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An Intelligent Investor's Response to Government Gridlock

On Oct. 1 I watched NOV carefully with the hope of buying low. It opened at $77.34 (while I was snoozing here on the West Coast) and by the time I woke up it popped above $78.

That doesn't bother me because as the following one-year price chart demonstrates, NOV has had quite a run since late April. The trailing 12-month (TTM) Ebitda line suggests earnings should be robust when NOV next reports on Oct. 25. Still, I'm willing to wait for a better entry price.

NOV Chart NOV data by YCharts

In late September NOV announced it plans to spin off its distribution division into a separately traded public company sometime in 2014. The spinoff could be an upside primer for the stock price.

Historically, we've learned that spinoffs have a tendency to generate higher total value for shareholders. Within a year or less the original NOV and its spinoff are likely to have a higher combined value than NOV's current price.

Jim Cramer and Stephanie Link of Action Alerts PLUS wrote about the spinoff, "...[W]e like the recent management decision to spin off 85% of its distribution segment, which we believe creates $7 to $9 per share in upside. Also, we like the $3 billion in acquisitions the company has made, which will lead to strong synergies (we estimate $0.20 accretion in first year) and margin support."

Another way investors can be smart and benefit from the current-events-driven market pullback is to invest like a billionaire activist. Take Carl Icahn, please!

Do you know which publicly traded company is this billionaire's biggest single position? You're correct if you said Icahn Enterprises (IEP - Get Report).

Most of us know that the first place we should invest is in ourselves, so it's no wonder Icahn, in his latest 13-F, disclosed that over 33% of his personal portfolio is in shares of his own company, IEP.

The company, which is structured as a Limited Partnership, engages in the investment, automotive, gaming, railcar, food packaging, metals, real estate, and home fashion businesses in the United States and internationally.
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IEP $78.85 1.80%
NOV $40.68 -0.22%
AAPL $111.76 2.10%
FB $92.79 0.35%
GOOG $640.98 0.28%


Chart of I:DJI
DOW 17,035.12 -15.63 -0.09%
S&P 500 2,013.43 +15.91 0.80%
NASDAQ 4,818.94 +8.1520 0.17%

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