Are Billionaire Plays Back? – Banyan Hill Publishing

2 OTC stocks spiked out of the gate on Monday…

Hyped by 1 BIG trader.

I’m talking about a billionaire almost every trader knows about.

And the hype worked.

It wasn’t exactly an old-school billionaire play.

That’s when a billionaire announces an investment in a company and the stock goes parabolic.

In the case of these two OTCs, the billionaire has invested since at least 2013.

But when you see his X post…

You’ll see why I took one of my easiest trades in months…

“If the Rich Guys Do It, It Must Be Worth Something”

On Monday (March 30), Fannie Mae (FNMA) and Freddie Mac (FMCC) both spiked right out of the gate.

And it had all the looks of a classic “billionaire play.”

The most important thing to know today is…

The 3-Step Billionaire Play Sequence

1. A billionaire invests in a company (usually, there’s a press release).

2. It creates a sheep-like “buy, buy, buy” mentality where uninformed investors buy just to follow the billionaire.

3. Over time, billionaire plays often sell off, following the long kiss goodnight.

So, was this a classic billionaire play?

Not exactly.

In this case, Bill Ackman of Pershing Square Capital Management tweeted…

Source: X

In a follow-up tweet, Ackman wrote…

Source: X

The main difference between Bill Ackman hyping FNMA and an old-school billionaire play is that he’s been invested in FNMA and FMCC for years.

Pershing Capital has owned nearly 10% of both companies since 2013.

So, Ackman is invested for the long-term.

But…

The Tweet DID Hype the Stocks

Right out of the gate on March 30, both FNMA and FMCC gapped and ran…

Source: StocksToTrade

FNMA, 2-day, 1-min candles, billionaire play.

FMCC is usually a sympathy play to FNMA. Notice how similar the charts look…

Source: StocksToTrade

FMCC, 2-day, 1-min candle, billionaire play.

Crazy, right?

Now check out the 2-year charts for FNMA and FMCC. Pay attention to the green candle on the far right of both charts.

Source: StocksToTrade

FNMA 2-yr, daily candle.

As you can see, it was a big one-day move for both stocks (And the only catalyst was the tweet)…

Source: StocksToTrade

FMCC 2-yr, daily candle.

I took a small trade (and I forgot how much easier OTC plays are).

It was a nice and easy single to start the week. I miss OTC morning spikers because the action is so clean.

We definitely need more of these!

Top Tips to Trade Billionaire Plays

The FNMA and FMCC moves weren’t old-school billionaire plays. But the hype and price action was very much the same (and THAT is key).

Here’s how to spot the next one:

• Pay attention to the news and watch for breaking headlines.

• Understand that hype can spike a stock, but it’s still just a trade. Trade the pattern and price action.

• Don’t chase. Remember, historically, these things come back down.

• Always follow rule #1 and cut losses quickly.

If you have any questions, email me at [email protected].

Cheers,

Tim SykesEditor, Tim Sykes Daily