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The Little Black Book of Billionaire Secrets: Forbes Billionaire'S Portfolio
The Little Black Book of Billionaire Secrets: Forbes Billionaire'S Portfolio
BOOK OF
BILLIONAIRE
SECRETS
How to turn
$20k into $26 million in 12 years
or $1.2 billion in 30 years
Introduction ... 4
Why You’re Not A Billionaire ... 5
How Billionaires Get Richer ... 10
What Billionaires Do Differently ... 11
How to Invest Alongside Billionaires Without Having
A Billion Dollars ... 12
How the Secret Can Work For You ... 14
4 Stocks Icahn Thinks Can Double ... 24
How To Make $26 Million ... 26
Summary ... 28
For more than a decade, we’ve trudged Alternatively, for every $20,000 invested
through every single stock that our in the S&P 500 for the same period, you
favorite billionaire investors have would have just $20,805.
bought. And what we have found is
truly amazing.
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Forbes Billionaire’s Portfolio
Take a look at these two hypothetical Here’s why: Your investment’s
charts … performance will largely depend on
when you enter and when you exit.
Both investments have an 8% average If you enter or exit at any given point
annual return. But Investment #1 has a along the path of Investment #2, the
wide range of returns, while Investment likelihood of success is greater than it
#2 has a stream of returns that more would have been with Investment #1.
tightly hug the average annual return. So unless you think you can pick the
exact bottom to enter and the exact top
If each of the to exit, you’re far better
points on off finding investments
the charts that have a tighter
represents
a monthly
“Billionaires don’t distribution of returns.
I say this with utmost respect as my And keep in mind that brokers get paid
dad was a stock broker for 50 years. But regardless of whether your account
let’s be honest, stock brokers are not as goes up or down.
valuable as they once were.
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Forbes Billionaire’s Portfolio
Bottom line: Stay away from them and it will
save you easily 2% to 4% in fees per year.
On a $100,000 account,
that’s as much as $4,000 more
a year in your pocket.
“Billionaire
investors invest
when they can
control their
own destiny...
they don’t
leave things to
chance.”
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Forbes Billionaire’s Portfolio
BREAK AWAY FROM THE HERD
AND STAND ON THE SHOULDERS OF
BILLIONAIRES
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Forbes Billionaire’s Portfolio
HOW BILLIONAIRES KEEP GETTING RICHER
You see, unlike the average investor, billionaire
investors don’t stand by and let the global
economic turmoil or restrictive policies destroy
their wealth.
They find companies that have a clear need for a shake-up. Then, they buy enough
of the company to take control of the wheel.
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Forbes Billionaire’s Portfolio
WHAT BILLIONAIRES DO DIFFERENTLY
When you buy as much as 5% ... 10% ... even 15%
of a company’s stock, YOU are in the driver’s seat.
Management works for you!
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Forbes Billionaire’s Portfolio
HOW TO INVEST ALONGSIDE BILLIONAIRE INVESTORS
WITHOUT HAVING A BILLION DOLLARS
You get ALL of the returns, but pay none of the fees. We let these
brilliant, billionaire investors do all the work and we reap the benefits.
For those that might be slow doing the Once he had control, he knew that he
math, I understand. That’s $460k for could impose his will on the company
every $10k invested. and turn it around. Believe it or not,
this was one of those “sure thing”
That’s a huge winner. And it also investments for him.
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Forbes Billionaire’s Portfolio
WOULDN’T YOU LIKE TO HAVE A BILLIONAIRE ON YOUR SIDE?
A year later, two different car rental
companies tried to buy DTG.
15
Forbes Billionaire’s Portfolio
DOUBLES, TRIPLES, AND BEYOND
Take a look at Pulte Homes, now. $4.25. The stock went up 200% in less
than a year.
This is
another
example of
the way these
billionaires
trade. They
PULTE HOMES want low
priced stocks,
because Carl Ichan is one of
the great billionaire
The guy that was involved in this stock it gives investors.
has one of the greatest long-term-track them the
records of any hedge fund manager in opportunity
the business. He’s averaged over 35% a to make
year for the past 20 years. And he’s now multiples of their money.
worth about $5 billion.
And you can see, in many of these
In this case, he became bullish on cases, it doesn’t take long after they’ve
homebuilding stocks around mid 2011. built their stakes, for these stocks to
start running higher.
His approach: To bet on a rebound in
housing, he wanted to find the cheapest Another? How about this stock,
stock in the sector. He bought the one Western Refining …
with the lowest book value, the lowest
share price and (this is key) the most
liquidity. He chose Pulte.
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Forbes Billionaire’s Portfolio
DOUBLES, TRIPLES, AND BEYOND
Here is another example of one of these their patents to Microsoft, for more
big-time billionaire investors buying a than the company’s market cap! The
stock below book value. result …
The guys involved in this play are “It’s like car-pooling with
bulldogs. They buy a controlling
interest in a company, and then they
a billionaire. They drive
like to force management to sell assets.
In turn, they manufacture a return on
and we get a free ride.”
their investment.
And these plays all have to work out
And that’s exactly what they did with within their time frame –which is
AOL. They forced the company to sell inside
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Forbes Billionaire’s Portfolio
DOUBLES, TRIPLES, AND BEYOND
of a year, in most cases. After all, these
funds are competing for assets, but
mostly for pride ... and annual returns are
everything!
They buy stocks that they know they can I’ve narrowed down my
take control of … to unlock value, to investing strategy to
impose their will. three simple steps:
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Forbes Billionaire’s Portfolio
Join
FORBES BILLIONAIRE’S PORTFOLIO
Manage Your Portfolio
Like A Billionaire Investor
20
Forbes Billionaire’s Portfolio
FOLLOW THE BEST!
Here’s what I mean …
Hertz sells for $17 a share. Billionaire
activist investor Barry Rosenstein
of Jana Partners has publicly said he
thinks Hertz is worth $60. Jana owns
almost $1 billion worth of HTZ stock.
“Great investors
And he has company. The legendary
billionaire investor Carl Icahn owns LOVE asymmetric
9% of the company. Stocks reprice on
catalysts. And these two influential
investors are the catalyst.
risk”
Now, the downside of the stock is that
it could, maybe, lose half of its value
here. A lot would have to go wrong
with the world and the company. But even if the stock went to zero you can only
lose 100%. I should say, this rarely happens when billionaire investors are so heavily
invested in a stock.
So if the world falls apart you only lose 100%. If things go right you have prospects
of nearly 300%. That’s a 3 to 1 risk reward trade. And trust me, there aren’t a lot of
investments that offer that scenario. That is why the best investors like stocks that
have this ASYMMETRICAL RISK TO REWARD opportunity.
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Forbes Billionaire’s Portfolio
BUILDING YOUR OWN BILLIONAIRE’S PORTFOLIO
We’ve talked about the value of Buffett’s growth rate over that length
following the best. What about the best of time is indeed amazing too. But
OF the best? due to the power of compounding,
the wealth creation of Buffett, from
I’ve studied the track records of pure investment returns, pales in
hundreds of billionaire investors and comparison to that of Icahn.
billion-dollar hedge funds. And one
man stands above the rest, as the best Icahn’s investment skill has created
investor alive. I’m sure most would $65 to every $1 created by Buffett.
consider it to be Warren Buffett. But
the numbers tell a different story. In So how has Icahn been able to
fact, the greatest investor of all-time is outperform Warren Buffett (and the
billionaire activist Carl Icahn. broad stock market) by so much and
for so long?
Incredibly, both
Icahn and Buffett Of course, Icahn is a dogged
have been building shareholder activist and often an
their respective agitator of corporate management. Key
investment empires to his playbook is using power and
for over five influence to control his own destiny
decades. And more on stocks he invests in. In a study
In 2015, Carl Icahn’s
net worth is incredibly, they he published last year, Icahn called
$21.3 billion. remain at the top attention to the power of the board
of their profession. seat. Looking back on a recent five-year
But Icahn has, unequivocally, shown period, Icahn showed that when he
superior skill as an investor. secured a board seat on a company in
his portfolio, he was able to create value
Consider this: Icahn has returned for shareholders to the tune of a 27%
31% annualized since 1968. That gain, on average. That’s controlling your
would turn every $1,000 invested with
Icahn into $325 million today – an “Icahn’s investment skill has
incredible number. Buffett, on the other
created $65 for ever $1
hand, returned 19.5% annualized
created by Buffett.”
during virtually the same time period.
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Forbes Billionaire’s Portfolio
BUILDING YOUR OWN BILLIONAIRE’S PORTFOLIO
own destiny. Icahn became rich by
TRAIT taking concentrated bets
Additionally, when we look strictly #2 throughout his career. As
across the stocks in his portfolio, we Buffett has famously said,
can see some common traits that have “you only need one or two great ideas a
made Carl Icahn the world’s greatest year to get rich.” This is exemplified in
investor: Icahn’s portfolio. His big win on Netflix
garnered a 463% return in just 12
The media, mutual funds, CNBC, months, between 2012 and 2013.
finance books — they all say having
a high win rate is paramount to good Patience is king. You don’t
investing. They tell you that the most TRAIT have to go to Harvard or
important thing is being right. Like #3 have a Goldman Sachs
many widely accepted adages, it investing pedigree to have
happens to be dead wrong. Billionaire patience. And many times, that can be
iconic hedge fund investor, George the difference between making money
Soros, says “it’s not whether you’re right and losing money in investing. Icahn
or wrong, but how much money you has an average holding period of over
make when you’re right and how much two years.
money you lose when you’re wrong.”
When you hunt for
Over the past 20 years, the stocks in TRAIT big returns, you must
Icahn’s portfolio have a win rate only #4 be willing to accept
a tad bit better than a coin toss. But he drawdowns and losers.
puts himself in position, so that when Icahn has multiple stocks over the
he wins, he has the chance to win big! past 20 years that have been full losers
(i.e. they went to zero). But when you
They like to invest in have a portfolio full of stocks with big
TRAIT opportunities with potential, and a change agent at work,
#1 limited risk and huge
in the end the big winners can more
potential return.
than pay for the losers.
Among Icahn’s stocks, his winners were
almost twice that of his losers. Want to invest like the greatest investor
of all-time?
23
Forbes Billionaire’s Portfolio
FOUR STOCKS BILLIONAIRE ICAHN THINKS CAN
DOUBLE... AT LEAST!
Below are four stocks, plucked straight worth of Apple stock, constituting 21%
from the portfolio of billionaire of his portfolio.
investor Carl Icahn. Not only can you
own them too, but in some cases, you Stock #2: Nuance (NUAN)
can buy them cheaper than the great
Icahn. Icahn owns more than $1 billion
worth of Nuance – almost 20% of the
Stock #1: Apple (AAPL) company. When Icahn appointees
(including his son) joined the board,
This is no secret. Over the past couple he said he was optimistic that their
of years, Icahn has famously and very impact (on the board) would have
publicly commented on his stake in similar results to their Hain Celestial
Apple and his view on how Apple investment, a stock that quadrupled
can unlock more over the three years they sat on the
shareholder value board.
in the stock. And
it’s worked, to Stock #3: Hertz (HTZ)
the tune of more
than a double in As we mentioned before, Icahn owns
the stock price. 12% of Hertz, almost $1 billion worth.
Still, Icahn issued And he’s accompanied by billionaire
a research report activist Barry Rosenstein, who owns
this year stating 10% of the company. Rosenstein has
that Apple shares publicly said he thinks the stock is
are worth $240, if worth $60 or a triple from current
Apple continues to levels. He said Hertz will be able to buy
use its huge hoard of cash to buyback back as much as 25% of its stock, which
stock.
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Forbes Billionaire’s Portfolio
FOUR STOCKS BILLIONAIRE ICAHN THINKS CAN
DOUBLE... AT LEAST!
should juice earnings and cause the stock to triple in price over the next year.
With two of the best billionaire activists in the world controlling more than 20% of
Hertz, this stock is a must own for investors.
Last month Icahn initiated an 8.5% position in FCX – a billion dollar worth – at
around $12. Today the stock trades for $9. The average analyst price target for
Freeport is $18 or 100% higher than the current share price.
Not only is Freeport one of the cheapest stocks in the S&P 500, selling at one-third
of its book value, but you can buy it cheaper than the price Carl Icahn paid for his
shares.
25
Forbes Billionaire’s Portfolio
HOW TO MAKE $26 MILLION
Before I go on, I want to emphasize the extreme value
of these types of returns I just mentioned.
“The
The difference between 50% per year and 8% per year,
when you account for the compounding effect over difference
years of time is extraordinary. It’s the compounding between 50%
effect of those types of returns that builds wealth. per year and
And that’s exactly why these guys are billionaires.
8% per year,
This is exactly why I’ve chosen to align my financial when you
future and my career with these proven investors. account for the
compounding
In fact, I’ve done, to my knowledge, the most
thorough research on the investing performance of effect over
billionaire investors and activist investors. years of time is
extraordinary.
I have a huge database of investors and I have
the good fortune of having access to the most
It’s the
sophisticated and expensive technology that Wall compounding
Street has to offer. Plus, I have a very lucrative effect of
network of contacts, among them, some of these
those types of
billionaire investors themselves.
returns that
In short, over the years I’ve tested portfolios of these builds wealth.
top managers through millions of iterations, and And that’s
I’ve narrowed down my top guys – my team. And I
went back through every single stock pick these guys exactly why
made over the past 25 years. What I found was truly these guys are
amazing. billionaires.”
The Research = Big Results
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Forbes Billionaire’s Portfolio
these investors made over the past 25 years,
you would have returned an amazing 42% per
year on your money.
Those are big numbers. And guess what. It can be done. There is living proof right
in front of us, with every one of these self-made billionaire investors.
The Little Black Book of Billionaire Secrets is strictly an informational publication and does not
provide individual, customized investment or trading advice to its subscribers. Although many of
our analytical approaches are unique, they are based on publicly available data.
Any opinions, news, research, analyses, prices, or other information contained on this ebook
are provided as general market commentary, and do not constitute investment advice nor a
solicitation. We are not liable for any loss or damage, including without limitation, any loss of
profit, which may arise directly or indirectly from use of or reliance on such information. We have
taken reasonable measures to ensure the accuracy of the information on the ebook. The content on
this ebook is subject to change at any time without notice.
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Forbes Billionaire’s Portfolio
7 SECRETS OF BILLIONAIRE INVESTING
6
Hold stocks until they return 300% to
500% - and sell them (or do what I do,
sell when the billionaire investors sell).
29
Forbes Billionaire’s Portfolio
Join
FORBES BILLIONAIRE’S PORTFOLIO
Manage Your Portfolio
Like A Billionaire Investor