Categories: Smart Money Masters HotlinesStock Market News

Pabrai’s Pick Surges as Chinese Companies Make a Bid

U.S. and global stock markets closed their first negative week across the board, with all the major U.S. indices ending in the red.

The S&P 500 fell 0.30% and the Dow Jones dropped 0.24%. The tech-heavy Nasdaq pulled back 0.19%. The MSCI Emerging Markets Index suffered the worst fate, tumbling 1.92%.

The star of your Smart Money Masters holdings was your most recent pick, Fiat Chrysler N.V. (FCAU), which jumped 9.04% in its very first week in the portfolio. Your other positions showed more muted gains, with George Soros’ Liberty Broadband (LBRDK) continuing its recent rise and jumping 1.71% over the week.

Shares of Fiat Chrysler N.V. (FCAU), a favorite investment of Mohnish Pabrai, surged on Monday after reports that one or more Chinese automakers are trying to acquire the company. Automotive News reported that at least one Chinese automaker has made an offer for FCAU, and several other Chinese automakers may bid to buy all or part of the company.

FCAU’s board rejected the offer, which was at a small premium over FCAU’s then-current market value.

China’s government has been urging big Chinese companies to invest in foreign companies. FCAU is probably the most appealing acquisition target among the major global automakers for the Chinese. Any sale would likely include the Jeep, Ram, Dodge, Chrysler and Fiat brands. The Italian Alfa Romeo and Maserati brands would be spun off, as former FCA subsidiary Ferrari (RACE) was, to keep them under the control of Italy’s Agnelli family, the descendants of Fiat’s founder.

Any bidding war is good news for you, as it inevitably will push FCAU’s stock price higher.

Portfolio Update

Three of your positions — PayPal Holdings (PYPL), Restaurant Brands International (QSR) and Liberty Broadband Corporation (LBRDK) — all boast double-digit-percentage gains.

PayPal Holdings (PYPL) is now up a whopping 46.3% since my initial recommendation. Carl Icahn has been reducing his position in PYPL gradually in the past week or so, Thus, I am recommending that you raise your stop to $57.25 to lock in at least a 40% gain in the stock.

Kraft Heinz (KHC), Costco (COST), Restaurant Brands International (QSR), BlackBerry (BBRY) and The Priceline Group (PCLN) are all trading below their 50-day moving averages (MA) and are currently HOLDs.

Sincerely,

Nicholas A. Vardy

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world. He was the Editor of The Global Guru, a free weekly e-newsletter, and also edited the trading services Momentum Trader Alert, which focused on making short-term profits in the hottest markets in the world, and The Alpha Algorithm, which was designed specifically to deliver big, fast triple-digit winners, month after month. He was also the editor of Smart Money Masters, a monthly service focused on longer term investments recommended by the brightest minds in the business. Mr. Vardy has been a regular commentator on CNN International and the Fox Business Network. He has also published articles in The New Republic, The World and I, and The Baker & McKenzie Legal Review. The Global Guru/Nicholas Vardy has been cited in The Wall Street Journal, Newsweek, Fox Business News, CBS MarketWatch, Yahoo! Finance, and MSN Money Central. Mr. Vardy graduated from Stanford with a B.A. — with honors and distinction — in both Economics and History, and he also earned an M.A in Modern European Intellectual History. After winning a Fulbright Scholarship, he earned a J.D. degree at Harvard Law School where he was an editor of the Harvard International Law Journal. When not uncovering investment opportunities for his subscribers and investors, Mr. Vardy is a keep-fit enthusiast and an avid student of classical music.