Doc's note: If you want consistent, big gains in the stock market, the trick isn't following the crowd… It's finding the stocks others are ignoring.
As my colleague Gabe Marshank explains today, to keep locking in profits, there are two rules you should follow…
Some trades you forget by lunch. Others stick with you forever.
For me, one of those came early in my Wall Street career, when I was working for legendary hedge-fund manager Steve Cohen at his firm, SAC Capital.
I wasn't managing hundreds of millions of dollars for Steve yet – that came later. At the time, I was still in my 20s, and I didn't have a whole lot of experience under my belt.
But what I did have was intuition... and it came in handy when I got a shot at a huge trade in – of all things – fish farms.
Now, I didn't have the first idea about fish farms. (Honestly, I still don't.) I figured it was a pretty simple industry, and as it turns out, I was right.
The industry is focused on salmon. They're healthy, delicious, and popular around the world. Since salmon grow well in cold water, Norway is the perfect environment to raise them.
But in 2005, the global salmon farming industry fell on hard times. Too many fish farms had opened, flooding the market. Prices plunged, bankruptcies piled up, and investors fled.
Amid the wreckage, something interesting was happening...
Norway's richest man was an oil and shipping tycoon named John Fredriksen. He started his career by trading oil in the Middle East, taking on bets others thought were too risky to touch.
He used that success to take positions in shipping companies and oil rigs. Each time, he demonstrated an incredible knack for investing at the bottom.
And suddenly, Fredriksen turned his attention to the salmon market.
He bought a 48% stake in fish farming company Pan Fish for about $124 million. It looked like this savvy investor was trying to nail the bottom in a cyclical industry once again.
But soon, word got out that he was aiming for something much bigger: He planned to use Pan Fish to acquire Marine Harvest, the largest player in the industry, for around $1.4 billion.
This was an ambitious, high-stakes move. And to pull it off, he needed serious capital.
On Friday, March 3, 2006, rumors of the buyout hit the market. Pan Fish shares jumped 20% on unusually high trading volume. But nothing was confirmed yet.
The following Monday, it became official: Pan Fish would buy Marine Harvest and raise $1 billion to fund the deal. To sweeten the offer, Fredriksen pledged to personally invest $100 million of his own money into the stock.
That got my attention.
The stock was immediately halted after the announcement that morning. The deal was going to happen that night, and the stock would reopen for trading the next day.
I had six hours to understand the entire salmon farming industry, this new combined company – and most important, whether the valuation made sense.
I was still new on the desk, but the deal appeared to check the boxes: a consolidating industry, a proven investor leading the charge, and an attractive price. So, with all the confidence I could muster, I pitched the idea to Steve...
Steve, I think this is a really good idea. The deal is getting priced pretty cheap. And the buyer's biggest investor is doubling his stake – at the same price as us. If this works out, we might make 30% pretty fast. I think we should invest $10 million.
He listened quietly. "I don't think it's a good idea," he told me. "I think it's a great idea."
I was stunned. Steve continued...
You're telling me that the guy who knows more about this industry than anyone – who's been successful over and over – is putting in $100 million of his own money? We should invest $50 million, not $10 million.
It was the first big trade I ever put on for Steve. It felt like a lot... because it was.
With the stock set to trade in Oslo the following morning, I tossed and turned for a few hours before waking up to watch the open at 3 a.m. Eastern time.
Our European traders started sending in "indications" of where the stock was looking to open. Up 5%... up 10%... up 12%... I watched with relief and amazement as the premarket share price went higher and higher.
The stock opened up 15%. By the end of the trading session, it was up 30%. We were sitting on tens of millions of dollars' worth of paper profits before most of my colleagues had eaten lunch.
The stock rallied another 15% by the end of the week. A few days later, we closed our position, happy to lock in a huge profit so quickly.
That trade taught me two important lessons that I still apply today...
1. Invest alongside the pros (if you can).
When someone with a legendary track record is putting his own real money to work, pay attention. Fredriksen wasn't in it to make a quick buck. He was building a business, and I saw the opportunity to ride along.
This doesn't mean you should follow every billionaire investor you see on CNBC. But if someone with a long-term reputation is putting up his own capital – not just managing other people's money – it's worth investigating.
Look for skin in the game.
2. The "fat pitch" is worth waiting for.
In a 1974 interview with Forbes magazine, legendary investor Warren Buffett popularized this idea, saying...
I call investing the greatest business in the world because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! And nobody calls a strike on you. There's no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.
The idea is simple: You don't have to swing at every pitch.
Most investors don't lose money because they're dumb. They're just impatient. They chase, they overtrade, and they feel like they need to "do something."
Investing, like baseball, is a game of discipline, not action. You don't get penalized for patience. You can wait until valuation, timing, management, and catalysts all point in the same direction to put your money to work.
For me, the salmon trade was a fat pitch. A distressed industry... a strategic insider... a clean balance sheet... and a misunderstood setup in the market. Those don't come along every day.
When they do, you don't bunt... You swing as hard as you possibly can. That's how you make outsized returns.
Nearly 20 years later, I still think about the salmon trade... not just because of the profits, but because of how clean and simple the idea was.
It wasn't complicated. You didn't need an MBA to understand it. But when the moment came, it required patience, conviction, and the willingness to act.
That's what I'm trying to do every day with my brand-new newsletter, Market Maven. We're trying to find the next opportunity that can return 3X to 5X over the next three to five years.
That's not about predicting the next hot stock. It's about looking where others aren't... in the places Wall Street forgets about... like salmon companies in Norway.
Regards,
Gabe Marshank
Editor's note: Big public events like the record-breaking SpaceX IPO – or the Anthropic IPO that’s about to happen – exist to make money for Wall Street, not individual investors. Instead, Gabe has a better alternative. The one that Wall Street doesn’t want you to know about.
If you want to unlock access to an entirely new world of professional-grade wealth-making opportunities, click here.
