February 16, 2017, 6:30pm EST

Stocks were down a bit today, for the first day in the past six days. Yields were lower, following two days of Janet Yellen on Capitol Hill. Gold was higher on the day. And the dollar was lower.

Of the market action of the day, the dollar and yields are the most interesting. The freshly confirmed Treasury Secretary, Steven Mnuchin, held a call with Japan’s Finance Minister last night, early morning Japan time.

What did USD/JPY do? It went down (lower dollar, stronger yen). Just as it did the week leading up to the visit between President Trump and Japan’s Prime Minister Abe.

Remember, the yen has been pulled into the fray on Trump’s tough talk on trade fairness and currency manipulation. The subject has cooled a bit, but with the new Treasury Secretary now at his post, the world will be looking for the official view on the dollar.

As I said before, I think the remarks about currency manipulation are (or should be) squarely directed toward China. And I suspect Abe may have conveyed to the president, in their round of golf, that Japan’s QE is quite helpful to the U.S. economy and policy efforts, even if it comes with a weaker yen (stronger dollar). Among many things, Japan’s policy on keeping its ten-year yield pegged at zero (which is stealth unlimited QE) helps put a lid on U.S. market interest rates. And that keeps the U.S. housing market recovery going, consumer credit going and U.S. stocks climbing, and that all fuels consumer confidence.

Yesterday we talked about the fourth quarter portfolio disclosures from the world’s biggest investors. With that in mind, let’s talk about the porfolio of the man that’s best position to benefit from the Trump administration: the legendary billionaire investor, Carl Icahn.

Icahn was an early supporter for Trump. He was an advisor throughout the campaign and helped shape policy plans for the president.

What has been the sore spot for Icahn’s underperforming portfolio in recent years? Energy. It has been heavily weighted in his portfolio the past two years and no surprise, it’s contributed to steep declines in the value of his portfolio over the past three years. Icahn’s portfolio is volatile, but over time it has produced the best long run return (spanning five decades) of anyone alive, including Buffett. And he’s worth $17 billion as a result.

Here’s a look at what I mean: In 2009 he returned +33%, +15% in 2010, +35% in 2011, +20% in 2012 and +31% in 2013. That’s quite a run, but he’s given a lot back–down 7% in 2014, down 20% in 2015 and down 20% last year.

Even with this drawdown, Icahn doesn’t see his energy stakes as bad investments. Rather, he thinks his stocks have been unfairly harmed by reckless regulation. And he’s been fighting it.

He penned a letter to the EPA last year saying its policies on renewable energy credits are bankrupting the oil refinery business and destroying small and midsized oil refiners.

And now that activism is positioned to pay off handsomely.

The new Trump appointee to run the EPA was first vetted by Icahn–it’s an incoming EPA chief that was suing the EPA in his role as Oklahoma attorney general. Safe to assume he’ll be friendly to energy, which will be friendly to Icahn’s portfolio.

And as we know, Icahn has since been appointed as an advisor to the
president on REGULATION.

To get peek inside the portfolio of Trump’s key advisor, join me our Billionaire’s Portfolio. When you do, I’ll send you my special report with all of the details on Icahn, and where he’s investing his multibillion-dollar fortune to take advantage of Trump policies.

Click here  to join now.

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December 8, 2016, 4:00pm EST

Stocks continue to print new highs.  And many continue to doubt the rally (as they have for much of the post-crisis recovery).

They continue to say stocks are priced for perfection, implying that stocks are expensive, and/or that investors are assuming a perfect Presidency from Trump. But remember, we’ve talked about the massive fundamental and technical performance gap that has still yet to be closed, dating back to the 2007 pre-crisis peak.  I did this analysis again just a few days after the election. You can see it here: “The Trump Effect Will Make Stocks Extraordinarily Cheap.”

Now, a few days ago, we talked about buying the stocks of the guests of Trump Tower.  Goldman comes to mind, as the Wall Street powerhouse has been well represented in the Trump plan, including the new Treasury Secretary appointment.  Goldman is the best performing Dow stock over the past month. And we talked about the meeting with Japanese investor, Masayoshi Son, at Trump Tower this week.  Son’s gigantic (80%+) stake in Sprint is up 11% since Tuesday.

With that said, the billionaire activist investor, Carl Icahn, has been out doing interviews the past two days.  Let’s talk about Icahn, because there is perhaps no one investor that should benefit more from the Trump administration. Remember, Icahn was an early supporter for Trump.  He’s been an advisor throughout and has helped shape policy plans for the President-elect.

What has been the sore spot for Icahn’s underperforming portfolio the past two years?  Energy.  It has been heavily weighted in his portfolio the past two years.  And no surprise, he’s had steep declines in the value of his portfolio the past two years.

But Icahn doesn’t see his energy stakes as bad investments. Rather, he thinks his stocks have been unfairly harmed by reckless regulation.  For that, he’s fought. He’s penned a letter to the EPA a few months ago saying its policies on renewable energy credits are bankrupting the oil refinery business and destroying small and midsized oil refiners. And now his activism looks like it will pay off.  Yesterday we got an appointee to run the EPA that has been vetted by Icahn (as he said in an interview today) — it’s an incoming EPA chief that was suing the EPA in his role as Oklahoma attorney general.  Safe to assume he’ll be friendly to energy, which will be friendly to Icahn’s portfolio.
Icahn’s publicly traded holdings company is already up 28% from election day (just one month ago).  But it remains 56% off of the 2013 highs.  This is the portfolio of an investor (Icahn) with the best track record in history (30% annualized for almost 50 years).  IEP might be one of the best buys in the market.

We have three Icahn owned stocks in our Billionaire’s Portfolio.  Follow me and look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio is up more than 27% this year. You can join me here and get positioned for a big 2017.

May 23, 2016, 5:00pm EST

Last week we talked about Warren Buffett’s new stake in Apple.  Today we want to talk about the investor that recently sold Apple: Carl Icahn.

In a world where information is abundant, markets are priced quite efficiently.  The way a stock re-prices is through CHANGE.

And that’s precisely what the influential investors that we follow in our Billionaire’s Portfolio specialize in.  And that’s why they have such a tremendous record in posting consistent superior returns – and, in turn, building tremendous wealth for themselves and their investors.

No one has done a better job at creating change for shareholders than Carl Icahn – certainly not over the span of the past three decades. That’s why we have 20% of our Billionaires Portfolio in stocks owned and controlled by Icahn.

We consider Icahn the god-father of activism.  Very early on, Icahn found that, among all of the complications people like to add to investing, there is a very simple opportunity to take advantage and capitalize on the simplicities that we all know about human nature.

In his words, “some people get rich studying artificial intelligence. Me, I make money studying natural stupidity.”

I’ll interpret that remark with these three simple points:  1) People will take advantage of opportunities to satisfy their own self-interests. 2) People will find ways to justify their self-serving actions.  3) People will be greedy.

Add this human nature to a concoction called the public equity markets, and you find, among many things, a witch’s brew of bad management teams at publicly traded companies.

To most investors, identifying a company that’s run poorly is a red flag – something to stay away from.

For Icahn, it’s opportunity. It’s blood in the water.  Why?  Because it presents the opportunity for CHANGE. And when you get change, you have a chance to make a lot of money as the stock re-prices to reflect that change.

Icahn has done this over and over throughout his long career. That’s why he has been able to compound money at nearly 30% a year for almost 50-years.  That’s the greatest long-term investment track record in history (as far as we know).  One thousand dollars with Icahn when he started has gone to $275 million.

Even at the age of 80, Icahn has been as vocal and as influential as ever. He influenced Apple to a near double by encouraging Apple to use their treasure chest of cash to buy back stock.  Cash sitting on a balance sheet idle does nothing for shareholders. Share buybacks create shareholder value.
That’s the name of the game. Despite what some CEOs may think, that is precisely why they have been employed, to create shareholder value.  And that is often the change that has to take place (the CEO or the mindset of leadership).

Icahn’s continued investing success can be attributed to one important talent:  He’s a change-maker.  When we follow him, we can be assured that he has a plan for change and that he will fight to make it happen. Plus, when we follow Icahn, we get an added bonus that few, if any, other big time investors summon: Because of his great success, his campaigns tend to attract other influential investors to join in – stacking the odds even more favorably for shareholders.

We’ll talk more about the “Icahn effect” tomorrow.

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(more…)

Buffett’s famed annual letter is due to be released this weekend. With that, today we want to talk a bit about his record, his philosophy on markets and successful investing and the high conviction stocks that he has in his $130 billion plus Berkshire Hathaway stock portfolio.

First, only one living investor has a length of track record that can compare to Buffett’s. That’s fellow billionaire Carl Icahn. Icahn actually has a better record than Buffett, and it spans a little longer. But he gets a fraction of the attention of the man they call the Oracle of Omaha. (more…)

8//27/2014

Over the past week, I received hundreds of emails concerning Carl Icahn’s announcement that he took an 8% position in Hertz (HTZ). We know Icahn has already publicly stated he wants to actively engage with Hertz management and its CEO, but there has been no word about Icahn pushing Hertz to merge or sell itself.

Here is why: First, regulators would never approve a Hertz-Avis merger. The two entities represent too large a share of the industry. It would essentially be a monopoly. So a merger with Avis isn’t happening — at least in my opinion.

Though, given the quick 25% run up in Family Dollar (FDO) last month after Icahn forced a merger with Dollar Tree (DLTR), it’s easy to see why investors are hoping for a similar result. Clearly, people don’t want to miss out on the next FDO. On that note, you can read some great analysis of the Family Dollar deal, where my partner and I predicted the merger and picked the bottom in Family Dollar stock (read that here).

But again, this is not going to happen with Hertz. Icahn and numerous other investors are long Hertz. Hertz is actually one of the most popular stocks owned by top billionaire hedge fund managers, because it’s a pure play on the improving economy, and rental car companies have lagged airlines in terms of raising their prices.

So many hedge funds are betting on Hertz increasing its prices, like the airlines did last year, and they are betting that demand will continue to improve with the recovery in the economy. It’s that simple.

Also, this is not a classic Icahn play. He typically comes into a deeply depressed stock selling near its 52-week low or multi-year lows. Icahn purchased Hertz near the stock’s all-time high.

But what Icahn is doing is playing his “change” card. He has recently laid out his evidence, based on his history as an activist investor, of how replacing a CEO is a powerful catalyst for producing shareholder wealth creation. And one of his fellow shareholders in Hertz is already at work on that strategy: Fir Tree Partners is pressuring the board to oust the CEO.

Will Meade
President of The Billionaires Portfolio