From Florence in Italy, Niccolo Machiavelli was a famous writer, statesman, poet, historian, political thinker and philosopher. I reckon he would have made a pretty good stock picker too, but living around 500 years ago excluded him from the greatest mental discipline of all.
Machiavelli's most famous work Il Principe (The Prince) was a handbook for statesman and leaders on how to exercise power and govern in order to defeat rivals and build a nation state. Machiavelli also taught that sneaky tactics were a virtual obligation for all good leaders if they accrued a benefit over rivals.
So if Machiavelli were to transfer his nation-building principles to stock picking for his SMSF what stocks might he select? I have three he might like.
BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) have been accused of orchestrating a Machiavellian-style plot to flood the iron ore markets with excess supply in order to drive the price down and force rivals like Fortescue Metals Group Limited (ASX: FMG) out of business. Since the iron ore price falls Fortescue has been forced to refinance US$2.3 billion of debt at 9.75%, while its share price has tumbled 46% over the past year.
If this were all part of a grand plan concocted by BHP and Rio (and not just sour grapes from an over-leveraged Fortescue) it's almost certainly a tactic Machiavelli would approve of and as a result both companies get added to his SMSF.
TPG Telecom Ltd (ASX: TPM) is another business that has been employing some dubious tactics recently in the battle to secure itself as the number one challenger to the dominance of Telstra Corporation Ltd (ASX: TLS).
In fact TPG has raised its shareholding in rival Amcom Telecommunications Ltd (ASX: AMM) to block its proposed merger with Vocus Communications Limited (ASX: VOC). This is another power play that Machiavelli almost certainly would approve of in securing TPG a better position against the interests of other Amcom shareholders.
