When one whale buys a position, that’s interesting, but when three of them buy the same position at the same time, it’s head-turning. Here’s the details…
by Nick Rokke via Casey Research
Justin’s note: This week over at The Palm Beach Daily, my colleague Nick Rokke has been writing about one of the simplest and most effective trading strategies that you can start using today. It’s a way to follow the world’s top investors into the money.
And recently, he discovered that three of them are buying one of our core recommendations here at Casey Research…
Today, we’re going whale hunting…
In the sports world, a “whale” is a superstar player who’s entering free agency. Teams hunt these valuable whales because they can change a franchise’s fortune.
Think of Michael Jordan in basketball, Peyton Manning in football, and Alex Rodriguez in baseball.
You can ride these whales to championships and glory.
The investing world has its own whales, too.
Now, we can’t sign them as free agents… But we can do the next best thing—follow them into the money.
As I showed you on Tuesday, one way to outperform the market is by following the best investors in the world. All you have to do is look inside their portfolios.
Today, we’re following three of the world’s biggest fund managers into one of our favorite chaos hedges…
I’ll show you what they’re buying in a second, but first let’s take a look at how this strategy works…
How to Get a Sneak Peek
There’s a simple way for the average guy to piggyback on the returns of the world’s top investors without hiring them…
All funds that have more than $100 million under management need to file a quarterly report with the U.S. Securities and Exchange Commission (SEC).
The SEC calls it a 13F filing. It requires large funds to disclose the stocks they own 45 days after every calendar quarter.
These reports are public record. So you can look at them yourself. (If you want to read through the 13F filings yourself, check out WhaleWisdom.)
Here’s what they’re showing for three of the world’s best investors…
Three Wise Men
When one whale buys a position, that’s interesting. But when three of them buy the same position at the same time, it’s head-turning.
The three titans I’m talking about are:
- John Paulson. He knows a thing or two about spotting a crisis. He made his investors $15 billion as the subprime housing crisis unfolded in 2008–2009. And if another crisis comes, he’ll make a lot more money with his current positioning.
- Seth Klarman. He’s the author of Margin of Safety, a book packed with such good information that people pay thousands of dollars for it (if you can even find a copy). No one is better at spotting value than he is.
- Ray Dalio. He’s the founder of the world’s largest hedge fund, Bridgewater Associates. The fund has made $50 billion for its investors—more money than any other hedge fund.
When these three whales all get excited about a certain investment, we should dig into it. And in this case, they’re buying gold.
This is a rare opportunity. You almost never see this many top investors get so interested in gold at the same time.
Paulson has 11% of his fund invested in SPDR Gold Shares (GLD), which tracks the price of gold. He has about another 8% of his fund in gold mining companies.
Dalio’s fund now holds 7% of its assets in gold and other mining stocks. That’s up from 2% during this time last year.
Klarman has the smallest portion of his portfolio in gold and gold miners. But he’s actively adding to his gold holdings.
Why Gold Could Soar
Regular readers know that we consider gold a chaos hedge. We like chaos hedges as an asset class because we view them as insurance against disaster.
They don’t always produce income or increase in value, but chaos hedges provide us the benefit of “sleep-at-night” protection.
Right now, there are plenty of reasons why gold could soar:
- The U.S. is printing more money and issuing more debt than ever.
- Inflation is on the rise.
- The trade war could upset the world markets… and lead to a real war with China.
- The powder keg that is the Middle East could explode.
I can think of at least 25 more reasons to own gold right now as well… But you get the picture.
These investors haven’t said why they’re buying gold. But we know they are buying… And you only buy something for one reason: You think it will go up in value.
The reason we follow the world’s most successful investors is because we don’t have to do all the research ourselves. They spend tens of millions of dollars on research every year. We can profit just by following them.
They have hundreds of other investments they could make. Yet they chose to allocate a good portion of their portfolios to gold.
I’m not going to bet against any one of these guys—let alone all three.
Let’s piggyback off their multimillion-dollar research budgets and own some gold. The easiest way to add gold exposure to your portfolio is through GLD.