3 Stocks I Saw on TV (VRX, HLF, CP) (May 2, 2016)
VRX HLF VRX HLF VRX HLF NUS AVP NUS HLF CP DJUSRR CP
Every night we watch the same shows, Fast Money and Mad Money, and we want to use those ideas to grow our money. Well good trading takes more than just punching the buy button every morning when you wake up and look at the stocks you saw on TV last nignt. I’m here to help you make money on these 3 stocks I saw on TV.
Today we’re going to look Bill Ackman’s portfolio. Valeant Pharmaceuticals ( NYSE:VRX ), Charlie Munger, Warren Buffetts partner in crime or I should say partner in profit, essentially just lambasted this company. I forget exactly what he said, but it was the Munger equivalent of kind of a bunch of scumbags; just bad in every way. And this is a pretty big bet that Ackman’s made, and of course it’s a bet that he’s ridden all the way down. I’m going to look at Herbalife ( NYSE:HLF) in just a second. But here, lets look at this technically and then I’ll tell you why I’m looking at Herbalife ( NYSE:HLF) as well. Okay, the stock traded here, it looks like a double bottom. It’s starting to do a little squeeze, a little volatility squeeze. So it looks like $30.00 is holding. But the trend is still lower, and there is SO MUCH risk associated with this stock. It’s not my kind of trade, but it is a lot of peoples so I’m going to help out here on it.
Trade this in a position that if the stock were to come down to $20.00, we’ll even say $25.00; your position size should be such that if the stock falls from $32.00 or $33.00 down to $25.00, you would be bummed, not question about it, you’d be bummed, but it wouldn’t be a huge loss for you. It would be an, “Oh crap, I took my shot and okay it didn’t work out.” Because the last couple times the stock got down to this level it bounced. What you don’t want to have happen, if you’re long this stock, is you don’t want to be panicked into SELLING right when a lot of other folks would be buying. That’s how I would trade Valeant Pharmaceuticals ( NYSE:VRX ). The reason I’m mentioning this is, I got this idea because you know Ackman was on CNBC talking about Valeant ( NYSE:VRX ) and Herbalife ( NYSE:HLF). And he was defending Valeant’s ( NYSE:VRX ) business model, saying there’s a couple of bad actors in there, but basically it’s okay for the company to gouge consumers, just as long as they’re nice about it. On the other hand, he’s short and essentially is engaged in a lobbying effort to take Herbalife ( NYSE:HLF) down, because he thinks it’s a Ponzi scheme and it wrecks a lot of people’s lives. Going back to Valeant Pharmaceuticals ( NYSE:VRX ) and wondering what the heck the difference is there. But he’s long one short the other, what a philanthropist that guy is.
So what are we going to do with Herbalife ( NYSE:HLF)? Charlie Munger, bringing him up again, he thinks ultimately Ackman is right about Herbalife ( NYSE:HLF), that it will ultimately be proven to be a Ponzi scheme. So what’s our edge on this? Our edge is this: Valeant Pharmaceuticals ( NYSE:VRX ), you trade the chart. It doesn’t matter if the company has run or has been run by a bunch of scumbags or not, you trade the chart. Herbalife ( NYSE:HLF), I would say the same thing. As far as whether it’s a Ponzi scheme, not really sure what the difference is between Nu Skin ( NYSE:NUS ), Avon Products ( NYSE:AVP ), both of which actually look like they’re pretty good buys, and Herbalife ( NYSE:HLF). They have the same business model, which is multilevel marketing. But with Herbalife ( NYSE:HLF), if this is your shot, just look at it as it’s got to be above the 200-day moving average. As long as it stays above the 200-day moving average, then you can take the other side of Bill Ackman’s trade. And with a short interest of almost fifteen days to cover, I think there’s some room for upside there.
And then the last one I want to talk about though, is Canadian Pacific ( NYSE:CP ). It turns out Pershing Square, which is Ackman’s hedge-fund, they just sold a big block of shares, I think at about $148.00, or something like that. I don’t think this is why the stock fell as much as it has, probably on this particular day or this particular day, they liquidated a bunch of it. But the stock is looking like all these other railroad stocks ( INDEXDJX:DJUSSR ); breakout above the 200-day moving average out of a consolidation pattern, and now this is consolidating again at a higher level. Hopefully it will consolidate a bit more. What I would suggest doing on this is, if it pulls back to about 140.00ish, something like that, closer to the 200-day moving average; and by the way the 50-day moving average is going to cross that 200 in probably another week or so. That would be the time when you would buy that stock. You would want to get it as close to here as possible. But ultimately I think Canadian Pacific ( NYSE:CP ) is going higher. It’s probably, ultimately a good trade for Ackman, unlike Herbalife ( NYSE:HLF) and unlike Valeant Pharmaceuticals ( NYSE:VRX ). But maybe two out of three is bad and this is the third one, and that’s good.
3 Stocks I Saw on TV Free Chart