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
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.
