Billionaire Howard Hughes is primarily remembered for two things: his eccentric behavior, portrayed by Leonardo DiCaprio in the 2004 movie The Aviator, and the special bra he invented for actress Jane Russell for the movie The Outlaw.

But Hughes should really be remembered as one of the greatest American technologists, inventors and entrepreneurs. He pushed the technological edge in all types of aircraft -- helicopters, jets, satellites and rockets -- and he foresaw that this type of innovation would be needed by the government. (Not to mention the fact that his real estate holdings included a substantial chunk of Las Vegas.)

His companies live on today, although almost all are divisions that have been absorbed into other public companies. On Stockpickr, we've created a portfolio of companies related to spun-off components of the old Hughes empire. The idea here is that America is not finished with Hughes' innovations and will continue to need them in the future.

For instance, his very first company, Hughes Tool, was instrumental in creating the drilling bits that became the foundation for modern oil exploration. While he was off in Hollywood producing movies in the 1920s and '30s, Hughes still found the time to personally hire and work with the research staff that was constantly churning out patents in oil drilling.

It was Hughes Tool that allowed Hughes to lose millions every year on his movie and stock investments (he was a horrible trader, despite his other successes), because the company was creating $10 million to $30 million annually in cash.

In 1987, Hughes Tool merged with Baker International to become Baker Hughes ( BHI), which is now the third-largest oil-services company, behind Schlumberger ( SLB) and Halliburton ( HAL). The company has benefited immensely from rising oil prices over the past few years but has slid with oil recently.


Baker Hughes (BHI)


Analysts expect Baker Hughes to earn $5.11 per share in 2007, 20% higher than the $4.27 per share expected in 2006, giving it a P/E of just 13. The P/E ratio is one of the reasons why Goldman Sachs strategist Abby Joseph Cohen was so bullish on the stock in the recent Barron's Roundtable.

Additionally, Forbes columnist and money manager Ken Fisher owns Baker Hughes.

Interestingly, Baker Hughes also turns out to be the stock most correlated to oil, according to our Stockpickr portfolio that tracks members of the Oil Services HOLDRs ( OIH) that show a relationship to the price of oil.

Hughes Aircraft, perhaps Hughes' most successful venture, was the No. 1 supplier to the military during World War II and became the largest employer in Southern California in the 1960s. There were eventually several spinoffs of Hughes Aircraft.

One of those spinoffs, Hughes Helicopters, was bought by McDonnell Douglas in 1984, which eventually merged in 1997 with Boeing ( BA). Boeing is a major holding of investing guru Louis Navellier and a component of the Claymore/Sabrient Insider ETF, the latter because two directors bought $200,000 worth of Boeing in 2006.

Boeing has consistently beat competitor Airbus in terms of sales of its Dreamliner 787 plane, which is currently under development, vs. the Airbus A380 "superjumbo" aircraft. However, Boeing's stock has been somewhat volatile in recent weeks because analysts are concerned that the 787 could be delayed.

That said, Boeing's long-term prospects remain great, as almost every major airline will be going through an upgrade cycle over the next four years. It's also worth noting that Boeing is a component of another ETF, the Claymore/Sabrient Defender ETF. This ETF is made up of stocks that not only were up last quarter but also went down the least on down days. In other words, if the market were to crash, this ETF says these stocks would perform the best relative to the rest of the market.

Hughes' empire ultimately spun off satellite operations, defense companies, gambling and real estate interests, and various other businesses. Check out the full Howard Hughes Index.

Stockpickr tip of the day: There hasn't been a significant snowfall yet in New York City, but when it does finally happen, it's worth knowing the effect of snow on the markets.

At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.

James Altucher is a managing partner at Formula Capital, an alternative asset management firm that runs several quantitative-based hedge funds as well as a fund of hedge funds. He is also the author of Trade Like a Hedge Fund and Trade Like Warren Buffett. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback; click here to send him an email.

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