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PRESENTING: 5 Hedge Fund Gods' First Stock Picks

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bill ackman

CNBC's Hedge Fund Specialist/"Squawk Box" producer Maneet Ahuja's new book "The Alpha Masters" is out today.

Ahuja—who is known for her massive Rolodex filled with the biggest names in the hedge fund industry—gives her readers a peak into the lives and careers of the most well-known and legendary investors

What's more is she also reveals some of their earliest trades, many of which were stock picks these hedge fund heavyweights made when they were kids. 

 

Ray Dalio, Bridgewater Associates

Background: When Dalio just 12-years-old, he spent time working at a nearby golf course as a caddie.  With his first job, he was able to collect tips from golfers, many of whom happened to be Wall Streeters.  He would then take those funds and research stock ideas in the Wall Street Journal.  Any stock he would pick at this age had to cost less than $5 a share and it had to be a name he recognized.

First Stock Pick: Following his own investment method, the first stock Dalio decided upon was Northeast Airlines.

Result: Dalio's first stock pick ended up tripling in value right after he bought it.  In the book, Dalio recalled that if it wasn't for that successful stock pick, he may of ended up in a different field. 

Source: The Alpha Masters 



John Paulson, Paulson & Co.

Background: Paulson first starting trading stocks when he was 14-years-old with money his father gave him.  When searching for an investment idea, Paulson would comb the New York Times for stocks trading at their lows with the widest discrepancy. 

First Stock Pick: The first stock pick he settled on a company called LTV, which had a high of $66 and a low of $3.  He bought it when it was trading at $3 thinking he would sell when it went back to $66.

Result:  LTV ended up going bankrupt.  But don't feel too bad for him.  Paulson kept LTV in his portfolio and eventually the company emerged from bankruptcy and he received out-of-the-money warrants in LTV Aerospace.  The stock price for LTV Aerospace soared.  While he was at Harvard, the company was bought out and his stock was worth ~$18,000.  

Source: The Alpha Masters 



David Tepper, Appaloosa

Background: Tepper became interested in stocks because of his father, an accountant (not a CPA), used to to discuss investing with him.

First Stock Pick: When Tepper was in high school, he bought 100 shares of Career Academies for $2 a piece. 

Result: That company ended up going bankrupt, but that didn't stop him from wanting to pursue a career in investing.   

Source: The Alpha Masters



See the rest of the story at Business Insider

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