Elite 25 April Update: How to Beat the World’s Best Investors

Carl Icahn, David Einhorn, and Warren Buffett are three of the all-time greatest investors…

  • Einhorn’s hedge fund has returned 16% annually over the past 21 years.
  • Icahn’s hedge fund has returned 31% annually over 43 years.
  • Buffett’s company, Berkshire Hathaway, has returned 20% annually over 50 years.

But you don’t need to spend years running a hedge fund to generate the types of returns these guys have.

All you need is 30 minutes per month. And the PBD Elite 25 portfolio.

Over the past 20 years, the Elite 25 has returned 21% per year. That’s compared to just 7% for the S&P 500.

By following the Elite 25 strategy, you could turn a $100,000 investment into over $5 million.

Each month, we update our Elite 25 portfolio. We remove stocks that are too expensive and replace them with new ones that meet our three criteria.

We’ll get to the update in a moment. But first, a review of our system…

Beating the Best

For those who are new to the portfolio or need a refresher, our Elite 25 is made up of companies that have a high return on invested capital (ROIC), high growth, and are cheap.

Here’s how it works…

First, you find all the companies that are:

  • Earning an ROIC over 20% per year
  • Growing revenue, free cash flow, and profit margins.

Then you buy the cheapest 25 companies that match those criteria.

At the beginning of each month, you’ll go through the process again. Sell any companies that dropped out of the cheapest 25. Buy any that joined.

So let’s see how our Elite 25 performed last month…

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Elite 25 Crushes the Market in March

In March, the 25 stocks we held gained an average of 3.3%. The overall market was up 0.1% for the month.

That’s the kind of outperformance we expect to see more often.

(February was an anomaly created by a couple terrible earnings reports. But earnings releases slowed down in March. And our quality companies took off. You can read our March update here.)

The biggest performer was electronics payment company Qiwi (QIWI) with a 24% gain.

In this month’s update, there are only three changes.

Here’s the updated list for April, listed in alphabetical order (buys shaded in green, sells shaded in yellow):

Company Name

 Ticker 

Industry

System Says

AbbVie Inc.

ABBV

Biotech

Hold

Aerojet Rocketdyne Holdings

AJRD

Aerospace/Defense

Buy

American Outdoor Brands

AOBC

Retail/Guns

Hold

Brinker International

EAT

Restaurants

Hold

Brunswick Corp.

BC

Recreational Goods

Hold

Foot Locker

FL

Retail

Hold

Gilead Sciences

GILD

Biotech

Hold

Herbalife

HLF

Nutritional Products

Hold

Hibbett Sports

HIBB

Retail

Sell

HNI Corp.

HNI

Home & Office Furnishings

Buy

InterDigital

IDCC

Communications

Buy

L Brands Inc.

LB

Retail

Hold

Lear Corp.

LEA

Auto Parts

Hold

Meridian Bioscience

VIVO

Pharmaceutical Equipment

Hold

Michael Kors

KORS

Retail

Hold

Michaels Companies Inc.

MIK

Retail

Sell

National CineMedia Inc.

NCMI

Advertising in Movie Theaters

Hold

Natural Health Trends Corp.

NHTC

Natural Drugs

Hold

Nautilus Inc.

NLS

Sporting Goods

Hold

Qiwi Plc

QIWI

Payment Processor

Hold

Robert Half International

RHI

Professional Services

Sell

Ruth’s Hospitality

RUTH

Restaurants

Hold

S&P Global Inc.

SPGI

Investment Information

Hold

Skyworks Solutions

SWKS

Semiconductors

Hold

Stamps.com

STMP

Digital Postage Stamps

Hold

Tenneco

TEN

Auto Parts

Hold

United Therapeutics

UTHR

Biotech

Hold

VeriSign Inc.

VRSN

Internet Services

Hold

It should take you no more than 30 minutes each month to make these trades.

In less time than it takes to watch one episode of your favorite TV show, you can position yourself to turn $100,000 into $5 million.

Regards,


Nick Rokke, CFA
Analyst, The Palm Beach Daily

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From Terry G.: I agree with your Big Short article that the Canadian real estate market is overvalued. But unlike Americans, most Canadians need a 20% down payment to buy a home. So I believe the mortgages are a little more secure. A bubble may be in the works and Canadian banks will take a hit… but not like the U.S. banks. Good article and glad to see some content on markets outside the U.S.

From Brian H.: Keep up the great work. Cryptocurrencies are one of the best investments/speculations I have ever received.

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