BRYAN RICH

FoCus: Stocks in which iconic activist investors have large positions

strategy: Billionaire investors and large activist hedge funds have a distinct edge in markets. They use their influence to force changes in management and effect cost cuts, divestitures and even the sale of an entire company. rich invests in the highest-conviction positions of top activist investors who have long track records of producing superior returns. “The strategy is easy to summarize,” rich says. “Find out who the best investors are, find out what they’re buying and buy what they buy.” rich sells portfolio stocks once key catalysts are achieved or when the billionaire exits the stock.

Case study: FreePort-mCmoraN (FCX), a copper and gold producer based in Phoenix, is a stock that had fallen from well above $35 in 2014 to less than $4 in early 2016. what made Freeport ap- pealing was the presence of an octogenarian activist investor with a winning reputation. “we followed the great activist investor Carl Icahn into Freeport,” says rich, who recommended the stock as Icahn was on his way to becoming its biggest shareholder. Icahn accumulated a billion-dollar initial stake in Freeport in 2015, added to his position and soon had representation on the board of directors, which allowed him to wield influence in the company’s affairs. He slimmed down Freeport’s balance sheet through big asset sales and debt reduction, and he also pushed for greater operational efficiency to make the company better able to capitalize on a rebound in commodity prices, which materialized the following year. rich recommended Freeport at $5.80 per share in January 2016 and exited the stock near three-year highs at $19.52 in February 2018, a two-year return of 237%. When was the last time you put a billionaire to work for you? Here’s your chance, forbesmagazine.com/billionaires