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Four "Bull Market" Strategies
07/27/2016 10:00 am EST
Todd Shaver compiles four specialized model portfolios for his newsletter, the Bull Market Report. Here, he discusses the strategies behind each portfolio and highlights some current top stock ideas.
Steve Halpern: Joining us today is Todd Shaver, founder and editor of the Bull Market Report at BullMarket.com. How are you doing today Todd?
Todd Shaver: Steven, I'm doing great. Thank you very much. The markets have been strong lately, since the Brexit broke in Great Britain. It had a great turn around and a comeback. We follow stocks solely in the United States and the US is a safe haven for much of the world.
Steve Halpern: Now you've been an expert in the financial industry for over three decades. Can you tell our listeners a little bit about your background and the investment goals underlying the Bull Market Report?
Todd Shaver: Well I was a Wall Street broker for three different firms, starting with Merrill Lynch in 1973, right in the middle of the Nixon price control debacle. I lived through the super high interest rates through the Carter years when interest rates hit 18%.
Started the Bull Market Report in 1998 and survived the dot-com crash of 2000. I sold the firm in 2005 to some very smart young men who ran it until just recently when I reacquired the company and relaunched it this year.
Some of the goals that we have for the company and for the Bull Market Report are primarily long term. We're not a trading firm. For example, we have a portfolio called Stocks for Success and these are companies that you want to buy and just put away.
If they go a little bit lower, which happens sometimes, you just want to buy more of them. We're definitely a long-term investment company and we're looking for opportunities that are going to outperform the stock market year after year.
Steve Halpern: So let's focus a little more on that portfolio called Stocks for Success, which you note is for long term investing. Could you highlight an example of the type of stock that would fit in this portfolio?
Todd Shaver: Sure, well one of them is Blackstone (BX). Blackstone is a $15 billion market cap company. They have $335 billion dollars of assets under management. They're paying a 4.5% dividend and they're trading at about $25 a share.
Well the all-time high is $42, like I said it is now trading at $25. And the CEO and chairman of the board is Stephen Schwartzman. He's very, very upset at the fact that the stock is at $25. He thinks it should be at $42, he thinks it should be at $62.
I kind of like the idea of the fact that they own so much in the way of assets all over the world, real estate and equities and so on and I like having the fact that a billionaire is working 24/7 to get the stock price up of a stock that we might own.
Steve Halpern: Now you also offer your subscribers what's called a Special Opportunities portfolio. What criteria are you looking for her?
Todd Shaver: Well the Special Opportunities portfolio is primarily stocks that are down 80% to 90% and they have two things going for them. They have a turn-around potential because they are good companies and they have quality products, number one. Secondly, they have the potential to be bought out by another firm.
Steve Halpern: Now, could you describe one of these special opportunities?
Todd Shaver: Well, take Twitter (TWTR) for example. The high was $59, now it's $18, after hitting a low of $14. Twitter is a fabulous company, with 300 million subscribers, active users to their service.
Donald Trump uses Twitter every day, it's in the news all the time. They were responsible for starting the "Arab Spring" in some ways — and the company's not going to go away.
With the stock down 80%, we think that someone's going to make an offer to buy them similar to the way Microsoft (MSFT) just bought LinkedIn (LNKD) for a 50% premium and if the doesn't happen, they certainly will be able to figure out how to turn the company around and we're looking for a much higher stock price here.
Steve Halpern: You also provide a High Yield portfolio. What kind of opportunities are you able to find in the income arena, particularly given the overall low-rate environment?
Todd Shaver: Well Steven, you know how many companies are paying really high dividends? It's really quite amazing and it's funny too. Sometimes when you see a list of high dividend paying stocks, you see these stocks that are paying 3% and 4%.
And it always makes me smile a little bit because we have uncovered six to eight companies that are paying 6%, 8%, 10% and 12% dividends and we're going to be adding probably six or seven other stocks to bring it up to 15 or so. All of the stocks in the high yield portfolio are companies that are paying 6% to 12% dividends. We are very, very excited at that.
Steve Halpern: Is there a particular stock you'd mention?
Todd Shaver: Take Annaly Capital Management (NLY) for example. They're a $10 billion to $11 billion market cap. They have been paying 10% to 18% dividends for the past 20 years. It's actually amazing. They invest in Freddie Mac, Fannie Mac, Ginnie Mae securities, backed by the full face and credit of the United States Government.
And they borrow at ridiculously low rates, as we know out there, so they pocket the spread and that's how they're able to basically produce 13% to 15% income based on their capital.
And after paying themselves some exorbitant salaries -- which makes me a little crazy to tell you the truth -- they're able to pay investors 10% and 11% lately. And they are a REIT, so they do pay out 90% of their income every year.
Steve Halpern: Finally, you recently introduced a fourth portfolio for your subscribers that focuses on the healthcare sector. Could you just give an overview of this new portfolio and perhaps highlight one of the representative stocks that has been put there?
Todd Shaver: You know, it's pretty simple, 10,000 people a day are turning 65 in this country, can you imagine and all of us will need some type of health care sooner or later.
One of our favorites for example, is Adeptus Health (ADPT). They're in the business of emergency rooms; they have almost 100 in place now and are adding them at a "healthy" clip. Yes, that is a pun, Steven.
Adeptus has a market cap of less than $1 billion and we expect them to break that barrier later this year or early next. Their stock is at $55. We have a $72 price target on the stock and this is just one of many that we do have now in the health care portfolio.
Steve Halpern: Again our guess is Todd Shaver of the Bull Market Report at BullMarket.com. Thank you so much for your time today.
Todd Shaver: My pleasure. Thank you Steven.
By Todd Shaver, Editor of the Bull Market Report
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