First why would you want to build your own hedge fund?
1) Because the top hedge funds (the top 5%) have returned over 36% annualized over the last 15 years versus 4% annualized in the S&P 500. To put this in perspective if you would have put just $10,000 (everyone has 10K in their retirement account right?) 15 years ago in the world’s top hedge funds you would have $1,000,000 today. That’s right you would be a millionaire today off just a $10,000 initial investment.
2) You can’t invest with the top Hedge Funds because they are only for the mega rich, you need a minimum of $10 million dollars in cash to invest with the top hedge funds.
3) When you build your own Hedge Fund it allows you the ability to profit in any market, Bull or Bear Stock Markets, and in any asset class. Basically it is a cash machine that will consistently produce 30% plus returns every single year.
4) Your Mutual Fund and Stock Broker can not and does not have the ability to build a hedge fund for you, I will tell you why in a second, also these same mutual funds and stock brokers still charge you a management fee and commission even if you lose money, so basically when you invest in a mutual fund or with a stock broker you always lose and they always win. Remember a Hedge Fund is different, a Hedge Fund Manager only gets paid when he makes a profit for his investors, novel concept huh?
The Secret Ingredients to building your own Hedge Fund
1) The ability to Short the Market, or short asset classes such as commodities, real estate or bonds. Your mutual fund can not do this, that is why you lost money in 2008 and 2011.
2) The ability to buy any asset class in the world at any time, again mutual funds just buy stocks and bonds, they do not buy oil, gold, currencies etc. That is why they miss out on the huge returns that Hedge Fund Managers produce, because a lot of times the best investments are not in stocks or bonds but are in commodities and foreign currencies.
3) Leverage, by far the most important ingredient. By law under the SEC, mutual funds are not allowed to use a lot of leverage or any, therefore they can not generate the same returns that the top Hedge Fund Managers use, Hedge fund use a minimum of 2x to 3x leverage or 200% or 300% leverage on their investments, mutual funds use 100 to 130% leverage, a tiny amount compared to what the top hedge fund use. So if your mutual fund returned 15% last year on stock, a hedge fund that invests in the same stock would have returned 30% to 45% a huge difference in returns.
So those are the ingredients.
After 12 years of working in the Hedge Fund Business, I can finally say the retail investor is on equal footing with the top hedge funds now, due to these new products.
Put it this way I built my own Hedge Fund with just a $10,000 account, using these new products that any retail trader can use with any online brokerage account, and the results are amazing. I backtested the results going back to 2008.
Unfortunately due to regulations I can not publicly post these returns, but I do promise they are eye popping and even better than the 36% annualized returns I talked about above, but if you would like to email at wmeade@purealpharesearch, I am allowed to give each person a copy of the returns, the products I used to get these returns and the strategy.
I just received some nice comments from a reporter who has worked at some of the biggest publications in the world The New York Times and Fortune. This reporter said that it absolutely looked like the Barrons writer, Andrew Bary, stole my idea about Buffett buying Bed Bath and Beyond on this blog a month ago.
Again this shows you the power of the Billionaires Portfolio, when you piggyback the stock picks of the world’s best Billionaire Investors and Hedge Funds you are always early to the party. You will always catch stocks well before the analyst’s on wall street or the mainstream media write about them, this is why this is such a valuable service.
Another example I will share with you, I recommended a $5 Financial stock that is actually a member of the S&P 500 to my subscribers in late September of 2012, this stock has already doubled and Barrons just recently featured this stock in their publication at a 100% higher price than what my subscribers paid for the same stock.
Imagine this scenario, an investing strategy where you can double or triple your money in less than 2 months, and you can implement this strategy for as little as a $150 investment furthermore this strategy profits regardless of where the stock moves or where the overall market goes, sound interesting?
Well this type of strategy is called a Options Strangle. An Options Strangle is an options strategy that allows the investor to gain on significant moves either up or down in a stock’s price it consists of buying an equal number of call and put options with the same expiration date but with different strike prices.
Basically its a really cheap way to make a lot of money in a stock that is probably going to move significantly up or down in the next couple of months.
The secret to making huge returns on Option Strangles is to use volatile stocks or stocks that move on news, and the best type of stocks for this are Biotech stocks. I have two juicy Biotech straddle trades that you can invest for as little as $150, and both of these could triple or go up 300% in less than two months.
Again Remember the great thing about option strangles is they are cheap, my new biotech strangle trade costs only $150, and it can make you more than 300% in less than two months.
Why is this a Billionaires Strategy? because Goldman Sachs uses the Options Strangle Strategy exclusively for their clients, and to be client of Goldman Sachs exclusive trading research you have to have a minimum net worth of $25 Million!!!!
So To find out more about this Billionaires secret the options strangle, and the exact biotech options strangle trade I am talking about email me at wmeade@purealpharesearch.com
Interesting 13D filing last Friday by First BioMed, a Billion dollar hedge fund, they disclosed an 8.8% stake in the biotech company Vivus ($VVUS). First BioMed also filed a proxy with this 13D, stating that they want to replace the company’s entire board. First BioMed said in the filing that they are concerned about the company’s strategy and the failure of its launch of Qsymia (its new weight loss drug) six month’s ago. First BioMed also stated that they are focused on fixing the company’s strategy on marketing Qsymia in both the U.S. and Europe.
What’s so great about 13D filings is that the filing actually tells you what price the hedge fund paid for the stock that they recently acquired. In this case First BioMed acquired more than 8.8% of Vivus at an average price of around $11.
So what do we make of all this, we have a top Billion Dollar Hedge Fund, BioMed acquiring a huge stake in a $10 biotech company, and the hedge fund is also taking a stance against the company trying to replace the board, and fix the company’s strategy. I think makes the stock very interesting now, Vivus has dropped from $30 to around $11 over the last 8 months, on the disappointment of the company’s sales for its new weight loss drug. So there is some value here and if First BioMed can actually fix the company’s strategy and improve the sales of its new weight loss drug, I think this could be a $21 stocks and that’s a great risk reward trade.
That is the great thing about following activist Billion dollar hedge funds, when they file a 13D and a proxy contest, it usually puts a bottom in on the stock, and in this case, I think the bottom is in at Vivus around $10. So what is the best way to trade this stock probably options, or using a stop loss.
If you believe that the Billion dollar hedge fund BioMed, with its almost 9% ownership of Vivus, can change Vivus and make it profitable then the stock offers compelling risk reward. You put a stop in a little below $10 at $9.75, and with this new catalyst of First BioMed’s ownership and proxy contest and the stock could easily hit $21, then you are risking $2 dollars to make $10, and thats an incredible 5 to 1 risk reward.
Folks you wont believe this, one of the featured writers, Andrew Bary, in Barron’s this weekend stole my idea from this blog..
Here is Andrew Bary’s article that he wrote last weekend on 3/09/13
http://online.barrons.com/article/SB50001424052748704836204578340321075970836.html#articleTabs_article%3D1
Now remember on this Blog, I wrote and article on 2/14/2013, a month previous to the Barron’s Article,
Where I said the most likely acquisition target for Warren Buffett would be Bed Bath and Beyond ($BBBY).
Well guess what Mr. Bary, this weekend in Barrons, titled his piece a month after mine: “Could Bed Bath and Beyond be Buffett Bait”..
Gee sound familiar.. Isn’t amazing that one of the biggest and most powerful financial publications in the world has to get their ideas from my blog..
I guess I should be flattered.. I know I am good but wow I didn’t realize I was so good that Barron’s and their ivy league Wall Street writers would copy my ideas from www.billionairesportfolio.com
I am telling you for the fourth time on this blog, please stop trying to bottom fish Apple ($APPL). Apple will not bottom as I have told you till $350. Every analyst and Wall Street hack has lost money on this stock because they think investing is easy, they think all you do is buy a great stock when it’s down in price. Guess what if it was that easy everyone would make money in the market and mutual funds would beat the market.
As you know 90% of all mutual funds over a 5 year period underperform the market, and most investors 99% underperform the market. Investing is hard trust me, there are the most brilliant people in the world that are professionals that get paid to invest in the market. They went to Harvard, Stanford, MIT, they have perfect SAT’s, trust me its a hard game and a competitive game.
So stop thinking Apple ($APPL) is a buy, its a sell its going to $350, especially when the worst guru in the business Dennis Gartman goes on CNBC, and says he is buying Apple.
Dennis Gartman is a failure, He could not raise money for a hedge fund, he is not a genius, he is and he is usually wrong on his market calls. So for the last time stop trying to bottom fish Apple ($AAPL), and make money the easy way by piggy backing the world’s best Billionaire Investors and Hedge Funds, at www.billionairesportfolio.com.
Warren Buffett did his quarterly kiss-ass fest with CNBC last week, and was asked by CNBC reporter Becky “hot legs, but not brain” Quick if he would buy Apple ($AAPL).
Buffett said that he had talked to Steve Jobs many times over the years about Apple, but that he was always concerned about the company’s huge cash pile. Also Buffett,as you know, has never invested in or will invest in technology companies, even though many people have argued that Apple is really a retail company.
But the most interesting point of the whole portion on Apple, was Buffett’s point that he did not like Apple because it held too much cash, which is something I think the everyday investor would think is a positive, too much cash.
See Warren Buffett, like him or not, is the greatest evaluator of companies that has ever lived, and he understands that the most important concept in investing is Return On Capital. Cash has a zero return on capital right now, so Apple is earning zero yes zero % on all of the cash the company is holding. That is not what a Billionaire Investor, like Warren Buffett wants to see, he wants a company using all of its cash to put back into into its company’s operations, and he wants to see that cash produce at least a 15% return on capital.
So bottom line Warren Buffett would absolutely not buy Apple, and nor should you, because the company is earning 0% on all of its cash, instead the company should be plowing that cash back into new products, or at worst buying its stock back, which could produce a 15% annualized return on capital.
That brings me to an exciting piece of news, a good friend of mine who was a top reporter in New York City just sent me over the most extensive collection of interviews and quotes on Warren Buffett I have ever seen in my life its over 100 pages and he has given me exclusive permission to use this.
Basically this file has has every interview Buffett has ever done and every investing advice Warren Buffett has ever dispensed in public over the last 40 years.
I read it this weekend and bottom line its amazing.
Therefore I am thinking of giving it away free as an ebook to anyone who subscribes to the Billionaires Portfolio for a year. I think this file is easily worth thousands of dollars because of all the incredible investing knowledge that Buffett has given over the years.
There is one interview from Forbes in the 1980’s where Buffett says that he guarantees that he could make 50% a year in the stock market every year, by just using a few simple techniques. Imagine if you could make 50% a year!!
Like always if you have any suggestions or questions please email me at wmeade@purealpharesearch.com
Will Meade
Editor of The Billionaires Portfolio
www.billioniaresportfolio.com
Please stop watching Apple and worrying about Apple ($AAPL), if you own the stock at a higher price, I am sorry sell it, its a dog, and instead look at these 3 hot small cap stocks which could easily double in the next 3 to 4 months.
Every week I scan through over 200 charts looking for sectors and stocks that are breaking out, and last night I found some real gems.
First many of the sectors that have been left for dead, Solar, Shipping and Newspaper stocks are starting to break out of an almost 3 year down trend. This is very important for many reasons, first off it shows that the current stock market rally has breadth , and that many of the sectors that were left for dead years ago are actually starting to trend up, another bullish sign for the market.
Secondly the biggest money is always made jumping on sectors or industries that are just starting to break out, remember almost 30% of reason a stock’s move up or down is because the sector or industry its in, so you need to be in sectors that are trending and breaking out.
With that being said, lets go into the 3 stocks that I think can double in the next 3 or 4 months.
1) Solar Stocks- Almost all of the major stocks, Sunpower (SPWR), First Solar (FSLR), Trina Solar (TSL) and Canandian Solar (CSIQ) are up more than 100% from the bottom over the last 3 months. This type of move cannot be ignored, when you see almost all every stock in a group such as (Solar) all breaking out at the same time, it is an incredibly bullish sign. Yet there is one Solar stock that stands out for 2 reasons, and I believe it is the one that could double in the next 3 months and that is Trina Solar. Trina Solar has the best balance sheet by far of any solar stock, so it has no bankruptcy risk even though its only a $4.17 stock. Secondly a Billionaire Hedge Fund Mt. Kellet, run by a former top Goldman Sachs Trader, owns almost 4% of this stock, a very bullish sign. My price target on this stock based on valuation and chart points is around $9.50 ( to see my charts and chart book you can email at wmeade@purealpharesearch.com)
2) Newspaper Stocks- Not only have most newspaper stocks been trending higher over the last 9 months, but you just had the Second Wealthiest man in the World, Mega Billionaire and Investing Legend Warren Buffett come out and say that he has been on a buying spree for local newspapers, and thinks there is tremendous value in local newspaper stocks. The one newspaper stock in this group that stands out is the McClatchy Company ($MNI), a company that owns more than 30 local newspapers, including the Sacramento Bee, Miami Herald and Kansas City Star, not to mention the company also owns many popular websites such as: Cars.com, Apartments.com and Careerbuilder, all of these properties for a stock that sells for only $2.77. My price target on this stock is $5.60, just based on a simple break up value of the company. Secondly this stock is also owned by one of the top performing Billionaire Hedge Funds Blue Mountain Capital, Bue Mountain owns almost 8% of this stock.
3) Shipping Stocks, Shipping and Tanker stocks have literally been dead in the water (no pun intended) for almost 6 years, every since the end of the commodity boom in 2007 these stocks have done nothing but go down. But in the last 6 months there has been a huge trend break in almost all of the major shippers, and when this happens I look for the most undiscovered small cap and highest beta shipping stocks that have the biggest potential to go up. Remember a rising tide lifts all boats, so as long as Shipping and Tanker stocks continue to trend higher, you want to be in the highest beta small cap names, because they will go up the most. My favorite by far in the Shipping Group is Eagle Bulk Shipping ($EGLE), this stock has the potential, based on its chart easily go to $7, and its a $2.18 stock, that is a huge potential winner. To see my chart on Eagle Bulk shipping, email me at wmeade@purealpharesearch, I am telling you the chart on thie stock is mind boggling.
See my earlier post about the three reasons you need to sell Facebook ($FB) now, or short Facebook ($FB). Well here is some visual evidence, Facebook broke its uptrend weeks ago on very heavy down volume, and is now poised to break its current support at around $27. If Facebook sells below $27 the next major support level is around $19 or almost a 33% decline from its current share price.
Here is a neat little trick I learned from my hedge fund days, its called a paired trade or hedged trade. Right now one of the biggest and best Gold Mining Stocks, Newmont Mining ($NEM) is currently yielding 4.30%, this is a great dividend, and I have a way you can capture it without taking little or any market risk.
To do this you want to sell Gold ($GLD) and buy the Gold Mining Stock, Newmont Mining. Why because selling gold short, via ($GLD) or better yet ($GLL), you are taking out the market risk of gold Prices going down. Also since Newmont Mining stock is a lot more volatile than Gold and the ETF $GLD, I suggest using the Proshares Ultra Short Gold ETF ($GLL), which is 2x leveraged and sells Gold short.
The Proshares Ultra Short ETF ($GLL) is an inverse etf, that sells gold short at 2X leverage, it only profits when gold prices go down, so its the perfect hedging tool to use for our trade.
So here is the trade I am using for my account: I am long 100 shares of Newmont Mining, Why? Because its the best and safest gold mining stock, with a 4.30% Dividend Yield, higher than almost any other S&P 500 company, and I am also going long 50 shares of the ETF, $GLL, The Pro Shares Ultra Short Gold ETF (its an inverse ETF that only profits when gold goes down and its leveraged 2 times).
Currently 100 shares of Newmont will cost me: $39.70 or $3970 and I am going long 56 shares of $GLL(The 2X leveraged Short Gold ETF) at $69.75 which will cost me $3970 as well. So I am equally hedged, both in dollar terms, and in volatility, since the Double Leveraged Short GOLD ETF moves in the same range as Newmont’s stock. But remember the idea behind this trade, is that I am hedging out any risk of Gold Prices, or Gold Prices dropping, and by doing this I am collecting a huge 4.30% Dividend without having to take any market risk.
Will Meade
Editor of the Billionaires Portfolio
As always please contact me with any questions at wmeade@purealpharesearch.com
or on my linkedin in page: http://www.linkedin.com/profile/view?id=137320584&trk=tab_pro
