Pabrai’s Pick Surges as Chinese Companies Make a Bid

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

U.S. and global stock markets closed their first negative week across the board, with all the major U.S. indices ending in the red.

The S&P 500 fell 0.30% and the Dow Jones dropped 0.24%. The tech-heavy Nasdaq pulled back 0.19%. The MSCI Emerging Markets Index suffered the worst fate, tumbling 1.92%.

The star of your Smart Money Masters holdings was your most recent pick, Fiat Chrysler N.V. (FCAU), which jumped 9.04% in its very first week in the portfolio. Your other positions showed more muted gains, with George Soros’ Liberty Broadband (LBRDK) continuing its recent rise and jumping 1.71% over the week.

Shares of Fiat Chrysler N.V. (FCAU), a favorite investment of Mohnish Pabrai, surged on Monday after reports that one or more Chinese automakers are trying to acquire the company. Automotive News reported that at least one Chinese automaker has made an offer for FCAU, and several other Chinese automakers may bid to buy all or part of the company.

FCAU’s board rejected the offer, which was at a small premium over FCAU’s then-current market value.

China’s government has been urging big Chinese companies to invest in foreign companies. FCAU is probably the most appealing acquisition target among the major global automakers for the Chinese. Any sale would likely include the Jeep, Ram, Dodge, Chrysler and Fiat brands. The Italian Alfa Romeo and Maserati brands would be spun off, as former FCA subsidiary Ferrari (RACE) was, to keep them under the control of Italy’s Agnelli family, the descendants of Fiat’s founder.

Any bidding war is good news for you, as it inevitably will push FCAU’s stock price higher.

Portfolio Update

Three of your positions — PayPal Holdings (PYPL), Restaurant Brands International (QSR) and Liberty Broadband Corporation (LBRDK) — all boast double-digit-percentage gains.

PayPal Holdings (PYPL) is now up a whopping 46.3% since my initial recommendation. Carl Icahn has been reducing his position in PYPL gradually in the past week or so, Thus, I am recommending that you raise your stop to $57.25 to lock in at least a 40% gain in the stock.

Kraft Heinz (KHC), Costco (COST), Restaurant Brands International (QSR), BlackBerry (BBRY) and The Priceline Group (PCLN) are all trading below their 50-day moving averages (MA) and are currently HOLDs.


Nicholas Vardy

Nicholas A. Vardy

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE

previous article

I. Conservative Recommendation Comcast Corporation (CMCSA) Hedge fund Tiger Global recently increased its stake in Comcast Corporation after it reported better-than-expected earnings at the end of last month. This is a significant vote of confidence for the stock. Also, Comcast Corporation is a “buy,” based on all short-, medium- and long-term technical indicators. II. Aggressive Recommendation Intuitiv


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Profits Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • Intelligence Report
  • Bullseye Stock Trader

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Technical Traders Alert
  • Success Trading Group

Used by financial advisors and individual investors all over the world, is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor