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Follow the Activist Investors to These 3 Stocks to Buy

From a trading standpoint, a little nudging from the likes of Carl Icahn usually helps the quick-reflexed longs

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Dow Chemical (DOW)

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Activist Investor: Daniel Loeb (Third Point LLC)

This final stock is one that I also discussed in Wednesday’s Beat The Bell column: namely, Dow Chemical (DOW).

Earlier this week  Daniel Loeb — the activist investor and hedge fund billionaire of Third Point LLC — announced that he has amassed a stake in the DOW stock, making it Third Point’s largest investment at the moment. As I wrote on Wednesday:

“Loeb is calling for a spinoff of Dow’s petrochemicals business, which in his eyes would improve the company’s profitability. He’s also asking DOW to consider a big share buyback that would in essence help to offset a convertible bond deal whereby Berkshire Hathaway (BRK.B) and the Kuwait Investment Authority will get issued a large amount of stock.”

Loeb has a good track record, and in this case. the management of DOW initially doesn’t seem too opposed to his suggestions. If I combine this with the fact that DOW stock recently began to break out of a massive inverse head-and-shoulders formation, I like trading DOW from the long side as well — particularly after it consolidates its recent gains somewhat and more developments from Loeb and DOW come to light.

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Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the Essence of Swing Trading e-book by clicking here. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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