As many of you know who read this blog, I told my clients to sell Apple all during the early part of 2013. And then in May, I said the bottom was in. And I set a target north of $500. This call was well documented by Fortune Magazine and CNN Money. When I said the bottom was in Apple was trading $420. Today, it’s $496.
Now, back in May, I said that hedge funds would be the buyers of Apple’s stock. I said, “Here is the catalyst, Tim Cook the CEO of Apple, for the first time has come out and lobbied for Apple verbally in the public domain. This is a sign of leadership major hedge funds have been waiting for.”
And what did we hear yesterday? Only that the biggest and best hedge fund investor in the world, Carl Icahn, has taken a sizeable position in Apple.
Now, here’s where it gets better. You’ll find no shortage of people telling you about Icahn’s Apple stake today. But what people don’t know is WHY he’s in Apple. I’ll tell you. Icahn bought Apple because he thought the stock was undervalued and had bottomed, just like I did. BUT, he also wanted to protect his massive investment in Nuance (NUAN), the maker of Siri. See Mr. Icahn owns nearly 16% of Nuance, or an almost $1 billion dollar position. And he wanted to make sure that Apple not only kept Siri on the Iphone, but also, in my opinion, he wants Apple to buy Nuance.
Nuance is selling near a 2-year low. It’s extremely undervalued. And it could easily be acquired by Apple for just a blip on their balance sheet.
Apple has $43 billion in cash. Nuance currently has a market cap of $6.2 billion. So even if Apple acquired Nuance for a 33% premium or $10 billion (around $25 a share), it would still barely dent Apple’s cash position. This would mean great synergies for Apple to own Siri outright, which would increase gross margins on every Iphone they sell. But it would also give Mr. Icahn a big pay day in his Nuance shares.
So, how do I know all of this? Well, for one, apparently I’m the top Apple analyst around — did anyone else tell you the bottom was in in Apple in May, and subsequently give you the roadmap to a 20% return in just three months?
Also, I happen to have studied billionaire investors and top performing hedge funds for over 15-years.
And from this research, I have built what I think is the best investing process on the planet. And with the reach of the internet, I no longer have to sell my research strictly to institutions, dealing with the stiffs at big pension funds. I can share it with average investors too. And I do so through my premium stock picking research service called The Billionaires Portfolio.
The Billionaires Portfolio is the only service in the world where the average person can invest along side the the world’s greatest hedge funds and billionaire investors. And it works! In the past three months, my subscribers have owned a stock that was acquired for a 90% premium in one day. And another that was acquired that resulted in a 70% gain in less than three weeks.
If you would like to learn more about my Billionaires Portfolio service, please click here.
William Meade
President of The Billionaires Portfolio
www.billionairesportfolio.com
I have been following Apple’s stock for over twelve years, since working for a hedge fund that purchased the stock when it was less than $10. And I’ve been known for having some controversial views on the stock.
Despite all of the fanfare surrounding Apple going into this year — on this blog, for the early part of 2013, I told everyone to sell Apple. In fact, my views on Apple were so against consensus that I’ve even been called an Apple bear by Fortune.com and CNN Money — not true, by the way. I’m not a bear or a bull. Rather, I’m just a realist.
All of that said, for those of you that are consistent readers of my BillionairesPortfolio.com blog, you know that on May 18th, I flipped the switch on this stock. In fact, I said flatly that the bottom for Apple was in.
That’s been dead on. Not only did the bottom hold, but today we’re getting a breakout in Apple, just as I forecasted in late July (here). We’ve now completed an inverse head and shoulders pattern (bullish!) and my target for aapl is now north of $500. In fact, I think we see $550 before the year is over.
Remember the most important thing that moves a stock is money flow, psychology and sentiment. All three of these factors have been extremely positive for Apple over the past two weeks. With stocks breaking above 1700 last Friday, the mutual fund managers of the world have no choice but to plow any cash into the market – average investors too. And guess what’s first in line for mutual fund managers that are getting new inflows and have cash to put to work: Apple.
I have received hundreds of emails today from readers who want to know on Apple’s stock will go next, i.e. my price target. As everyone knows, price targets are very hard to predict, but I will go to the charts to give you my price targets on Apple.
Apple has almost completed a bullish inverse head and shoulders pattern. In order for this pattern to be completed Apple must close above $450 dollars. If Apple close above $450, the next take profit or price target is $500, which it could hit in the next month or so. Why $500? It’s a psychological round number, where funds and retail investors like to take profits. Also, it fills a gap that occurred in January of 2013. As most traders know, gaps tend to get filled, especially on heavily traded stocks.
The next major resistance level for Apple is 545-550. That’s also the target from the bullish inverse head and shoulders pattern.
Will Meade
President of The Billionaires Portfolio
www.billionairesportfolio.com
Remember me? Hello? I am the guy who told you that Apple had bottomed in May.
Apple reported yesterday, where they announced a special $3+ dividend. I expect this stock will hit $450 again, and will go to $500 in the coming weeks.
If you don’t remember my famous blog post on Apple, you can read it here. I was featured on Fortune.com and CNN Money.
Now that you know how good I am, let me tell you a few other things about me and the way I do things.
First, I run an innovative online advisory service called The Billionaires Portfolio. It allows people like you to invest like a billionaire hedge fund manager. Does it mean you have to be rich? Of course not.
What it means, is this: If you want to get rich, you have to invest in situations that can produce big winners. That’s how billionaires got rich. And that’s how they continue to get richer. And there is no better way to put yourself on their path, than to follow their moves.
My service is up more than 35% in less than 11 months. For every $20,000 my subscribers are managing, they have gotten a $6,600 return. Not bad. They pay me $297 a quarter , and they get $6,600 in return. For those of you that are slow, that is a very good return on investment. Perhaps most importantly, my subscribers get to learn how professionals make money in the stock market. This is my service to society.
Now, here’s a bit about the way I do things: We are in the early stages of a mergers and acquisitions boom. And every stock in our portfolio is a candidate to be bought for a huge premium.
We have a basket of undervalued technology, energy and retail stocks that have a built in catalyst. That’s how you make money folks. You don’t blindly buy stocks and sit and wait and hope to make money. You only buy stocks where there is a catalyst at work to move the stock. That’s the difference between a pro and an amateur. I want to buy stocks that are going to make me money, not bore me to death.
How do I get a catalyst? A good start is finding stocks that have a powerful billionaire investor involved. I want a bulldog on my side that is fighting everyday to get rid of lazy management, sell of bad assets or sell the company outright – anything to unlock value.
We just followed a famous hedge fund manager into a small cap technology stock about three months ago and nine weeks later the stock was purchased for a 90% premium. Our stock jumped 90% in one day. We also just booked profits on a high flying semiconductor stock, SunEdison, where my subscriber made over 250% in less than nine months.
Look, I am telling you, we are going to see an incredible surge in small cap mergers and acquisitions over the next year, and you have to be fully invested in small cap value activist stocks to take advantage of it. The way to do this is to subscribe to my Billionaires Portfolio.
So look, I already made you tons of money on Apple. Now I am telling you we are about to see a boom in small cap M&A. This means that small cap value stocks will be THE game in town. You do not want to miss this next wave of buyout madness, as stocks will be taken over every day for 50%, 100%, 200% or more.
If you don’t want to join me, keep reading my blog. I will be back again to tell you how much money you have missed.
Will Meade
President of the Billionaires Portfolio
www.billionairesportfolio.com
Investing is all about probabilities and risk versus reward. You want to invest in trades that have a high probability of winning and that have a huge upside reward versus downside risk.
I like commodities because they tend to be extremely seasonal and predictable.
Natural gas, for instance, is extremely seasonal. According to historical commodity data, natural gas tends to go up in August. In nearly 80% of all the past years that natural gas has been trading, if you would have purchased this commodity on August 1st and held it till the end of the month you would have a made a profit. Now that is what I call a high probability trade.
Natural gas prices are almost entirely driven by the weather. And if you live in the Midwest, Northeast or West Coast, you know that we are having record heat waves this summer. That means a lot of people are running their air conditioner. And what powers most utilities now? Natural gas.
So after yesterday’s extreme move in natural gas, which broke a huge downward trend line, I think we could see prices jump by as much as 20% by the end of August.
If natural gas pulls back at least two days in a row in the next week (pullback means two consecutive down or flat days in price) I will be a buyer of everything natural gas related.
I like the natural gas ETF (UNG), as well as call options on it. Another alternative, the 2x leveraged ProShares Ultra Natural Gas ETF (BOIL).
A Small cap natural gas stock that I like is Penn Virginia (PVA), this stock is deeply undervalued it is trading at 1/3 of its book value, and is currently breaking out of an inverse head and shoulders pattern. This could take the stock to $7 in a very short time frame. This would be mean an almost a 40% move for Penn Virginia. The September $5 Calls are attractive at $.40 cents or less, which means if Penn Virginia goes to $7, we are talking about a home run triple digit plus winner on those call options.
My favorite small cap natural gas stock is one that not only will benefit from rising natural gas prices, but also has the kicker of having three top billionaire activist hedge funds involved, who own more than 20% of this stock. We own a huge chunk of this stock in my Billionaire’s Portfolio service, and I believe this stock could go up 150% or more by the end of the year.
I want to share with everyone the most important lesson to becoming a good investor, the concept of asymmetrical risk reward.
The world’s greatest Billionaire Investors, Carl Icahn, Warren Buffett, and all of the top performing hedge funds in the world focus have mastered this concept.
Asymmetrical risk-reward means your expected reward can be multiples of your expected risk on an investment. In most case, if I do not find this risk-reward profile I will not make an investment.
At The Billionaires Portfolio as perhaps the most important part of our process, we are looking for stocks that can jump at least 100%, and more often 300% to 500%.
In general, we buy stocks that have the potential to be influenced by a huge catalyst — a takeover, the sale of a bad business unit, etc.. That unlocks value.
I also will only buy a stock or recommend a stock when I think the downside risk is little to none. How do I know if a stock has little to no downside risk? I make sure that the stock is deeply undervalued, many times trading for less than the breakup value of the company. And I want the presence of a catalyst.
The most identifiable catalyst is an influential or activist investor who already owns the stock and is pushing for the company to put itself up for sale.
Other catalysts include FDA Approvals (for Biotech Stocks), major political, legal, regulatory and macro changes that will affect the stock in an extremely positive way. But the best and most powerful catalyst I’ve found that can push a stock higher in the short term is to have an influential or activist investor who is already pushing for change to the company.
Catalysts driven stocks can give you a nearly 300% winner in nine months … or a 90% winner in one day. My subscribers have enjoyed both.
That’s my lesson for today — and it’s an important one.
If you want to see more examples of stocks that are so cheap they can go up 100% or more in one night, if you want to see stocks with asymmetrical risk reward returns, and stocks that have identifiable and powerful catalysts, then subscribe to my Billionaire’s Portfolio service at https://www.fxtraderprofessional.com/order/billionaireport/
Will Meade
President of The Billionaires Portfolio
I am privileged to have a friend from graduate school that is one the smartest options guys at Goldman Sachs.
I see a lot of Goldman Sachs research on options, which includes a weekly report with all of their recommended option trades, as well as any published research, white papers, and studies that Goldman has done on options.
Given that most of the readers of this research are controlling hundreds, if not billions, of dollars, this is pretty special research.
I have been reading Goldman research on options for years. And I always pick up a ton of incredible trading tips and methods that the best investment bank in the world uses to analyze and trade options.
Today I will give you some nuggets that I think average trader likely don’t know, and need to know:
1) Implied volatility (“vol”) is the key element in analyzing options. When implied volatility is high, an option can become too expensive. When implied volatility is low an option can become cheap. That can create a trading opportunity. I should note, it all depends on why its high or why its low. Let’s assume there is nothing macro or micro level that has pushed vol around. Now, to know if vol might be cheap or expensive, you need to compare the current vol to its history. Where is it trading relative to the past three months, the past twelve months? Follow this screen and you will improve your options trading dramatically.
To get implied volatility for options you need a good platform that provides these statistics.
If you don’t have this type of platform, and most of you probably don’t, there are some ways to tell if implied volatility is low and the options are cheap. I call this the “eye test.” Look at a chart of the stock or ETF from which the option is derived. If the stock or ETF has gone sideways, or if its at a double or triple bottom, or a double or triple top pattern, there is a good chance implied vol. is low and the options are cheap.
Also, if the earnings announcement for a stock is close — within 1 to 2 weeks — you will likely find that implied volatility will be high, and the options will be expensive. That is why many people who have purchased options before earnings never make money. Even though the stock goes up, the option they buy already had it priced in through the inflated vol.
Now, onto tip number two …
2) You need to have a catalyst to trade options! There must be something that moves the stock or etf in a dramatic way such as a merger, a major corporate announcement, an activist investor, a major conference call/investor day, a new product launch, a major economic announcement, a change in the fundamentals of the economy, earnings announcements (but make sure you buy the option at least 2 weeks ahead of time), a potential sale or divestiture of the company. If you don’t have a catalyst such the ones listed above, don’t spend your money on options (unless you can actively hedge it).
3) There are two techniques I like: Using options as an outright bet on a spike in vol …and using options as a stock replacement strategy.
When focusing on cheap options with low implied volatility and a catalyst, you are implicitly long volatility (you’re betting on a move higher in vol).
I’ve talked about the stock replacement strategy many times on this blog. Its using options as a leveraged proxy for the stock or ETF. You look for a quick move in a short period of time. When you are using this secret stock replacement strategy, you must only buy in-the-money options.
I use both of these techniques when I buy options.
Bottom line this is just a little insight into how the richest most powerful investment bank in the world approaches options. And it reinforces what I always tell you on this blog — and what I do for my subscribers in my premium service (The Billionaire’s Portfolio). You have to follow and know what the best, most influential investors in the world are doing.
That’s right folks. I am calling the top in the housing market. Remember I am the guy who:
1) Called the top in Gold and Silver this year
2 Called the top in Emerging Markets
3) Called the top, then the bottom in Apple
4) And more importantly, I told you to buy to every dip in the stock market this year, therefore making you a killing if you trade options, futures or leveraged ETFs.
So now, me, the former top hedge fund manager, top Economist (educated at The Johns Hopkins University, trained by Fed and Treasury economists) and nationally quoted writer (Barrons, Forbes and CNN Money) … I am telling you that the Housing Market has topped and is in a bubble that is going to burst, BIG!
Why? It’s simple analysis of interest rates, understanding of hedge fund flows and basic psychology. If you were in the market to buy a house or condo just as early as May, you could have purchased a 30-year Fixed Mortgage for 3.5%. That is incredible. And that’s why people went out and purchased new and existing homes.
Now, that same 30-year fixed mortgage is being priced as high as 5%. That is a 50% increase in the total interest paid over the life of the loan. Not to mention, given the rise in housing prices, the price tag on homes in some areas of jumped as much as 35%+.
Who in their right mind would pay 50% more for the same asset two months later? That is exactly the choice being given to the new homebuyer right now. They will back off. And that is why we will see a huge dip in the sale of new and existing homes.
Bottom line: The spike in mortgage rates will cause major ripples through the mortgage and housing industry, and its stocks.
Secondly, around a third of the housing volume has been purchased by hedge funds and private equity funds over the last 2 years. That’s right, all those record home sales you heard about on the news has been driven by distressed hedge funds and private equity funds like Blackstone, who have purchased millions of homes out of foreclosure. But this game is over, for now. Many of these top distressed hedge funds and private equity funds have stopped buying homes for investment purposes because prices are too high, and there are not enough cheap homes to buy.
So put those two elements together and you will have a major shift in the demand curve. Both retail buyers and institutional buyers have stopped the presses.
If you own a home and want to protect its value, or you just want to profit off the housing bubble bursting once again, your friendly neighborhood hedge fund trader is here to help you!
So here is what you do: There is an ETF called the SPDR S&P Homebuilders (XHB). It has options. Put options here allow you to bet directly against the housing market, and these options are very liquid and cheap.
Also if you like to look at charts, take a look at a chart of the S&P Homebuilders (XHB), it has formed a bearish head and shoulders and is projecting a 25% decline for this ETF.
The September $29 (XHB) put options give plenty of time for people to realize that the housing market has topped, and for summer to pass as well (when a lot of people shop for homes).
Will Meade
President of The Billionaires Portfolio
www.billionairesportfolio.com
wmeade@purealpharesearch.com
Today I want to teach you how a billion dollar hedge fund, like the one I worked for, trades. Hedge funds are called “hedge” funds because they are structured to hedge against downside risks.
That means hedge funds are generally obsessed with risk and controlling risk — contrary to popular opinion. One of the ways to manage or minimize risk is to trade “market neutral.”
For market neutral strategies, funds will generally have a $1 short on their books, for every $1 in long positions. In this case, you’re betting on your stock picking ability, while stripping out the risk of the overall market.
So what can you do today if you want to trade a low volatility market neutral strategy? Use ETFs. ETFs are great. They are extremely liquid, easy to short and they represent an entire market, country, sector or asset class.
So if I were back at a billion dollar hedge fund, I would implement a market neutral trade today by buying $100 million dollars worth of US stocks while at the same time shorting $100 million dollars worth of emerging market stocks. As a retail investor you can execute this same trade through ETFs. In fact, since you don’t have to worry answer to investors about monthly volatility, you can get some extra juice by using leveraged ETFs.
So here is my aggressive billionaire’s market neutral ETF trade : I would be long the ProShares UltraPro S&P 500 ETF (Symbol UPRO). This ETF is leveraged 3X, or 300%. And I would be buy an equal dollar amount of the Direxion Daily Emerging Markets Bear 3X Shares ETF, symbol (EDZ). So, here you are betting that US stocks will continue to go up and that emerging market stocks will drop (or at least not go up as fast). I think this is a great trade from fundamental, monetary policy, and technical perspectives.
Now, if you want to get even more aggressive, I would put on an ETF market neutral options bet. This is a great strategy that even investors with a small account can use. Due to the recent unprecedented move in long term interest rates, I am very bullish on financial stocks (Financial stocks become more profitable as the yield curve steepens, as it is doing now). But because of this, I am very bearish on homebuilders (as higher mortgage rates will hurt future new home purchases). The chart on XLF, the financial sector ETF, looks very strong. Meanwhile the chart on XHB, the Homebuilders ETF, looks like it is starting to break down. The charts are confirming the fundamentals — the move in rates.
Will Meade
President of The Billionaires Portfolio
www.billionairesportfolio.com
wmeade@purealpharesearch.com
Folks, its time to remind you who I am and what we do here at The Billionaires Portfolio.
I get emails sometimes that frankly annoy me.
I am a hedge fund veteran with over 15-years of experience taking money out of financial markets. I am not market maker, floor trader, journalist or stock broker. These people only know how to generate commissions or sell you stories. I don’t listen to them. And I don’t care what they say. So please don’t email me and tell me what a 25-year old journalist at the Wall Street journal said about the stock market. My advice to you: Don’t listen to them.
Now, there is a stark contrast between what those people do for a living and what hedge fund professionals do. Those people get paid for having a pulse. Hedge fund professionals get paid when we make money – when our investment strategies, themes and processes WORK! We eat what we kill.
I am the real deal. I worked for a $1.4 billion dollar hedge fund started by a former Goldman Sachs Partner and Harvard MBA. He worked for the real Goldman Sachs (not a floor brokerage shop that was acquired by Goldman along the way). The one on Wall Street. When at its most powerful in the 90’s.
This man taught me everything I know. He was a brilliant investor. Not only was our performance great, but we also made money in the toughest of market conditions, in 2001 and 2002 — when no one was making money in equities.
Now, when I say I worked at a hedge fund, I’m not talking about some rinky-dink small time garage business with Mom and Dad’s money. Believe me, I see people these days, it seems that every Joe says he worked at a hedge fund. Let me be clear: We were the real deal. We managed portfolios for some of the top fortune 500 companies, pension funds and university endowments, and a handful of billionaires. The fund I worked for was so successful, and had such good performance, it was acquired for over $50 million dollars by a publicly traded asset management firm.
I say this not to brag. I want to help you understand the difference between me and 99% of the rest of the journalists, financial media and stockbrokers and hacks that try to give you advice. I worked for the best. I learned from the best. And I created real money and real value for people. And I do it consistently for my own accounts to this day.
So when I tell you information on this blog — like when I’ve told you to buy stocks, sell gold, sell emerging markets and sell gold — listen to me! I know what I am doing. I have excellent sources of information (real hedge fund managers) and I am usually right.
Please read through my former blog posts.
As I’ve said in prior posts, I am writing this blog and running The Billionaires Portfolio to help and educate you, the retail investor.
I don’t care what people think about me. I don’t care what the industry would think about this? I don’t care.
I want you to get the same tools that I provide to my rich clients. I want you to make 30% to 50% a year and be able to retire and send your kids to college.
That’s why I am doing this. I don’t need the money. But I like to make money. It’s fun. And the internet is an amazing tool to communicate with the world. Believe me, if I can destroy the business model that has been ripping off investors for a very long time, I will make a lot of money from it. And that’s what I intend to do.
I want to even the playing field between the rich and the middle class and I also want to expose the abuse that is going on in the brokerage and mutual fund industry. And I want to help you use the markets to make money. It’s not that hard, despite what all of these charlatans will tell you. I tell you almost every day in this blog how to make money.
Now, my lesson for you today: The way to make money in financial markets (the only way I was taught to make money) is to invest with a top-down view and to only invest when a potential catalyst is in play.
What does this mean?
First, a top-down view helps you understand the world and helps you determine which asset class and sector is best suited in a particular environment. Next, when you invest in stocks, all of the typical financial metrics (valuation, growth, etc) are all secondary to catalysts. Investing in stocks with catalysts means everything! It’s the only way to make consistent money. Only invest in stocks where an event can create a price adjustment for you. This is limited to just stocks. It’s the name of the game in currencies, commodities, bonds, real estate, etc.
If you learn one thing from reading my blog, that’s the takeaway. Investors that make a living and build wealth in financial markets win by participating in events (i.e. catalysts).
How do YOU do this? You subscribe to The Billionaires Portfolio, my premium service that is up 22% in less than 10 months. It’s crushing the stock market by more than 10%. But more importantly my subscribers – normal, every day people — have made real money and real profits. My average subscriber is up more than $4,000 and my service only costs $297 a quarter. That’s a good trade.
So sign up for my service. And don’t write me or second guess me about this blog. You are not me. You don’t have the quality of work experience, investing background or, quite frankly, the education that I do. I am good at what I do, because I learned from the best. And I continue to be good at what I do because I listen and I follow the best. And I work my ass off for my subscribers, 10+ hour days, 7 days a week. I don’t take vacations.
I don’t play golf. This is it. This is what makes me tick. For me, taking money out of financial markets is a competition. And I am a fierce competitor.
With all of that said, I want to tell you my take on Google and Apple, because I know it’s in every average investor’s portfolio. Here it is: It’s my take on all stocks, especially technology stocks. You buy them! Stocks are the only game in town and will be for the rest of the year. Global central banks want us to buy stocks (our catalyst). So buy them.
So from now on, if you are cynic, a crybaby, or if you wildly overestimate your abilities as an investor, don’t read this blog.
If you are a winner and a doer, if you are someone who takes control of their life, their money and their investments, and someone that wants to learn from the best, then please continue reading my blog. If you want to join me, subscribe to The Billionaires Portfolio. I wont you let you down.
Respectfully,
William Meade
President of The Billionaires Portfolio
wmeade@purealpharesearch.com
