, the world’s greatest and richest investor just told you, for free, how you should manage your retirement portfolio and your net worth.

Don’t pay your financial advisor, stock broker, financial planner, etc 2% of your net worth to allocate your assets, fire them! Do what Buffett says. Buffett is everything your broker, advisor and banker isn’t. Buffett is the richest and most successful investor in the world, educated at Wharton and Columbia. Yet you pay your broker/advisor 2% of your money. He isn’t a billionaire. He doesn’t have Buffett’s record of success.

So take good advice, especially when its free. And maybe you too can become rich like Buffett. Invest 90% of your money in stocks. Sell your gold, your long term bonds, your ETFs, covered calls, annuities and all of the other crap in your portfolio, and take Buffett’s advice.

Our Billionaires Portfolio is based on same philosophy that Warren Buffett follows. Our Billionaires Portfolio returned 34% last year. Those are real results. We eat our own cooking. And we have a $100,000 account you can follow — co-invest with us. While Buffett has a tremendous long term record, we actually beat him last year, and the S&P 500.

Follow us on twitter @hedgefundclone. Join us today at billionairesportfolio.com.

2/26/2014

To successfully trade options you must have a catalyst and an exit plan. High probability option trades are rare but recently I found a mispriced stock with a catalyst that is set up perfect for a quick options trade.

Whenever there is significant insider buying in a stock, especially when by the CEO or Founder of a company I pay attention. Over the last week Richard Kinder, the CEO and Founder of Kinder Morgan, Inc, purchased almost $10 million shares of $KMI stock at an average cost of $32.50. The stock is currently trading at $32.21.

Secondly the stock has formed a double bottom and has strong support at $32. The stock has recently been sold off for non fundamental reasons, including the stock declared its dividend on Feb. 18th, which always causes a sell off especially in high yielding dividend stocks like $KMI, Kinder Morgan currently has a 5% dividend yield.

So the catalyst is the significant insider buying and the best way to play a bounce in this stock after its sell off, is to use my secret stock replacement strategy.

My secret stock replacement strategy, uses deep in the money call options as a proxy for buying the stock. I use this strategy when I am looking for a quick bounce in an oversold stock with a catalyst, which is exactly the situation with Kinder Morgan.

The trade I would make is to buy 10 March Kinder Morgan Call Options at $2.35, and you are only paying a $7 cents premium over the stock price (why I call it a stock replacement strategy). Also the March $30 Calls will move almost one for one with the stock, (again you are basically owning the stock with almost no premium). By purchasing 10 calls I am controlling 1000 shares of Kinder Morgan for only $2300 instead of $32,000 which is what it would cost to buy 1000 shares of Kinder Morgan.

My exit plan is to put a GTC order $1 above my fill price, as I looking to make a quick $1000 on this trade in less than 3 weeks, for a 40% Internal Rate of Return on my investment. Once it hits my GTC order $1 above my fill price I am out with a $1000 profit.

I will sell the option if Kinder Morgan, the stock, closes below $32, its that simple.

Will Meade
President of The Billionaires Portfolio

https://www.fxtraderprofessional.com/order/billionaireport/

2/25/2014

There is a money manager out of Chicago, that has secretly become one of the biggest traders of ETFs on the planet. The firm Good Harbor Financial LLC, which had less than $10 million in assets in 2008 has grown to almost $12 Billion today by frenetically trading in and out of ETFs.

The firms strategy is to make aggressive bets on a small number of bond and stock ETFs, while using as much as 1.6 times leverage. Good Harbor trades so aggressively and so rapidly that it can move from 100% stocks to 100% bonds in a single day.

This aggressive trading strategy has worked exceptionally well, Good Harbor has returned 20% annualized over the last 5 years with less risk than the overall stock market. Good Harbor lost less than 1% in 2008 versus a 37% loss in the S&P 500 and it made 47% in 2009. Furthermore when almost every single equity based hedge fund and mutual fund lost money in 2011, Good Harbor returned 12.73%.

Good Harbor uses quantitative models that signal whether to buy stocks or bonds based on changes in investor risk premiums (the VIX), momentum, economics data and yield curve dynamics. The founder and Chief Investment Officer of Good Harbor has a strong quantitative background with a degree in electrical engineering from Michigan Technological University located in Houghton, Michigan a masters in electrical engineering from the University of Michigan and an MBA from the University of Chicago.

Good Harbor is one of the funds that I constantly watch at the billionairesportfolio.com as they have shown a consistent ability to time the market. Also due to the size of their ETF trades, their trades and signals are very easy to follow.

This month Good Harbor has been pouring more than $7 Billion dollars into bond ETFs betting on a recovery in both corporate bonds and treasuries, a move that is being closely watched even as equity markets are making all time highs.

Good Harbor is a great example of how one can tactically use ETFS to beat the market and for individual investors they are a firm to watch as they have shown a strong ability to time the stock and bond markets.

Will Meade
President of The Billionaires Portfolio

2/25/2014

Hedge funds have been getting a lot of negative press due to their mediocre performance but one hedge fund has quietly been blowing the doors off the industry. The Marlin Fund run by Michael Masters, who was once profiled in the book Stock Market Wizards, has quietly averaged 42% a year annualized since 1995. Even more incredible in 2012 he more than doubled the S&P 500′s return with a 39% return and in 2013 he returned an incredible 100%.

Let me repeat that Michael Masters of the Marlin Fund returned 100% last year.

Master’s investing style is very similar to ours at The Billionaires Portfolio he trades stocks and options based on catalysts. He does not look at a company’s earnings or cash flow, all he cares is about is whether there is a catalyst present that will push the stock higher in the short term. Secondly Masters also looks at what sectors and markets the top investors and hedge funds are investing in follows them, something we do everyday at the billionairesportfolio.com

Master’s also is one of the biggest options traders on the street, and he is a buyer of options not a seller, he buys call options on stocks that he thinks will move up because of a catalyst and because of the leverage in options he has put up some of the best performance numbers in the industry.

But the coolest thing about Michael Masters is that he is a 100% self made man. Masters never worked on Wall Street, or went to an Ivy League School, he does not have an MBA or even a graduate degree, he is just a “regular guy” from Marietta, Georgia who graduated from the University of Tennessee and started off his career selling door to door literally as a full commission stock broker.

Yet Masters was confident in his stock picking ability and ad tired of the sales grind of the brokerage business and started his own hedge fund at the incredible ripe age of 27.

Masters pooled together money from friends and family about $200,000 and launched his hedge fund in 1995, without any experience, and the rest as they say is history.

What this should tell you is a couple of things: first performance is everything, if you can perform the money will come, no matter who you are or where you came from.

Secondly persistence and the ability to stick to your “guns” even when things are not going your way is the key to success. Masters had a very tough time between 2000-2003 as his investment style of trading stocks and options on catalysts underperformed the market and his assets shrunk from over a Billion to just $200 million.

After that Masters decided he was not going to let investors or people dictate his life, he basically stopped trying to raise money and just decided to let his performance do the talking and never deviated from his investment style of buying stocks on catalysts.

But after putting up two huge back to back years in 2012 and 2013 Masters didn’t have to try and raise money it just came pouring in, especially after putting up a 100% gross annualized return in 2013. Now Masters manages well over $2 Billion dollars and has become one of the highest paid hedge fund managers on the street.

2/23/2014

How do you get rich? Piggyback the investments of private equity, Golden Gate Capital purchased 22% of Zales (ZLC) at $2 in 2010, Zales was just recently acquired for $21 dollar a share last week. 10 Bagger, 1000% plus return by just following the stock picks of private equity.

See chart below

William Meade
President of The Billionaires Portfolio.

2/22/2013

According to CNBC.COM

A Huge, mysterious bet has traders buzzing.

“Someone is risking $1.5 million on the hope that shares of Southwestern Energy will rise nearly 15% in the next 3 months.

In a massive, unusual options bet, one institutional player is making a wager that Southwestern Energy (SWN) will have an especially energetic run between now and June.

On Thursday, one options trader bought 15,000 June 47-strike calls for about $1 each. This trade won’t make money unless Southwestern rises above $48 by the middle of June, which is some 15 percent above current levels.

If the stock closes below $47 at June expiration, the entire $1.5 million spent on the trade will be lost.”

Here is my take on this huge million dollar options trade. Southwestern Energy (SWN) is a pure play on natural gas prices (and the company happens to be the lowest cost natural gas producer) and with natural gas prices hovering at their highest level in four years one has to believe Southwestern Energy will report their best earnings in years on May 2nd. (This is because the company’s May earnings report will incorporate this winters high natural gas prices of $5 and $6)

Therefore the stock could easily hit $50 on an earnings pop especially by June, when the option expires. Even Better the options are currently selling for only $.70 cents (nearly 30% lower that what the huge option trader paid) and if Southwestern Energy goes to $50, you will make more than 320% on this option trade.

Will Meade
www.billionairesportfolio.com

2/18/2014

$YINN, Direxion Daily China 3X Bull could have 50% upside over the next couple of months.. see chart below

Will Meade
President of the Billionaires Portfolio
www.billionairesportfolio.com

2/13/14

I found that if I took a basket of the biggest and best billionaire activist investors and hedge funds (many of the names we follow in our service, The Billionaires Portfolio) and bought just the stocks they owned, whereby they had initiated an activist campaign against a company, that basket returned 31% annualized over the past 12 years. The S&P 500 returned just 6.1% in the same period.

This means a $20,000 investment 12-years ago, would be worth over $500,000 dollars today. The same investment in the S&P 500 would just be worth $40,000 today..

More importantly, the stock picks of these top activists had only one losing year during the period and that was of course 2008.

In 2008, the stocks in this basket of the top activists lost 18.2% versus a loss of 37% in the S&P 500. So in our study, these activist investors beat the stock market by more than 4 times on an annualized basis or nearly 23 percentage points. But they lost significantly less than the stock market in a losing year (in fact, a terrible year).

To put this return in perspective, no other mutual fund, ETF or private money manager on the entire planet has a returned anywhere close to 31% annualized over the period. The best performing mutual fund in the world returned 14.5%, which is not even half of the annualized performance of our basket. And that same mutual fund lost more than 45% in 2008!

Bottom line: By just following my Activist Select Strategy, you would have outperformed over 20,000 mutual funds, 5,000 money managers and 1,000 ETFs. And you would probably be considered the best investor on the planet.

Yet my next study has even better news. In my next study I took the same top Activist Billionaire Investors and Hedge Funds but this time I only tracked the performance of the activist stocks that fit the following criteria: 1) They had to be a small cap, meaning a market cap under $2 Billion and or 2) had to have a low share price under $15 combined with a market cap of at least $500 million and the results were astonishing.

The average annualized 12 year return for, what I call the Activist Small Cap Strategy, was an amazing 52% annualized over the last 10 years. Again this compares to only a 6.1% annualized return in the S&P 500.

Therefore a $20,000 investment in the activist small cap strategy would now be worth more than $3,000,000 million dollars today

Let me repeat that, because I know it sounds too good to be true, but by only selecting the lowest priced and smallest cap stocks owned by the best activist investors and hedge funds $20,000 investment in 2002 would be worth more than $3,000,000 million dollars today. Of course these huge returns come with a more volatility, yet this activist small cap strategy still had only one down year (2008) over the last 12 years, another amazing statistic.

So there a couple of conclusions you should come away with from this study. First as I have told you before there is no more powerful strategy in the world from a risk reward perspective than piggybacking the stock picks of the world’s best activist investors and hedge funds. Secondly Activist investors do not need the stock market to produce these huge annual returns as proven above, even when the market went through a 10 and 12 year period of low to medium single digit returns, the stock picks of these activists still produced huge market beating returns of 31% to 52% a year!!

Will Meade
President of The Billionaires Portfolio
Providing Sophisticated Hedge Fund Strategies and Analysis For The Everyday Investor

2/11/2014

I receive hundreds of emails a week asking me about trading advice, but one email that I received recently really made me think.

It was from a student at one of the top business schools in the world who wrote me a very passionate and eloquent email about options trading, that it took me weeks to think about how to answer him.

His basic question was how do I learn how to trade options?

He told me he had watched videos, read newsletters, books talked to brokers at Morgan Stanley but still felt confused as ever on how to trade options.

So I wanted to share with everyone what I wrote to him plus some other advice that I have learned over 15 years of trading and working for some of the top hedge funds and research firms.

1) Only trade options with money you can lose, meaning never ever bet the house on an option, use 5% to 10% at max of your trading account for options.

2) Do not follow options tips from newspapers, even the prestigious Barrons, and their nice and creative options writer Steven Sears is not a good mentor. Mr. Sears is a good writer, but he is not an options trader, I have written him at least 6 times about mathematical errors in his options columns and mistakes, he seems to think that you can make more than 100% selling an option, its mathematically impossible, yet the editors allow it… Scary huh..

3) Do not follow option tips from Floor Traders, yes traders who worked on the floor of the CBOE or the NYSE or AMEX exchanges
have traded a lot of options, but their scalpers who pay little if any commission or spread on an options trade, so you will
never be able to replicate their trading technique unless you are on the floor. Moreover 99% of floor traders make their
money off deal flow and spread, very few if any take outright positions in options. So their advice is simply not applicable
to the regular investor.

4) Do not trade options or take options advice from full service brokerage firms, for two simple reasons: Brokers are salespeople they make money regardless if you win or lose on your trade, and more importantly they charge huge commissions as much as $100 per trade. There is no worse place to trade options than at a full service brokerage firm.

5) Do not take options advice from newsletter gurus who spam with you promotions, they have no skin in the game and they have blown out more accounts than they have profitable trades. Remember really good option trades are rare, so anyone telling you they can consistently make money trading options is not being truthful.

So where do you go to learn about options or how trade options, let me share with you the letter I wrote to the young business school student the other night.

Dear,…..

It looks like you are on a great path to be a successful options trader.

I honestly think the best way to learn about options is trial by fire. Meaning either paper trade or trade any money you have so you can experience the ups and downs of the market.

Trading is very emotional, you need to see what type of trader you are?

Are you patient and can take drawdowns- then try and use longer dated options where there is a catalyst that could reprice the stock before the option expires. That is how we trade options in our service at The Billionaires Portfolio. But these types of option trades are rare so you have to be very patient.

If you are a short term trader use deep in the money options, 1 to 2 months out maximum and buy calls on popular and market leading stocks (Apple, Google, Twitter, Facebook etc.) after major selloffs and use limit orders and Good Till Cancel Orders. If you don’t know what this is google it and learn it!

Finally there is no magic bullet for trading options, so you have to be flexible and adjust your strategy and temperament to the current market conditions.

Yet options will always be popular, because of the huge profit potential that can be made off a good options trade (100% 500% 1000% and yes many of the greatest hedge fund traders and hedge fund managers started their career and funds with huge options trades that not only made them rich but put them on the map as well.

So stay tuned as I will continue to talk about options trading and strategies on this blog.

Will Meade
President of The Billionaires Portfolio

1/31/2014

If you ever wanted to buy Apple (AAPL) now is the time. Technically, Apple has the best short term bullish trading set up I have seen all year.

Apple today just bounced off the psychological $500 round number level. Actively traded stocks always find support or resistance at round numbers, because there is a lot of trading activity that occurs at round numbers.

Secondly, the $500 level is the exact price that Apple broke from in Late October, and as most chart watchers know previous resistance become support.

If Apple can hold above the $500 price today it is a very strong bullish reversal signal, and it also creates a great trading setup.

On Monday morning you can put a stop in $10 below Apple’s current price (at $490.50). If Apple holds above $500 today then I believe there is a greater than 90% chance it will go up to fill the gap to $550. That means you can risk $10.00 to make $50 or a 5 to 1 risk reward if Apple closes above $500 today (Monday).

You should take profits or put a limit order in at $550 as well, in order to achieve the 5 to 1 risk reward trade.

For aggressive traders you can buy a $500 February Apple Call Option, or mini apple call option (remember a mini option is much cheaper and gives you the right to hold 10 shares of Apple’s stock not a 100).

Either way if you buy the stock or buy a February Apple call option, the risk/reward of being long Apple here at $500, is just too good to miss.

Furthermore, Billionaire Carl Icahn just spent $500 million of his own money purchasing apple stock at or around $500 as well. Its hard to second guess a man who is averaged 27% a year for over 51 years and is worth $20 billion today.

At billionairesportfolio.com our specialty is finding deep value stocks that have a catalyst at work.

One of our favorite “deep value screens” not only identifies cheap stocks, but also situations where a rich, influential investor has taken a significant stake. As a shareholder, the presence of this type of investor can mean you have a partner on your side, working everyday to push management to unlock value in the company.

Selecting deep value stocks, with the presence of an influential investor that is hell-bent on unlocking value, is a very powerful formula. It’s especially powerful when we find situations where the big investor is down on his investment. That tends to raise their sense of urgency and their aggressiveness with management.

Here are four stocks that currently meet these criteria:

1) J. C. Penney Company, Inc. (JCP) – Billionaire David Tepper owns JCPenney at much higher price than where JCP currently trades today. According to my estimate the average price Tepper paid for JC Penney is around $10 a share. If you bought JC Penney today you are getting a 34% discount to what billionaire David Tepper paid for his shares.

1) Transocean (RIG) – Billionaire Carl Icahn owns almost 6% of this oil and gas exploration company. Icahn’s average cost is $50. The stock currently sells for $47. This means you are getting a 6% discount to what Icahn paid for this stock. To even sweeten the deal, RIG currently pays a 5% dividend.

3) Sony Corp (SNE) –The average price Billionaire Dan Loeb paid for Sony is more than $18 a share. If you bought Sony today you are getting a 5% discount to what Loeb paid for his shares. Moreover, Sony is selling at distressed valuation levels. It has a price-to-sales of 0.19 and price-to-book of 0.61.

4) Hologic, Inc. (HOLX) – Two top Billionaire Activists own more than 10% of this healthcare stock. The two Billionaires, Carl Icahn and Ralph Whitman of Relational Investors paid an average cost of $23.10 for Hologic. That means if you buy Hologic today you are buying it at 6% discount to what these top Billionaire Investors paid for their shares.

To piggyback our actively managed portfolio of deep value stocks that are owned by the world’s best billionaire investors, follow us at www.billionairesportfolio.com

1/27/2014

Retail-Apparel stocks have been hit hard due to the extreme cold weather conditions that have plagued most of the United States over the last two months, but a bottom could be finally in.

American Eagle (AEO) one of the biggest and most profitable teen retailers had strong insider buying today. Jay Schottenstein, the company’s interim CEO and Chairman stepped up big and recently purchased over 500,000 shares or more than $6 million dollars of the American Eagle’s stock at around $12.84 a share. This purchase occurred some time over the last two days.

Any insider who purchases over $5 million dollars worth of his company’s stock is always a significant and bullish sign — especially when the purchase comes after the stock has been in a significant decline.

Also, technically it looks like American Eagle has formed a double bottom at $13, with a bullish outside day — a major bullish reversal signal. With this, we may have seen the bottom in all retail and apparel stocks, and if so the risk reward of buying retail apparel companies has never been better.

1/26/14

His fund has generated a 58% annualized return over the past five years.

And he did it during one of the worst stock market crashes in history. In 2008 when the S&P 500 lost 37%, his fund lost only 9%. When the stock market rebounded in 2009, his fund returned 264.38% versus a 26.46% return in the S&P 500. He beat the S&P 500 by more than 10 times. That year, he had 2 stocks that went up more than 1,000%.

To put a 58% annualized return in perspective, no other fund in the world has a better 5-year track record. This means over the past 5 years not one single mutual fund (over 18,000 funds) or a single equity hedge fund (over 4000 funds) has better performance.

Even though he is the best fund manager fund on the planet (literally he has the number one fund in the world), he has completely shunned publicity and has kept his assets base very small around $40 million. This guy is a purist stock picker. All he cares about is his performance not about selling his fund.

He went to Johns Hopkins University — my alma mater. And you might be surprised to learn, he has no formal training in investments. He worked in the medical research field his whole life but according to his colleagues his real passion was always investing. He started his fund in his early 40′s.

So how did he do it? How does he do it? He has a rather simple stock picking formula. He rarely buys more than 10 to 20 stocks in a year. His formula is so rigorous and selective that very few stocks meet his requirements. But he has more 100%+ winners than any fund manager I have ever seen.

As someone who has spent more than 15 years analyzing the world’s greatest hedge fund managers and billionaire investors, I have never seen a fund manager that has these stock picking abilities.

Because this fund manager is so reclusive and his fund is so small, information is hard to find on him. I spent over 100 hours analyzing and pulling up every document I could find on his fund, and researching and documenting every stock pick he has ever made. For my Billionaire’s Portfolio service, this is a new manager I’ve added as a candidate to our stable of the world’s best investors that we follow — even though he doesn’t fit my typical mold of the ultra-rich activist. He has a record of picking stocks that produce multiples on his investment, and that’s precisely what we look for in our portfolio.

Will Meade
President of The Billionaires Portfolio
Providing Sophisticated Hedge Fund Strategies and Analysis For The Everyday Investor

What continues to be one of the most obvious trades in the world, yet many investors are missing, is to short gold.

Today Morgan Stanley cut their price target for gold in both 2014 and 2015.

Earlier last week Goldman Sachs cut their price target.

Japan has come out and said they are selling gold and will continue to sell gold throughout the year.

Anyone long gold here is playing a fools game. Stocks are and will continue to be the only game in town. Holding gold or buying gold will only lose you money. It’s a QE fear trad — a hyperinflation fear trade. QE has come (three times) and now is nearing an end. Guess what? No inflation. Sell it now before you are selling it at pre-QE levels ($800).

So next time that gold newsletter huckster tells you gold is bottoming for the 8th time in the past year. Throw it in the trash. Pull up a gold chart from the mid 1980′s to late 1990′s. Gold gave you negative annual returns for almost 15 years. That’s like paying a tax, holding an investment that loses money every year.

1/21/14

The Biotech stocks in our Billionaires Portfolio have returned an annualized 129%. One of our biotech stocks up almost 270% and another biotech stock up more than 70% in less than 2 months.

These stocks have the ability to produce multiple returns, but they have little if any correlation to the overall stock market. Last week, the stock market had its worst one day performance since November. Yet, the biotech stocks in our portfolio gained on average 6% versus a negative 1.5% for the S&P 500.

In 2008 when the S&P 500 lost 37%, the small cap biotech sector actually gained a positive 9%. In 2011 when almost every fund lost money and the market was up a meager 3%, the biotech sector was up 10%. I have two top billion dollar biotech hedge funds in my database that have produced an average annualized return of 45% a year since 2002, without one losing year.

I honestly know of no other investment vehicle that can claim those results. Why? Because biotech stocks are the ultimate event-driven investment. It’s all about FDA approvals, results from clinical data and news of partnerships. That’s the driver and it can unlock value in a rising or falling stock market — it doesn’t matter.

The secret to investing in biotech stocks: follow the smart money. That is to only invest in the biotech stocks. You want the stocks owned by the world’s best billionaire biotech investors and hedge funds.

Will Meade
President of The Billionaires Portfolio
Providing Sophisticated Hedge Fund Strategies and Analysis For The Everyday Investor