Big Moves in Icahn Enterprises Even as Markets Pull Back

Nicholas Vardy

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

It was a slightly negative week in global financial markets, with the Dow Jones down 0.40% and the S&P 500 dropping 0.51%. Global markets pulled back more sharply, with the MCSI Emerging Markets Index tumbling 2.91%.

The big story in your Alpha Investor Letter portfolio continues to be Icahn Enterprises, L.P. (IEP), which closed another stellar week and posted another 13.59% gain. With this position up 30.22% since my recommendation three short weeks ago, this has been one of the quickest gainers out of the gate ever for The Alpha Investor Letter. The ProShares Ultra-Short 20+ Year Treasury (TBT) also jumped 5.23%.

Some of your other Alpha Investor Letter positions pulled back somewhat. But this was due more to shifting market sentiment than a genuine change in fundamentals. Both WisdomTree Japan Hedged Equity (DXJ) and Berkshire Hathaway (BRK-B) dropped below their 50-day moving average and are now a HOLD.

Today, global stock markets are in a contradictory position.

On the one hand, the broader U.S. market as measured by the S&P 500 is now technically overbought. Yet, it has held up longer than normal and I keep waiting for the other shoe to drop for at least a slight correction.

At the same time, after a remarkably strong run in September and October, international markets have pulled back over the past two weeks and are now approaching oversold levels that signal a terrific time to re-enter markets.

Overall, I still expect markets to end 2013 on a strong note. I am not alone. The University of Pennsylvania’s Wharton business school professor and stock market tracker Jeremy Siegel went on record as predicting Dow 17,000 by the end of this year. That would mean a rise of about 8.8% from current levels — equivalent to another run like the one we had in September and October.

In other news, I’ll be hosting a panel “Where the smart money is headed: Trends for profit” — at the Money Show in London this Saturday, Nov. 9, at 2:15 p.m., at the Queen Elizabeth II conference center, right across the square from Big Ben. I hope to see some of you there.

Portfolio Update

Berkshire Hathaway (BRK-B) lost 2.58% last week. Analysts see several positive trends in the broader insurance markets, and insurance blue chips with solid future earnings estimates are an excellent way to gain from this uptrend. Berkshire Hathaway is one of the best in the insurance business, making BRK-B the perfect choice. BRK-B dipped below its 50-day moving average (MA) yesterday and is now a HOLD.

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Visa Inc. (V) gave back 3.36% after reporting earnings last Wednesday. Visa reported $1.85 earnings-per-share (EPS) meeting analyst estimates of $1.85 earnings per share (EPS). Revenue jumped 8.9%, hitting $2.97 billion vs. a $3.02 billion estimate. Payment volume spiked 13%, and Visa announced a new $5 billion stock buyback program. V remains a BUY.

iShares MSCI Ireland Capped Investable Market Index (EIRL) added 0.44% last week. The “Troika” — comprised of the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB) held recent discussions on Ireland’s expected bailout exit date. Senior ministers are confident that Ireland will be able to meet a Dec. 15 deadline, finally freeing Ireland from the burden of the bailout’s economic restrictions. EIRL is a BUY.

iShares MSCI Singapore Small Cap Fund (EWSS) ended flat, continuing its sideways trading pattern along the 50-day MA for a second week in a row. Although this “consolidation” pattern may persist for several more weeks, a definitive and enduring trend is usually the result. EWSS closed directly on the 50-day MA yesterday and is a BUY.

Google Inc. (GOOG) dipped 1.42%. Google had two big announcements last week, giving its users two new toys to play with, even before Christmas arrives. Google released its new Nexus 5 smartphone, delivering mobile users one of the most powerful phones to date and premiering Google’s new Android 4.4 “Kit Kat” mobile operating system. Google’s “Nexus” product line comes with no third-party user interface — giving users a pure Google experience. Internet radio giant Pandora also released support for Google’s $35.00 Chromecast device last week, giving users the ability to send a high-quality, customizable Internet Radio signal wirelessly to their home theater sound systems. This allows users to control the music experience at home via the familiar, mobile and user-friendly interface of nearly any mobile device — Apple products included. GOOG is a BUY.

WisdomTree Japan Hedged Equity (DXJ) dipped 2.15% last week. Share buyback programs have been a trending topic over recent months as many U.S. companies have announced new buybacks, or increases to existing plans. Although Japanese companies are using this method to shore up stock prices, the trend is in its early phases and may yield gains well into the future. DXJ dipped below the 50-day MA and is now a HOLD.

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Guggenheim Spin-Off (CSD) ended the week perfectly flat. Corporate spin-offs have been hot this year, and CSD has reaped a 13.68% gain in the short time it has been in your portfolio. Currently bumping up against the $44 resistance level, expect CSD to continue gaining after breaching this price. CSD is a BUY.

PowerShares Buyback Achievers (PKW) dipped 0.68% over the previous week. This exchange-traded fund (ETF) that generally tracks the performance of the NASDAQ Buyback Achievers Index is testing resistance of its own at $41.00. PKW is a BUY.

First Trust US IPO Index (FPX) was flat last week. Initial public offerings (IPOs) have always attracted the attention of investors, with their lure of quick and exciting gains. FPX is one of two major IPO funds, with the other being the Renaissance IPO ETF (IPO). Although each fund differs slightly in investment methodology, FPX is up a whopping 39% year-to-date, while IPO just launched on Oct. 16. FPX is a BUY.

WisdomTree Japan SmallCap Dividend (DFJ) lost 2.56% over the past five trading days. DFJ came to rest on its 50-day MA yesterday for the second time in two months. Each time it did so, DFJ gained 6.5%. DFJ will likely repeat this performance and eventually move even higher. DFJ is a BUY.

Vanguard Global ex-US Real Estate ETF (VNQI) lost 1.92% last week. “Moving average crossovers” are important in the world of technical analysis — especially when the 50-day MA crosses above the 200-day MA. VNQI’s chart has just made such a bullish move. Couple this with a recent strong bounce up from the 200-day MA, and it’s enough to make any technical analyst want to rush out and buy a new property. VNQI is a BUY.

iShares S&P Global Timber & Forestry Index (WOOD) dipped 1.07%. WOOD holds positions in some of the top lumber producers, with 8.1% of its assets in Weyerhaeuser, 7.9% in Plum Creek Timber and 7.5% in Rayonier — making up its top three holdings. WOOD is also diversified internationally — allocating 47.8% of its capital to U.S.-based producers, 11.5% to Canadian companies and 9.5% to Brazilian timber operations. WOOD is a BUY.

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PowerShares Global Listed Private Equity (PSP) gave back 1.75%. PSP’s top three capital allocations are 41.0% in the United States, 16.3% in the United Kingdom and 7.8% in France. PSP has $461.7 million in assets-under-management, making it the largest private-equity ETF of its kind. It also boasts a 12-month dividend yield of 9.88%, making PSP a valuable addition to your Alpha Investor Letter portfolio. PSP is a BUY.

Market Vectors Biotech ETF (BBH) fell 2.30% last week after hitting a recent 52-week high. The future for biotech will likely remain strong, regardless of the turmoil that Obamacare may bring to the world of healthcare. The growing number of elderly baby-boomers will fuel demand for more pharmaceuticals, funneling billions of taxpayer dollars straight onto the balance sheets of biotech firms. BBH touched its 50-day moving average yesterday but remains a BUY.

ProShares Ultra-Short 20+ Year Treasury (TBT) jumped 5.23% last week as an oversold condition led traders back into TBT on robust volume. Recent news reports that cast some confusion on the Federal Reserve’s “tapering” plans also provided a catalyst for the rebound. TBT is just pennies below the 50-day MA but remains a HOLD.

Icahn Enterprises, L.P. (IEP) closed another stellar week, posting a 13.59% gain on the heels of a blockbuster earnings report on Monday. IEP reported third quarter earnings per share of $4.10, beating estimates, and revenue came in at $5.70 billion vs. an estimated $4.73 billion. This position is up 30% in just the three short weeks it has been in your portfolio. IEP is a BUY.

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Stocks fell today as investors hesitated to inject more money into the markets while waiting for the release of this week's economic growth and jobs data.

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