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
As a former Portfolio Manager of a top performing $1.2 Billion dollar Hedge Fund, I still love to short short stocks or buy put options on a stock when I see a great set up. It’s exciting to be a contrarian and go against what everyone else is doing plus it can be extremely profitable, and a great way to hedge your current portfolio.
Right now there is a perfect set up to short Facebook ($FB) or sell you Facebook stock for 3 reasons:
1) Smart Money– The Top Billionaire Hedge Fund Tiger Gloabl, a $7 Billion long short technology based hedge fund, sold all of its stake in Facbeook ($FB) last quarter even though it was one of the largest holders in the stock, both Pre IPO and Post IPO.
2) Valuation- The stock is extremely overvalued on any financial metric, it has a price to sales ratio of 12 that’s more than twice Google’s Price to Sales Ratio ($GOOG) of 5.5., and Google as we know is one of the most profitable companies in the World, is a Market Leader with a Dominant Competitive Advantage and its actually profitable, Facebook isn’t it.
3) Performance andFacebook’s Relative Strength. This one you can’t ignore. Even as the Stock Market has rallied to new highs in the the last three months Facebook’s stock been has flat to down. This is a very important indicator which many of the best hedge funds and biggest mutual funds use to comapare stocks to invest in. (By the way its been the real reason why all the biggest Growth Mutual Funds have been buying Google ($G00G) and Selling Apple ($AAPL).
Its called Relative Stength, and its a concept which compares one stock’s performance to an index or another stock over a certain period of time. The reason its such an important indicator is that is shows you what stocks are participating in a Bull Market Rally, like the one we are in now, and what stocks are flat or down. Stocks like Facebook ($FB) that are not going up when the market is rallying are stocks that institutions and hedge funds are not buying, meaning there is no real money flowing into these stocks. So what happens with stocks with negative money flow is when the rally stops, and the market sells off, stocks like Facebook ($FB), get sold quickly and hard.
To put Faceook’s recent performance in perspectice, The S&P 500 is up 9.3% over the last 3 months, while Facebook is actually down -1.4%. During this huge rally in stocks which has taken the Dow to record highs and the S&P 500 to almost double digit returns, none of the smart money or institutions have been buying Facebook ($FB), since Facebook has not participated thes stock is actually down over more than 1% durint this most recent rally, and when the market starts to correct, this will mean Facebook will be one of the first stocks to sell off and sell off hard.
Will Meade
Editor of the Billionaires Portfolio
www.billionairesportfolio.com
Again like always please email with any questions at wmeade@purealpharesearch.com
or check me out on Linkedin http://www.linkedin.com/profile/view?id=137320584&trk=tab_pro
I dont have to remind you again that Billionaire Hedge Fund Manager David Tepper has the greatest track record of any investor over the last 20 years, he makes Warren Buffett look foolish. Buffett who couldn’t even beat the S&P 500 last year and whose Berkshire stock has returned 9.7% annualized over the last 20 years pales in comparison to David Tepper’s hedge fund Appaloosa.
David Tepper considered to be the “regular guy of the hedge fund world”, a self proclaimed C student, who graduated from the very un IVY like University of Pittsburgh, has returned 41% annualized since 1993. Let me say that again over the last 20 years, David Tepper the hedge fund manager of Appaloosa Partners has returned 41% a year over the last 20 years.
To put this in simpler terms if you would have invested 10,000 in David Tepper’s fund in 1993, you would have close to $10,000,000 dollars today, $10 Million….. (Actually $9.7 million but who is counting at this point). So if you dont believe piggybacking Billionaire Hedge Fund Managers can make you rich then your crazy!!!
To see what stocks David Tepper is buying and to see how you can piggyback your portfolio into $10 milllion check out The Billionaires Portfolio
Everyone in the media from Barrons to CNBC has been calling for a top and of course everyone is wrong. I have an issue from Barrons, the stock brokers rag mag, from last month that has at least three different articles about how stocks have topped, and how you should buy puts to protect your portfolio.
Well here we are a month later and the Dow just made a record high ($DIA) and those puts Barrons told you to buy they are worthless. This is a great lesson in why you should never listen to the mainstream news or so called TV Pundits. No one can time the market, and momentum is a very strong force that can carry the markets for a long time in one straight direction.
So if you want to dip your toes back into stocks but are scared, buy stocks where you get an edge, and those are stocks owned by Billionaire Activists investors, people who impose their will on companies and force them to create instant shareholder value.
An example of this has been Groupon ($GRPN), Tiger Global, one of the top Billionaire Hedge Funds in the world acquired nearly 10% of this stock last quarter, and recently forced out the company’s CEO. Well Groupon ($GRPN) is up over 50% since the Billionaire Hedge Fund Tiger Global acquired their stock, and its up over 30% in just 4 days since Tiger forced the company’s CEO out. That’s right Groupon ($GRPN) is up over 30% in just 4 days…
So again please ignore the media, Barrons, CNBC, and also stop trying to buy your personal favorite stocks like Facebook ($FB) and Apple ($APPL) and buy stocks that Activist Billionaires are buying, because they will make you rich regardless of what is going in the economy or market.
To see what stock picks some of the world’s best Billionaire Hedge Fund Managers or Investors are buying check out the Billionaires Portfolio at billionairesportfolio.com.
The Billionaires Portfolio will be releasing its newest pick this Wednesday, and I promise that you don’t want miss it. This could be the biggest potential winner I have ever recommended in The Billionaires portfolio.
Here are the details, one of my good friends that works for a top hedge fund, told me that his hedge fund has invested nearly 10% of its entire assets into a little known biotech stock.
Why, well his boss the manager of this Hedge Fund, who by the way happens to hold a PHD From Harvard , believes this company has developed a groundbreaking new drug that will cure most strains of the common cold and flu. As everyone knows this has been one of the worst cold and flu seasons in over 100 years, so you have to believe that everyone including the FDA is going to want to approve a drug that can treat the flu effectively.
Furthermore this hedge fund is never wrong, this Hedge Fund has averaged 36% a year since 2002, with only one down year. If you would have put $10,000 into this hedge fund when it first started in 2002 you would have nearly $150,000 today. This compares to a 4% annualized average return in the S&P 500 turning $10,000 into a meager $15,000 today.
Even better we are going to be able to buy this stock at a cheaper price than what this superstar Harvard PHD paid for his nearly 10% position in this stock. So please dont miss out on this lucrative stock pick, this biotech stock has the potential to gain 400% in price (according to one top wall street analyst) which would completely pay for your subscription even with just a $100 investment.
Please go to www.billionairesportfolio.com and click on the order now tab, before the news gets out on this stock.
Great Article from Bloomberg today, http://www.bloomberg.com/news/2013-03-04/icahn-foe-rachesky-joins-mentor-attack-on-navistar.html, on Billioniare Activist investor Mark Rachesky.
Some Key Points from this article on The Billionaire Activist Investor Mark Rachesky:
1) Rachesky has a degree in molecular biology from the University of Pennsylvania, and has both an MBA and MD from Stanford University as well. WOW!!!
2) Rachesky is a so called Activist Investor, which the article defines as “They dont buy a stock, dial into a earnings call and hope for the best, they take a stake and angle for control” This is a Great summary of how Activist Investors are different from mutual funds, and why we like to follow activists at The Billionaires Portfolio.
3) Rachesky has returned 20% annualized in his hedge fund since 1998 versus a 4.5% annualized return in the S&P 500 during the same period, even more impressive, of Rachesky’s 43 major investments (where he controls 5% or more of a company), 39 have been profitable or 93% of all his major investments since 1998 have made money. This might be the greatest batting average I have ever seen from an investor.
Bottom Line: Billionaire Activist Investors dont lose, 93% of Rachesky’s Investments have been profitable and he consistently produced huge market beating returns for over 16 years. So why are you not following his stock picks? To learn more how you can piggyback off the world’s gretest Billionaire Activist Investors, go to the www.billionairesportfolio.com.
Why Didnt you listen? I told you in countless posts on this blog at least three different times not to buy Apple ($APPL). Let me summarize again:
1) Almost all of the World’s Best Billionaire Hedge Fund Managers and Investors sold their entire Apple ($AAPL) position over the last three months. Furthermore many of the hedge fund managers I talked to were selling Apple ($AAPL) short and even buying puts on Apple (find out more about buying puts on Apple ($APPL)in my upcoming Billionaires Options Trader).
2) David Einhorn is not an activist investor, he owns barely 1% of Apple’s stock and therefore has zero control over the company or its managment, hence as I told you that Einhorn and his stupid lawsuit would have no effect on the stock price of Apple ($AAPL).
3) Apple ($AAPL) is a value stock that pays a nice dividend, it is not a growth stock, Hedge Funds and Billionaires did not get rich buying low growth dividend stocks, leave that to the mutual funds, they love buying low growth value stocks that return 6% a year. Just ask mutual fund manager Bill “over the hill” Miller of Legg Mason, who has been telling you to buy Apple since $550, he has destroyed more investors wealth than taxes.
4) Apple ($AAPL) is in a serious downtrend, never buy a stock in a downtrend, its too risky.
Instead of worrying about trying to bottom tick Apple ($APPL) and lose money, subscribe to The Billionaires Portfolio, I recently recommended two stocks that have gone up over 100% in the last 4 months.
As many of you know I run my own consulting firm where I follow and track the World’s best Billionaire Investors and Hedge Funds. I have a database of over 500 of the Top Hedge Funds and Billionaire Investors that I maintain and update on a daily basis.
More Importantly at least 3 times a week I talk with a Portfolio Manager or Trader, and in some cases a Billionaire Investor about their current investment strategies and how they are investing their portfolio. From this I gain an amazing insight into not only what stocks these Billioniare Investors and Hedge Funds are buying and Selling, but also what their Asset Allocation is: meaning are they net long stocks, are they net short stocks, are they buying treasuries or commodities (such as gold and oil), or are they playing it safe and holding cash.
Its an amazing information source, these Billionaire Hedge Fund Managers, and I pick up many common trends and investment themes that I can use to profit with in the markets.
More Importantly I have learned that you can trade these investment trends and themes very profitably using leveraged ETF’s. I actually made 50% in 4 weeks buying a leveraged ETF from the information I learned from these Billionaire Hedge Fund Managers.
Here was the actual trade, basically over the last month from my discussions with Portfolio Managers at Hedge Funds I learned that every single Hedge Fund Manager I talked to was liquidating their Precious Metals Positions (they were selling almmost all of their gold and silver holdings) ($GLD, $SLV) and gold and silver stocks ($GDX) and many of the managers were even going short Silver, Gold and precious metals stocks as well ($ZSL, $GLL, $DUST)
So from this information I purchased the Direxion 3 Leveraged Inverse Gold and Silver Miners ETF ($DUST) this ETF effectively sells silver and gold stocks short at 3 times leverage. It is the most cost effective and profitable way to short Gold and Silver stocks. I purchased this position on Jan 30 at $38.10 and today the price of this 3 times Short Gold and Silver Miners ETF is currently over $56. That is a profit of over 50% in a month.
So my question to my audience is: Would you be interested in a premium trading service that uses leveraged ETFs to piggyback off the investment moves of the World’s Greatest Billionaire Hedge Funds and Investors?
Please let me know at wmeade@purealpharesearch.com, I would love to hear from you either way.
Will Meade
The Editor of the Billionaires Portfolio
Due to the incredible success and strong performanc of our Billionaires Portfolio. I will be rolling a super exciting new premium Service called The Billionaires Options Trader. We plan on launching this super premium service in the next couple of weeks, and I am really pumped about it.
The opportunities in options trading right now are incredible for many reasons. First off, in my 14 years of workinng in the hedge fund industy I have never seen so many Billionaire Hedge Fund Investors using options as they are today. I know this from my sources at Hedge Funds and from many interviews I have conducted with Hedge Fund Managers recently.
Why are Billionaire Investors and Hedge Funds buying so many outright calls and puts options, well its quite simple.
1) Volatlity is at a 15 year low, It has never been cheaper to buy calls and puts then it is today.
2) Hedge Fund Managers are finding it very expensive to short stocks, not only because the borrowing costs and margin interest is high (as much as 5% annualized) but, its also hard to find the actual shares to short. When you buy a put option you have no interest or financing cost and you are never at risk of a short squeeze.
3) Most Importantly – Huge returns, Billionaire Hedge Funds are now embracing the idea of buying calls and puts because the returns can be so big, were talking 500% 100% etc…
4) The Invention of the Mini Options, in the next three weeks the CBOE will be launching mini options on the most High Priced Stocks such as Apple ($AAPL), Google($GOOG), and Priceline ($PCLN). The Mini Option will let the option user control 10 shares of stock, instead of a 100 which a regular option controls. This will make mini options much cheaper to buy, it will allow the individual investor to buy options on Apple($AAPL) for as cheap as $100 per contract.
So please stay tuned to this blog, as I will obviously give you an exact date when we launch this service.
As I posted last week, some of the top hedge funds in the world including Stephen Mandel of Lone Pine Capital had purchased millions of shares of Dollar Tree (DLTR), Mandel’s fund owns more than 5%, and just like clock work, Dollar Tree came out with great earnings and positive guidance, and the stock jumped more than 11% yesterday. Yes there still is time to ride the train on Dollar Tree (DLTR) because it will probably go up another 10% or more to $50 in the next couple of weeks, because of a financial theory called “Earnings Drift” But my point is there is no better way to make money then following the worlds best billionaires hedge fund managers like Stephen Mandel.
Put it this way Mandel is considered the best retail-consumer analyst on wall street, he is worth billions of dollars because he is so good at picking retail stocks, so when you see him taking a huge position in a retail stock follow him, and I promise you will make money.
Another interesting note is that Mandel has a huge short position on a major retailer, and is he using big leverage to do this by using puts, to find out what retailer the billionaire Stephen Mandel is buying millions of dollars of puts on and how you can piggyback him in these put options go to www.billionairesportfolio.com and subscribe to our service, this trade is going to be huge, I promise, and it could potentially be a 1000% winner, because we are using options.
