Monday, September 30, 2013 | Issue #2132
The Smartest Investor on Earth (and It's Not Warren)
Alexander Green, Chief Investment Strategist, The Oxford Club
|  Dozens of academic studies and more than two decades of personal experience have demonstrated that there is no better "heads-up" in the stock market than top executives and directors piling into their own company's stock with their own money at current market prices.
As buy signals go, it just doesn't get much better than this. Why? Because corporate insiders have access to all sorts of material, nonpublic information that is not available to the rest of us, including the direction of sales since the last quarterly report, the addition of major new clients or customers, new products and services in development, the likely resolution of pending litigation, and so on.
A World-Class Mining Company Sitting on a World-Changing Technology
Since the late 1940s, one company has supplied the elements needed to develop breakthrough technologies. We're talking about automobiles... refrigerators... microprocessors... even color TV sets. Without this miner, mass-producing these innovations would have been nearly impossible. But as it turns out, the company's biggest claim to fame may be right around the corner...
Recently, demand for a powerful but obscure element has started to mount. And one of the world's richest, most significant deposits belongs to our miner. To find out more, just click here. |
That's why the SEC requires insiders to file a Form 4 within 48 hours of each purchase, detailing how many shares they bought, at what price and on what date.
Over the years, however, I've learned that some insiders are much more astute than others. And the single-most knowledgeable one in the nation, in my view, is shareholder activist Carl Icahn.
Best in the Business
Icahn began his career on Wall Street as a stockbroker in 1961. In a recent Forbes interview, he says he quickly learned that "attempting to determine if the market will rise or fall is a complete waste of time. There are simply too many variables. To be a successful investor one must look for situations where the risk/reward ratio is greatly in your favor."
He found those favorable odds when he pioneered and perfected his "activist" model of investing. Icahn believes many American companies are undervalued because they are mismanaged.
Yet booting incompetent management isn't easy. CEOs and their boards can build heavily guarded walls to protect themselves. It takes a lot of time, money and - most of all - practical experience to force management out or get them to change course. Yet Icahn has managed to do it time and again.
Over the years, I've made a bundle for readers by recommending companies, including Motorola, Navistar, CVR Energy and Hain Celestial, not long after Icahn accumulated a stake of 10% or more - and was legally required to disclose his ownership stake.
Every investor gets one vote for each share of stock he owns, but investing in public companies is usually a passive activity. Even if you own tens of thousands of shares of a company, your ability to influence management is greatly limited. Yet Icahn has the risk capital, the expertise and the cojones to force positive changes that benefit all shareholders.
Most investors don't realize just how good he is. For example, from January 2000 through August 2013, the S&P 500 returned 52% with dividends reinvested. Warren Buffett has done much better with Berkshire Hathaway (NYSE: BRK-A). It's up 208% over the same period. But Icahn's holding company, Icahn Enterprises (NYSE: IEP), has returned 1,126% with dividends reinvested.
The man clearly knows what he's doing. He recognizes opportunity when public companies are selling for far less than they are worth ... including his own. On Jan. 30, 2012, for instance, he purchased 13 million shares of Icahn Enterprises in the open market at $36.79 per share, an investment of over $478 million.
That's no small bet. Yet it paid off big. Last year's investment is now worth a cool billion dollars.
Yes, it definitely pays to watch what the insiders are doing. Perhaps especially if their name is Carl Icahn.
Good investing,
Alex
| Editor's Note: Our Research Director says this could be the trade of the decade. Thanks to the sort of insider insight Alex shares above, you could have a very real shot at $15,735 a month. In fact, one couple used the sort of "restricted trade" to unleash $412,569 every day for four years. To get the incredible details on how you can potentially pull off the same sort of trade... click here. | | | Recent Articles:
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| Have You Seen These "Tax Loophole" Hot Spots?
 This map pinpoints where money paid out by Uncle Sam is, in effect, winding up in the hands of at least 27,000 U.S. citizens - all thanks to an odd "tax loophole." These payouts have nothing to do with social security, unemployment, food stamps, or any other regular program.
And if you live within 250 miles of these locations, you may be able to collect cash distributions of $840... $1,260... even $2,550 every ninety days, regardless of your income or employment status. To find out how, just click on the map or this link. | |  Ensco (NYSE: ESV): Dividend Doubling Within Four Years? | The Most Profitable Company in the History of the World?
Standard Oil... Saudi Aramco... The Dutch East India Company... These companies were bigger and more profitable than any single company on the planet today.
But one company could be on the verge of joining their ranks. It's already more profitable than just about every company on the globe. And yet, you've likely never heard of it. Details here. | | | | |
   
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