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'The Great Gatsby' Portfolio: Building a West Egg Nest Egg


Invest wisely in these names and, with a little luck, your screen will be as green as the ethereal emerald light at the end of Daisy's dock.

Wall Street hits dizzying heights as conspicuous consumption runs amok. New technologies utterly transform America. A country loosens its collective collar, in the mood to indulge again after emerging from a dire decade during which war was everywhere. And mixed in with the rampant materialism, much hand-wringing and anxiety over a loss of moorings and meaning amid all the empty excess. 1922? Yes, but arguably an equally apt description of 2013. Thus, with due respect to The Great Gatsby's unforgettable last line, there is actually no need to be "borne back ceaselessly into the past," for many themes of F. Scott Fitzgerald's iconic novel remain fresh as a Daisy, Buchanan or otherwise.

Baz Luhrmann's buzz-worthy movie of the same name opens on Friday, starring Leonardo DiCaprio in the title role and featuring Carey Mulligan as his aforementioned love interest. Tobey Maguire and Isla Fisher round out an impressive cast that also includes Bollywood legend Amitabh Bachchan.

An accompanying marketing blitz is already well underway, transporting us to the era of affluent West Egg mansions, when high society and low morals mixed along Long Island's Gold Coast. The film itself features an orgy of upscale product placements to conjure up images of old-money aristocrats whose blood bleeds blue. Since the book's narrator Nick Carraway successfully sold bonds in an era when stocks also ascended to the stratosphere, it seems only appropriate that we look at ways to make money off the renewed interest in all things Gatsby.

So join us as we put on the Ritz with a Roaring Twenties portfolio that is the bee's knees and cat's pajamas. Invest wisely in the next 10 names and, with a little luck, your screens will be as green as the ethereal emerald light at the end of Daisy's dock.

The Gatsby Portfolio

Two short blocks from New York's swanky Plaza Hotel, where F. Scott Fitzgerald once frolicked in the fountain and whose hallowed halls feature in his superlative work, stands the 42,000-square-foot Fifth Avenue headquarters of Tiffany (NYSE:TIF). Its upscale Art Deco necklaces and earrings were must-have items for newly-liberated society ladies of the 1920s, and the retailer is rushing to embrace Luhrmann's film. Pièce de résistance among its $2 million worth of blingy movie-related baubles is the Savoy headpiece worn by Carey Mulligan's Daisy, costing a cool $200,000. (Ms. Mulligan previously played Winnie Gekko-Moore, Gordon's daughter, in Wall Street 2, and so is presumably not short of cash, but that price may bring a tear to even the eye of her fictional father.)

Other items among its 30 Gatsby-related jewelry offerings embrace more affordable price points, and Tiffany has also unveiled a related Ziegfeld collection for the occasion. The company inauspiciously went public in 1987, a year notorious for an even steeper slide in the Dow (INDEXDJX:.DJI) than the 1929 Crash that officially ended Gatsby's age of opulence. It has subsequently thrived however, and reached a fresh 52-week peak just this Monday. Shares have risen more than 30% in 2013 alone, with the company currently guiding for 6% to 9% earnings growth in fiscal 2013, as it embarks on a concerted push into silver and gold. Tiffany also recently raised prices, which should be good for gross margins. Risks include a slowdown in its hitherto red-hot Chinese market and competition from online rivals, notably Blue Nile (NASDAQ:NILE).

Robert Redford memorably sported Ralph Lauren's (NYSE:RL) spiffy wardrobe for the 1974 version of Gatsby, and the upscale fashion firm is now busy reminding a new generation of its heritage. The company's name instantly brings to mind pictures of patrician "Polo"-playing "Chaps," to name two of its aspirational brands Yet ironically, given this air of Greenwich old money grandeur, the retailer was founded by a scrappy Jewish boy from the Bronx, born with the decidedly non-WASPy last name of Lifshitz. (He also once worked as a salesman at the privately owned Brooks Brothers, which is unleashing an ad campaign of its own for the film.)

Shares hit the highest level in their history this week, and the company boasts a pristine balance sheet with about $1.1 billion of cash on hand. International expansion also offers excellent growth opportunities. Potential headwinds include private label competition and a relatively high exposure to Macy's (NYSE:M), which represented roughly 20% of wholesale revenue for fiscal 2012.

Interestingly enough, several foreign firms rate a mention in what is the ultimate Great American Novel. (Minnesota born he may have been, but Mr. Fitzgerald and his wife Zelda memorably spent time in 1920's Paris, as part of a cosmopolitan milieu that also included Ernest Hemingway.)

France's own LVMH Moët Hennessy – Louis Vuitton (OTCMKTS:LVMUY), fresh from sponsoring a lavish Gatsby after-party, is the last word in luxury. The firm controls a quartet of champagnes capable of blowing a hole in any expense account (Dom Pérignon, Krug, Moët & Chandon, and Veuve Clicquot), ably augmented by other ultra-premium brands including Bulgari and Fendi. Earlier this year it announced a 12% increase in annual net profit, to 3.42 billion euros, and LVMH also offers investors a dividend yield in excess of 2.00%. Shareholders should be alert to increasing signs of a slowdown in the previously free-spending Far East, especially in the critical category of upscale watches.

Prada S.p.A (OTCMKTS:PRDSY) was founded in 1913, only one year before the lights went out all over Europe. By the early 1920s, however, American women, weary of war, were ready to let their bobbed hair down. In fact Daisy donned one of the company's daring metallic gowns to a soirée hosted by Gatsby.
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