SAIC, Inc. (SAI), The Boeing Company (BA), Caterpillar Inc. (CAT): How To Invest Like The World’s Most Expensive Hedge Fund

Most appealing, SAIC, Inc. (NYSE:SAI) plans to break its business into two entities. SAI will continue dealing with government agencies, but its technology-based division will now be known as Leidos. Historically, this type of split has had a positive effect on companies. I expect the same result with SAIC, Inc. (NYSE:SAI), which also happens to offer a 3% yield.

Technically speaking, shares have been in an uptrend since June 24 before hitting resistance at $16. The price has fallen back into my value buy zone with a $20 six-month target.

Risks to Consider: A change in a fund’s position in a company should not be used alone as a buy or sell signal. However, when combined with solid fundamental and technical factors, it can be a compelling additional reason to follow along. Remember, even hyper-successful funds like Rentech often sustain losses in individual stocks. Always use stops and position size properly when investing.

Action to Take –> I like SAIC, Inc. (NYSE:SAI) right now as a buy candidate. The new contract, pending split and technical price level each make SAI a compelling buy.

P.S. — SAI’s spin-off business could become a great investment if it’s ever taken public because it would belong to a special group of securities we call “Rich Parents” stocks. These spinoff businesses all have a wealthy “parent” company giving them sweetheart deals and special pricing. A $10,000 investment in one of these stocks in 2001 would be worth $177,200 today, but thanks to the “Rich Parent” advantage, that looks like just the beginning. To get the names of some of these stocks, click here.

– David Goodboy

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