The Best ‘Trump Trade’ is Really the ‘Icahn Investment’

We’re not even a full month into 2017. Just 30 days in, and 2017 is already one heck of a year. However, only in the last 10 days have things really gone up a gear.

The ‘Trump factor’ is nothing short of extraordinary. His actions are extreme. But he is at least following through on everything he said he’d do. It shouldn’t come as a surprise really.

Trump said he’d build a wall. And the US is starting to build a wall. He said he’d ban Muslims. And you guessed it — he’s banning Muslims from entering the US.

If you’re going to ban Muslims, then why not Indonesia?

I was thinking how Trump’s immigration ban has any benefit to the US. The extreme policy in supposed to protect the US. If anything, it makes the country a bigger target.

There’s no way this helps the US. And it is cherry-picking targets, too. Like the ban on just seven major Muslim countries. For a start, if Trump was worried about Muslims, then why didn’t he ban Indonesia?

There are more Muslims in Indonesia than anywhere else in the world. Indonesia has around 205 million Muslims.

And the seven countries banned from entering the US? Iran has 74.8 million Muslims. Iraq has 31.1 million. Sudan has 39 million and Yemen 24 million. Syria has 20.8 million. And then there’s Libya with 6.3 million and Somalia with 9.2 million. The grand total…205.2 million.

Unbelievably, Indonesia has as many Muslims as the others combined.

Yet for some reason, if you’re from Indonesia, the US is happy to have you.

Trump has no business interests in Iran, Iraq, Libya, Somalia, Sudan, Syria or Yemen. However, his company, Trump Hotels, is opening two six-star hotels in Indonesia. According to The New York Times,

One resort, planned as the largest in Bali, will overlook a spectacular Hindu temple. The other, in the verdant hills of West Java, will adjoin a theme park. The properties will be so luxurious, the Trump Organization says, that even an impressive five-star rating will not do them justice. So it will give them six stars instead.’

The NYT also highlights Trump’s relationships with high-ranking Indonesian officials. These include a former politician who had to step down because of corruption allegations. These allegations had to do with alleged extortion of mining company Freeport-McMoRan [NYSE:FCX].

Freeport has major mining operations in Indonesia. In particular, its exploration and development of the Grasberg minerals district. According to the company, ‘The Grasberg minerals district contains one of the world’s largest copper and gold deposits…’

The NYT also says Freeport is looking to extend its mining licence in Indonesia. With Trump in office and his pals in the Indonesian government, that might just happen.

The ‘Icahn investment’

You see, one of Freeport’s major shareholders is Carl Icahn. Icahn is also Trump’s special adviser.

As at 30 September, 2016, Carl Icahn held 104 million Freeport shares. That’s 7.64% of the company. Icahn began to buy it up in July 2015. By the end of 2015, he had a huge stake in the company. But why?

In December 2010, it was trading around US$60. And by January 2016, it was US$3.94. Most people would walk away from a company like that. However, Icahn must have seen or known something the rest didn’t.

Since January last year, the stock has taken off like a rocket.

This US$23.04 billion miner is up 315% in the last year. At the close last Friday, it was US$16.37. Today, Icahn’s holding is worth US$1.76 billion.

One year ago, that holding was worth US$424 million. Some might suggest Icahn is just a shrewd investor. Or is it that he just knows the right people — or person?

Also according to Fortune,

U.S. President Donald Trump helped send shares of Freeport McMoRan soaring Tuesday after he signed an executive order putting his infrastructure spending plan into action.

Shares of the metals and mining company jumped 8.27% Tuesday as investors anticipated higher sales for Freeport under the infrastructure-focused and energy-friendly Trump administration.’

Upon naming Icahn as his special adviser, Trump said,

Carl was with me from the beginning and, with his being one of the world’s great businessmen, that was something I truly appreciated.’

This got me thinking…

How have some of Icahn’s holdings performed year-to-date? With the ‘year of Trump’, how much richer (or poorer) is Icahn? Well, let’s take a look at some of his investments.

  • Herbalife [NYSE:HLF], up 16.93%
  • Freeport-McMoRan [NYSE:FCX], up 24.11%
  • PayPal Holdings [NASDAQ:PYPL], up 2.03%
  • American International Group [NYSE:AIG], down 0.15%
  • Cheniere Energy [NYSEMKT:LNG], up 18.44%
  • CVR Energy [NYSE:CVI], down 8.78%
  • American Railcar Industries [NASDAQ:ARII], up 4.17%
  • Hertz Global Holdings [NYSE:HRI], up 22.93%

I think you get the drift here. Year-to-date, Icahn has done well with his investments. I guess it pays to have friends in high places.

I’m not suggesting there’s anything illegal going on. Conflicts of interest? Well, quite possibly.

But it’s clear that a Trump presidency has been good to Icahn. And it could be good to you.

What it shows is that the best ‘Trump trade’ might not even be a Trump trade. You could just follow his mate, Carl Icahn. If you did, your portfolio would have seen a cracking start to the year.

That’s the kind of start you want to 2017. Not turmoil and trouble thanks to the president himself.

That’s why the best ‘Trump trade’ for 2017 might be to follow Icahn. Get on the ‘Icahn investment’.


Sam Volkering

Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’ opportunities that are often shunned by those in the financial services industry.

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