U.S. and global stock markets fell across the board last week.
The S&P 500 fell 0.36%. The Dow Jones dropped 0.40%. The Nasdaq tumbled 1.8% as tech stocks were hit hard.
Global markets corrected sharply, with the MSCI Emerging Markets Index plunging 2.97% — its worst week in several months. Your Smart Money Masters portfolio continued to move independently of the market.
Bruce Berkowitz’s bet on The St. Joe Company (JOE) rose 4.16% and moved back to a BUY. Mohnish Pabrai’s Fiat Chrysler Automobiles N.V. (FCAU) increased by 2.17%. It is up 17.51% just over the last month. Charlie Munger’s Costco Wholesale (COST) recovered 1.55% as the market’s love affair with Amazon.com (AMZN) continues to wane.
Five of your positions — PayPal Holdings (PYPL), Restaurant Brands International (QSR), Fiat Chrysler (FCAU), Baxter International (BAX) and Berkshire Hathaway (BRK-B) — boast double-digit-percentage gains.
Kraft Heinz (KHC), The Priceline Group (PCLN), Liberty Broadband Corporation (LBRDK), Vanguard FTSE Emerging Markets ETF (VWO) and BlackBerry (BBRY) are all trading below their 50-day moving averages and are currently HOLDs.
I had dinner last week with Bill Browder, CEO of Hermitage Capital Management, formerly the single biggest investor in Russia. I wrote about this in last week’s Global Guru: “My dinner with Putin’s #1 Enemy.”
I did not discuss where Bill Browder is currently putting his own money. As it turns out, Browder has no money in public markets.
Instead, Browder invests in funds that take an activist, hands-on approach to investing.
In other words, he invests in companies that are very similar to your holdings in private equity-controlled companies such as Restaurant Brands International (QSR), Baxter International (BAX), Kraft Heinz (KHC), Liberty Broadband Corporation (LBRDK), BlackBerry (BBRY) and Navigator Holdings (NVGS).
Bill told me that he invests in these funds and companies for one reason: He knows that there is a team that is actively working to maximize shareholder value.
And he knows that activist investors are creating value regardless of the global financial markets’ latest mood swing. Bill doesn’t care about the short-term price movements because he knows that that will work itself out in the end.
Bill’s investment strategy confirms how the “smart money” in the world is thinking. And that strategy is reflected in your Smart Money Masters portfolio.
Nicholas A. Vardy