Who to Watch / Company Watch - UPDATE

Who to Watch
My how times have changed!  In the past, young investors like myself would have wanted to follow in the footsteps of corporate raiders, mutual fund managers, and high profile investors.  One well known corporate raider is Carl Icahn, he and other corporate raiders were legendary for taking over companies or agitating boards for significant change. There was also those legendary mutual fund managers that made people in my parent's generation a lot of money by investing through their fund. Some well know names here are Peter Lynch (Fidelity), Bill Miller (Legg Mason), Bruce Berkowitz (Fairholme), and many others.  The last group of high profile investors are guys like Warren Buffet and George Soros.  Today some of the most well known money makers are in the hedge fund industry.    A small difference from the previous investors in the past, are hedge funds try to make money when markets are up or down by betting on and against the performance of stocks.  Here is a run-down of some of my favorite hedge fund managers:

• Steve Cohen, David Einhorn, John Paulson, Seth Klarman, 
• Bill Ackman, David Nierenberg, Monish Pabrai, Ray Dalio

Legg Mason...Do they have a Legg to stand on?

Like Fifty Cent said, "I've been patiently waiting for a track to explode on". Well my game isn't music, its stock picking. And I am glad I was patient. I saw some indicators that would have lead me to purchase Legg Mason (NYSE: LM) between 28 on up. I admit I haven't been following individual securities lately but I was very suprised to see LM’s recent decline after it began picking up steam towards the end of last year (see the charts). The catalyst (for the decline) after some quick analysis was the recent quarterly earnings report. For financial firms, these meetings have caused serious havoc to the stock prices. The stock is now under both its 50 and 200 day moving averages. I am going to assume that this means new support levels will need to be established and all those investors that bought a few months ago will need to cost average down. But in order for them to buy in again at these lower a level they need to believers in what Legg Mason does and that’s asset management. Yep, these guys make their money investing in the damn stock market (Sigh).

Here is a quick rundown of the Pros:

- Good indicators show support for the stock
- Bill Miller is a fund manager that historically has had a great track record. He finds great companies and holds onto them for a long duration
- The stock has broken through its technical moving day averages, which could lead to additional support needed from investors
- I believe that I read that retirement portfolio outflows have stabilized, likely due to the run-up in the economy since last March
- I have the basic belief that the Federal Reserve won’t turn the spigot off too soon, which should keep the economy from “double-dipping”

Here is a quick rundown of the Cons:

- The stock broke through its technical moving day averages which could lead to investors cutting their losses…why would they cut their losses see the next bullet
- Although Bill Miller is the man, his fund consists of a large number of financial institutions…arguably one of the most volatile sectors right now
- The economy, which is still teetering could send the funds managed by Legg Mason lower