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Indradip Ghosh

5 Stocks to Watch on Icahn & Paulson's Gain from Trump Win

AGN AIG FCX SHPG

Trades from $3

Major U.S. benchmarks witnessed a remarkable rebound from their pre-market losses on Wednesday to log gains of more than 1% after Donald Trump was declared victorious in the Presidential election. Trump’s pledge of expanding infrastructure spending and promise of reducing corporate taxes played an important role in boosting investor sentiment. Banking on the rebound, popular activist investors, Carl Icahn and John Paulson emerged as one of the biggest gainers.

These two billionaires had played an active role in Trump’s presidential campaign. While Icahn was one of the main supporters of Trump in the race to the Presidential election since Sep 2015, Trump included John Paulson as one of the key members in his economic advisory team.

In this scenario, it will be interesting to discuss stocks that helped these billionaire investors to reap huge returns during yesterday’s trading. But before going into the discussion let’s have a look at yesterday’s best performing sectors as it played an important role in boosting portfolio returns of both Icahn and Paulson.

Sectors that Gained the Most on Trump’s Victory

Financials

Strong gains in financial, healthcare and industrial emerged as the major catalysts in boosting the U.S. equity markets yesterday. Meanwhile, a significant decline in bond demand following Trump’s win led yields on treasury bills to surge to their highest levels since January. Yields on 10-year and 30-year treasury bills jumped to nearly 2.07% and 2.86%, respectively. Also, 10-year yield registered the biggest jump since Aug. 11, 2011.

This indicates that investors are confident about the fact the President Trump may succeed to fuel inflation along with economic growth during his tenure, which in turn may result in a rise in key interest rates. This had a positive impact on financial sectors. Financial Select Sector SPDR ETF (XLF) and Financial Services Select Sector SPDR (XLFS) jumped 4.3% and 4.1%, respectively.

Healthcare

Hillary Clinton’s defeat played an important role in boosting the healthcare sector. It was speculated that Clinton’s strong intention to control high drug prices would have significantly affected the sector’s performance if the election results went in her favor. The popular biotech ETF, iShares Nasdaq Biotechnology (IBB) jumped 8.9%, witnessing the biggest one-day gain since 2008. Moreover, Health Care Select Sector SPDR ETF (XLV) emerged as one the biggest winners among the broader S&P 500 sectors by gaining more than 3.5%.

Industrials

Last but not least, it was the industrials sector, whose strong gains also played a significant role in boosting the U.S. stock markets on the big day. Expectations of a significant expansion in infrastructure spending throughout the country as promised by Trump during his campaign led industrial stocks to register healthy gains.

Also, in his victory speech, Trump indicated that infrastructure will be one of the major priorities during his presidency. He said: “We're going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.” Industrial Select Sector SPDR ETF (XLI) registered 2.5% gain during yesterday’s trading.

Stocks that Boosted Icahn & Paulson’s Portfolios

Among others, two prominent Trump supporters, Icahn and Paulson look to have gained the most after Trump became the 45th President of the U.S. While Paulson remained one of the active members in Trump’s economy advisory team, it was reported that Icahn was offered the position of Treasury secretary under Trump’s administration, which was however refused by the billionaire. In an interview, Ichan said: “I don’t think I’d be the right guy to fit into Washington, you know, I’m not an establishment guy.”

Icahn’s Gains

His refusal of course wasn’t a deterrent for the huge gains he registered yesterday. According to a report, Icahn’s portfolio earned him over $700 million on the day.

CVR Energy, Inc. was the biggest winner among holdings in the portfolio. Shares of CVR Energy, which has 5.4% of the portfolio assets allocated in it (as of Aug 18, 2016), jumped nearly 24.1%. The surge helped Icahn’s portfolio to make more than $219 million.  

Freeport-McMoRan Inc. (FCX - Free Report) , which takes the fifth spot in terms of asset allocation at 5.7%, also registered healthy gains as prices of copper reached 52-week high levels. An 8.1% gain in shares of this Zacks Rank #3 (Hold) company helped Icahn to take in around $100 million.

American International Group, Inc.’s (AIG - Free Report) shares also gained, boosting Icahn’s portfolio. American International Group takes the second spot in the portfolio at 11.9%. The Zacks Rank #3 insurer earned him nearly $65 million yesterday following its 2.4% gain. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Paulson’s Winning Bets

Though Icahn’s huge gain came on the back of impressive performances of stocks across multiple sectors, Paulson’s gain was primarily led by well performing healthcare stocks. Paulson & Co. hedge fund took in above $463 million on Wednesday.

Shire plc (SHPG - Free Report) was one of the biggest winners among Paulson’s portfolio holdings. Shares of this Zacks Rank #3 company, which takes the second spot in terms of asset allocation at 8.7% (as of Feb 17, 2016), jumped nearly 11.5%. The increase helped Paulson’s portfolio to make about $100 million.

Allergan plc, (AGN - Free Report) , which takes the first spot in the portfolio at 11.9%, also gained significantly, benefiting the portfolio. An 8.7% gain in shares of this Zacks Rank #3 company helped Paulson to take in around $68 million.

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