Today, we’re going whale hunting…
In the sports world, a “whale” is a superstar player who’s entering free agency. Teams hunt these valuable whales because they can change a franchise’s fortune.
Think of Michael Jordan in basketball, Peyton Manning in football, and Alex Rodriguez in baseball.
You can ride these whales to championships and glory.
The investing world has its own whales, too.
David Tepper is one of them.
His Appaloosa fund has averaged returns of 30% a year for the last 24 years. That means his original investors have made 545 times their money.
Now, we can’t sign Tepper as a free agent. But we can do the next best thing—follow him to the money.
In yesterday’s Daily, we told you one way to outperform the market is by following the best investors in the world. All you have to do is look inside their portfolios.
How to Get a Sneak Peek
There’s a simple way for the average guy to piggyback on the returns of the world’s top investors without hiring them…
All funds that have more than $100 million under management need to file a quarterly report with the U.S. Securities and Exchange Commission (SEC).
The SEC calls it a 13F filing. It requires large funds to disclose the stocks they own 45 days after every calendar quarter.
These reports are public record. So you can look at them yourself. (If you want to read through the 13F filings yourself, check out WhaleWisdom.)
To be clear… we can’t exactly match Tepper’s returns simply by following his 13F filings. He invests in some markets that we don’t—like distressed debt.
But if we bought his stocks after each of his 13Fs were released, we would have made 20.6% per year since 2000.
That’s more than quadruple the returns of the S&P 500, which returned only 4.8% (including dividends) over the same span.
What Is This Whale Hunting?
Just last week, Tepper’s fund released its 13F report. And he added a big position.
It’s one of our favorite sectors of the market: semiconductors.
Semiconductors are the brains of our electronics. They’re the chips and circuits that go into computers, smartphones, and even the timers on your crockpots.
Semiconductors are in just about everything these days.
We’ve been following the sector since last year. Since October 2017, the VanEck Vectors Semiconductor ETF (SMH) is up 17%.
And SMH is up 13% this year—making it one of the best-performing sectors in the market.
Individual names have done even better…
For example, we first told you about Micron Technology (MU) in December 2017. It’s up 50% since then… It also happens to be Tepper’s largest holding.
In the first quarter of 2018, Tepper bought 7.9 million additional shares of Micron. It now makes up 19% of his portfolio.
But he isn’t stopping there… He’s increased his exposure to semiconductors by 4% this past quarter.
He added Lam Research (LRCX), Applied Materials (AMAT), and Nvidia (NVDA).
It’s clear that Tepper thinks semiconductors are going higher. And that’s a trend I’d be willing to bet on.
Nick Rokke, CFA
Analyst, The Palm Beach Daily
P.S. I recently had lunch with PBRG’s newest analyst… a guy we call the Billionaire Broker. He worked for one of the world’s top investment banks, where he figured out how to hunt these whale traders… And he codified a scientific trading system to track them.
In his historical trial—that was independently verified by a $1.1 billion third-party financial services company—his top 150 trades averaged an astonishing 2,418%.
In fact, during lunch, he told me that his system flagged Nvidia when it was $22.31 per share in February 2015. It’s up 1,095% since then.
We’ll reveal his identity tomorrow at 8 p.m. ET during a special presentation. You can register for this event right here…
Nick’s Note: Each morning, our Billionaire Broker runs his proprietary system and pulls more than 120 data points on over 4,000 U.S. stocks. But only a handful trigger his buy signal. Today, his system is signaling one of our favorite sectors: small caps.
Regular readers know that we like small caps because they’ll outperform large caps if a trade war escalates. Now, we’re getting confirmation of big buying in this sector. See his Chart Watch below…
Small Caps Are Getting Big Signals
My system continues to point to small caps. This isn’t a new idea… I’ve been seeing signals for months now.
What this suggests to me is that prospects in this space are rosy. You see, Mr. Market often gives us clues about the near-term outlook. It’s not uncommon to see stocks lift in the face of fear or prior to very positive news.
As you can see below, the iShares Russell 2000 ETF (IWM) continues to clock new 52-week highs recently.
Many of the companies in the Russell 2000 generate most of their revenues inside the U.S. compared to the larger S&P 500, which contains many multinational firms.
Year-to-date, IWM has more than doubled the performance of the SPY, which tracks the S&P (8.46% vs. 3.92%). With outperformance like this, I want to bet alongside the leader.
Looking at charts tells only part of the story. What really encourages me in the small-cap space is the high number of signals accompanying this move higher.
Just last week, my model showed that over 43% of all buy signals were in companies smaller than $5 billion in market cap.
I want to stack the odds in my favor… And when my data supports the bullish move we are seeing in the small cap space, I see this as a very encouraging sign for future upside.
P.S. Tomorrow at 8 p.m. ET, I’ll reveal myself and my system during a special presentation. I’ll be joined by former hedge fund manager and world-renowned cryptocurrency expert Teeka Tiwari.
During the presentation, I’ll tell you more about my trading system, which can produce winners as high as 7,384%. It’s the same system that’s signaling unusual buying in small caps right now.
Our report card grading President Trump on how successful he’s been at following through on his campaign pledges continues to stir the pot…
From Robert E.: The “report card” you published for President Trump shows you guys are as STUPID as he is.
While he has done little to improve our country and will NEVER make America great, most of what he promised is destructive to our economy and our country.
He doesn’t get a grade above “D” on anything he’s done. If you’re smart, you’ll leave the country as I’m considering doing.
What’s your grade for President Trump? Send it to us right here…
On October 17, 2018, all your favorite Palm Beach Research Group editors will be flying to Bermuda for the largest conference we’ve ever held.
The speaker list will include some of the greatest investors in the world covering the topics they know best. Plus, you’ll get to hear from John Stossel and special guest Glenn Beck.
Register today and lock in the early bird pricing plus receive a $1,000 voucher to use toward any investment research service offered by us or our seven partner companies.