At BillionairesPortfolio.com, I am always looking for deep value stocks that are owned by some of the world’s top hedge funds and billionaire investors.
Nothing represents a great value play more than a stock that is trading below the cash it holds on its books.
A stock that is trading “below cash” means the company has more cash on its balance sheet than its entire market capitalization. As billionaire hedge fund David Tepper put it “buying cash for less than cash” is one of the easiest ways to make money in the stock market.
Here are five stocks that top hedge funds own that are also trading below cash:
1) STR Holdings, Inc. has $1.74 per share in cash and has zero debt. The stocks sells for only $1.72. Top hedge fund Red Mountain Capital Partners owns nearly 15% of this stock.
2) Career Education Corporation has $3.44 in cash per share and zero debt. The stocks sells for $2.66. Blum Capital Partners, a top hedge fund/private equity firm, owns almost 14% of this stock.
3) AVEO Pharmaceuticals AVEO +0.96%, Inc. has $3.04 per share in cash and has zero debt. The stock sells for only $2.09. Billionaire and legendary hedge fund manager, Seth Klarman of the Baupost Group owns more than 7% of this stock.
4) The First Marblehead Corporation has $1.23 per share in cash and has zero debt. The stock sells for just $0.85. Value-based hedge fund Mangrove Partners owns almost of 10% of this stock.
5) Savient Pharmaceuticals, Inc. has $0.71 per share in cash and has zero debt. The stock sells for only $0.62 cents. Top biotech hedge fund Palo Alto Investors owns more than 13% of this stock.
Disclosure: Clients of Billionaire’s Portfolio, own shares of STR Holdings (STRI)
I am writing you to respectfully recommend an investment opportunity that I think well suits your respective investment styles.
The stock is Blackberry. As you know Blackberry has put itself on the block and has given a deadline to sell itself.
And as you know, Blackberry has an influential investor involved, Prem Watsa, an investor that owns shares at much higher prices (roughly $17/share).
Now, Mr. Watsa is in position to take this company private. And that creates opportunity. Given the deadline Blackberry has self-imposed, if/when Mr. Watsa makes a public bid to take Blackberry private, this will create a virtually risk-free trade for other influential investors to enter the trade.
You will have a floor, in Watsa’s bid, and the power to influence shareholders to force that bid higher.
Moreover, as the November date approaches, the opportunity for a bidding war grows. You may find yourself owning shares in a company with an implicit floor, while composing a bidding war.
Are there challenges associated with Canada’s takeover laws. Yes. Will that mean one of the world’s best technology providers in the cell phone/mobile computing space quietly goes away for book value? Unlikely.
Mr. Smith, I recall you 2011 investment in AOL. AOL was considered a rapidly dying business. It was hated by and poorly understood by analysts. Sound familiar. But it had a fantastic balance sheet, and valuable patents and technologies. Your firm acquired a huge position in AOL in 2011, and instantly forced the company to sell its valuable patents and technology. In doing this you created instant value for the shareholders. AOL’s stock price went from a low of $10 in August of 2011 to over $40 in April of 2013.
Blackberry is a stock with $5.50 in cash per share with zero debt. The company, according to a consensus of analysts has anywhere from $8 to $10 worth of patents and technology. Regardless of the synergistic value creation that those patents and technology could mean for another big mobile player (Apple, Samsung …) Blackberry is still selling for a nice discount to its break-up value.
So I see three potential outcomes for Blackberry, with your involvement:
Scenario 1 – Mr. Watsa tries to take the company private. That supplies a floor from which to negotiate from on behalf of shareholders. The result: Virtually no risk and a potential premium to Watsa’s bid won for shareholders.
Scenario 2 – With an approaching deadline and a bid on the table from Prem Watsa, a rapidly evolving bidding war could ensue for the coveted Blackberry technology.
Scenario 3 – Force the sale of Blackberry most valuable assets and then force management to buy back stock or pay out a one-time special dividend to its shareholders.
Bottom line: Blackberry offers a very attractive asymmetric risk/return profile. And the stock is in need of at least one influential investor to demand the highest value for shareholders in a Blackberry sale.
On a parting note, comparing a Blackberry outcome to the AOL outcome (where Starboard Value forced the company to sell patents and change its strategy), Blackberry could be worth anywhere from $21 to $25 a share. Perhaps most intriguing, given the potential scenarios and the approaching November deadline, a large premium in Blackberry shares could come in just a few short months.
Respectfully,
Will Meade
President of The Billionaires Portfolio
As I mentioned last week, as part of our research process for our online platform, billionairesportfolio.com, we look for investment ideas using a series of simple, yet powerful, screens.
The goal is to identify stocks where the potential reward greatly outweighs the risk. Finding stocks with asymmetrical risk/reward is at the core of activist investing — it’s a characteristic represented in every one of our picks in our premium research service, the Billionaire’s Portfolio. If you want to find yourself on the right side of big winners, if you want to own the stocks that show up on the news at night after doubling or tripling on the day, you need to focus on this risk/reward relationship in your stock selection.
Among the many screens we run through our research process, we like finding stocks that are trading at a huge discount to analyst consensus price targets. These are stocks that have consensus analyst price targets well above their current share price, that have strong sentiment and Wall Street sponsorship. That can prove to uncover deep value investment opportunities. In using this screen, we tend to “back into” finding the presence of a an influential investors, already involved in the stock.
Now, given the backdrop I’ve described, the following five stocks have recently hit our radar as high potential, deep value candidates. These stocks have an average analyst price target that is at least 100% higher than its current share price.
1) Emcore Corporation (EMKR) has a current share price $4.29. The consensus analyst target price is $8.63. That gives us a “street projected return” of 101%.
2) Global Geophysical Services (GGS) has a current share price $2.55. The consensus analyst target price is $5.57. That gives us a “street projected return” of 122%.
3) Uni-Pixel Inc. (UNXL) has a current share price $18.12. The consensus analyst target price is $45.26 That gives us a “street projected return” of 150%.
4) Virnetx Holding (VHX) has a current share price $19.74. The consensus analyst target price is $46.67. That gives us a “street projected return” of 136%.
5)Wi-Lan Inc. (WILN) has a current share price of $3.26. The consensus analyst target price is $6.57. That gives us a “street projected return” of 101%.
This gives us a great starting point to identify stocks that may be deeply undervalued, with the potential to be the next big winner that dominates financial news headlines.
Will Meade
President of The Billionaires Portfolio
Every week I like to run a scan for stocks that are selling at a huge discount to analyst consensus price targets. I use the following parameters for my screen:
1) Market Cap has to be greater than $100 Million.
2) There has to be more than three analysts covering the stock.
3) There has to be more than three analysts that have a price target on the stock.
The following four stocks have an average analyst price target that is greater than or equal to 200% higher than its current share price. Here they are:
1) Immunocellar, Symbol (IMUC) has a current share price $2.78. Consensus analyst target price is $10.25. Projected return 268%.
2) Merrimack Pharmaceuticals Inc, Symbol (MACK) has a current share price $3.47. Consensus analyst target price is $12.00. Projected return 245%.
3) Threshold Pharmaceuticals Inc, Symbol (THLD) has a current share price $4.37. Consensus analyst target price is $13.50. Projected return 208%.
4) OncoGenex Pharmaceuticals Inc, Symbol (OGXI) has a current share price $8.88. Consensus analyst target price is $26.90. Projected return 202%.
One of the best indicators to find stocks that can break out quickly is short interest as a percentage of Float. Short interest as a percentage of float is the number of shorted shares divided by the float (the float is the total number of shares publicly owned and available for trading). Basically stocks that have a high percentage of their shares being sold short are ripe for a “Short Squeeze.”
A “Short Squeeze” occurs when short sellers are forced to cover their shares when a stock moves against them abruptly. This causes sellers to panic, and if they are leveraged they can be forced to cover their shares. Either way it creates instant buying in a stock.
A lot of traders look at a high short interest as a percentage of float as rocket fuel, because they know these types of stocks have built in buyers due to all the short sellers that might have to cover on abrupt move.
Yet looking at just short interest as a percentage of float can be dangerous, because the so called “smart money” hedge funds are usually the ones who sell stocks short. And they will not sell a stock short unless they believe there is a major fundamental reason for why the stock will go down.
But by combing momentum with a high short interest as a percentage of float, you are testing the will of the short seller, and how much pain they can take being short the stock when it is going against them and they are losing money. If their losses become too big eventually they will throw in the towel and this will cause the stock to breakout in a big way.
Here is a list of the top 3 stocks with the highest short interest as a percentage of float and with the best momentum. These stocks have been outpacing the market, and causing pain to the investors shorting these stocks. So eventually, you could see a short squeeze and a big move up in these stocks.
1) ITT Educational Service Inc. (ESI), this stock has an amazing 57.6% of its float short, yet the stock is up more than 100% over the last 5 months.
2) Radioshack Corporation (RSH), Radioshack has almost 40% of its float short, yet the stock is up more than 30% this month alone, and it has just broken out of a huge channel formation as well.
3) Miller Energy Resources (MILL) Miller has 35% or more than a 1/3 of its float short and the stock is up more than 50% since April.
As we complete our first rolling twelve month period, today, I want to give a brief summary of our performance.
Since inception (August 2012), our portfolio is up 35.7% versus 15.5% in the S&P 500. This includes a long period where we held a significant amount of cash, as we were building the portfolio. For every $20,000 invested our picks have produced gains of $7,131.
We became fully invested in June. And that’s when we have truly been able to show the power of our process.
Since June 1, the portfolio is up 20.1% versus 4.5% in the S&P 500.
What about today? Today, stocks, yields and the dollar has a technical sell-off. And predictably, the media and Wall Street salesmen are licking their chops — going to their wheel-house of scary market conjecture.
Our Billionaire’s Portfolio lost 1/8 of 1%. Meanwhile, the S&P lost over 1.5%.
This is what real investing is about. It’s not about picking up tips and clues from watching heavily made-up egotists on CNBC all day. It’s about investing in stocks where there is a clear catalyst at work and pent-up value. And we only do so when we have a very rich, powerful partner on our side, that owns enough stock and has enough influence to control his own destiny. When he wins. We win.
This is how you make money consistently in the stock market. This is what “absolute return” investing is all about. It doesn’t matter what the stock market is doing. When value in a company is unlocked, the stock goes up! This week was a very good example. When stocks were down for a second consecutive day, one of the picks in our portfolio, jumped over 30%. And today, stocks break-down, our portfolio holds firm.
If you are reading my blog. You have found the right place. Join me. Stop giving your money to uneducated brokers and untalented mutual fund managers. To subscribe to The Billionaires Portfolio please click here.
Will Meade
President of The Billionaires Portfolio
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
