Positive Sentiment in the Markets Continues

Nicholas Vardy

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

It was another positive week in global stock markets. The major U.S. indices all hit record highs with the Dow Jones up 0.90%, the S&P 500 rising 0.72% and the NASDAQ jumping 1.41%. The MCSI Emerging Markets Index also gained 0.64%.

Big gainers in your Alpha Investor Letter portfolio included Skyworks Solutions Inc. (SWKS), which added 6.57%; the Market Vectors Biotech ETF (BBH), which rose 2.99%; and the iShares Currency Hedged MSCI Germany (HEWG), which gained 2.78%.

A whole slew of your positions hit new 52-week highs. These include the iShares S&P Global Timber & Forestry ETF (WOOD), Vanguard Russell 2000 Index ETF (VTWO), Markel Corp. (MKL), Skyworks Solutions Inc. (SWKS), Actavis plc (ACT) and the Market Vectors Biotech ETF (BBH).

All positions are a Buy except India’s ICICI Bank (IBN).

Overall, the market’s optimism continues and remains at the same level it was last week. This is reflected in your current Alpha Investor Letter portfolio. 14 out of 15 positions are profitable. Six of your positions boast double-digit percentage gains, ranging from 96.01% in Berkshire Hathaway (BRK-B) and 81.44% in Skyworks Solutions (SWKS) to 10.29% on your bullish bet on the U.S. dollar through the PowerShares DB US Dollar Bullish ETF (UUP).

Looking ahead, I expect U.S. small-cap stocks to outperform large caps in 2015, for the reasons I outlined in yesterday’s edition of The Global Guru. Specifically, the Vanguard Russell 2000 Index ETF (VTWO), Guggenheim Spin-Off ETF (CSD) and the Global X Guru Index ETF (GURU) should continue their recent recovery — though I expect these to pull back with the broader market when the current bout of optimism wanes.

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As I noted last week, I expect your global stock positions to continue their recent bullish trend. This is good news for your current bets on iShares Currency Hedged MSCI Germany (HEWG), ICICI Bank Ltd. (IBN), the Cambria Global Value ETF (GVAL)Actavis plc (ACT) and the Vanguard Global ex-US Real Estate ETF (VNQI).

Portfolio Update

Berkshire Hathaway (BRK-B) closed flat last week. Apparently, even Warren Buffett, the king of “buy and hold,” had enough last quarter as the relentless drop in oil prices raged. According to a recent filing, Berkshire Hathaway sold 41 million shares of Exxon Mobil and just under a half million shares of ConocoPhillips late last year. Warren Buffett had been the sixth largest shareholder in Exxon prior to the sale. BRK-B is a BUY.

Vanguard Russell 2000 Index ETF (VTWO) added 0.63%. This play on the Russell 2000 Index of small-cap stocks hit a new 52-week high last week. VTWO is also up above its long-held resistance point of $96 — a high this exchange-traded fund (ETF) has never breached before. VTWO is a BUY.

Markel Corp. (MKL) dipped 0.90% over the past five trading days. MKL took a slight breather last week after seeing strong post-earnings-report gains the week prior. MKL hit a new 52-week high and all-time high as well. MKL is a BUY.

Skyworks Solutions Inc. (SWKS) continued its impressive gains to add another 6.57% and hit a new 52-week high. SWKS is up over 80% in your portfolio and is within striking distance of doubling since you bought it. SWKS remains a BUY.

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Cambria Global Value ETF (GVAL) gained 1.32%. GVAL’s globe-spanning, diversified reach into markets that are tremendously undervalued is a position that will likely remain in the Alpha Investor Letter portfolio for quite some time to come. And, with the uptrend likely just beginning, this is the ideal entry point into just such an investment vehicle. GVAL is a BUY.

Actavis plc (ACT) rose 0.77% last week and hit a new 52-week high. ACT reported fourth quarter 2014 earnings per share (EPS) of $3.91 vs. Wall Street’s $3.91 estimate. Sales topped $4.06 billion, beating the $3.84 billion estimate. A spate of positive media reports too numerous to list followed on the heels of this report last week as well. Argus also raised its price target on ACT to $340, representing 17.6% upside above yesterday’s close. ACT is a BUY.

Latest Special Report

As a courtesy, I want to bring to your attention the newest version of The Top 12 Stocks for 2015, which features three of my top investment recommendations, as well as bonus picks from each of my fellow investment newsletter editors at Eagle. This report and others are available FREE on my website to you.

Nicholas Vardy

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When it comes to stocks, “big” is sometimes little -- and “little” is sometimes big. Here I’m referring here to the recent performance of small-cap stocks versus large-cap stocks. Small caps include stocks with a market capitalization of between $300 million and $2 billion. The bulk of these companies are ones you probably have never heard of. Large-cap stocks consist of stocks with a market cap of more than $10 billion. These stocks make up a huge chunk of the S&P 500 and


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