I don’t see this very often, but it looks like there’s a little battle brewing between Ian Cooper and Rob Fannon … or probably more precisely, between Stansberry & Associates and Angel Publishing.
I don’t know if this has anything to do with it, but the two seem linked in several “sincerest form of flattery” ways — Angel Publishing’s daily free newsletter is called “Wealth Daily” and has a little black and white compass rose logo that seems kind of similar to Stansberry’s “Daily Wealth” and whatever they call their little b&w logo.
Don’t know which came first, or if the things that look to me like similarities are just coincidences, but I do know that Ian Cooper is touting an options trade for his Small Cop Trading Pit service that essentially had him betting against what looks like the most recent heavily-touted recommendation by Rob Fannon’s Phase 1 Investor.
And Cooper even got a little dig in at Stansberry …
“Some ‘advisors’ are charging upwards of $2,500 for access to this single biotech stock recommendation.”
(Yes, that’s the price for the Phase 1 newsletter in that latest promotion.)
Now, it’s not necessarily a bad idea — I’ve had many readers come up to me and suggest that one should watch a heavily teased and touted stock climb, then bet against it and wait for the likely fall that comes once the bloom is off the rose, or once the marketing campaign stops. Of course, it’s no sure thing.
But this time, here’s what Ian Cooper’s saying:
“Right Now, a Breakthrough Biotech Stock is Skyrocketing … And I Want You To Sell!
“In fact, over the next 10 minutes, you’ll discover how to score twice … off its long awaited FDA results. But time is running out.”
He goes on to say that he has an “urgent update” — he dates that update “Feb. 18, 3:07 p.m. EST” … in it he tells us …
“Yesterday we issued a put option buy recommendation on a stock that has soared ina run-up that can only be described as ridiculous. And already our bold move is beginning to pay off. Fortunately there’s still time to join in the profit taking, before the next leg down…. we could easily see this stock dropping another 20% or more.
“And here’s the thing … The stock has spiked on nothing more than an over-hyped announcement.. one that’s not due until the end of March 2009. Even Wall Street believs the stock is overbought, downgrading it this morning.”
So it looks like this is what happened: Stansberry’s folks put out their (yes, “over-hyped”) teaser about March 30 results that could make everyone rich. If you’ll remember, I wrote about that ad when it started circulating, and plenty of readers shared opinions at the time. You can see my earlier comments here.
This teaser ad for Phase 1 Investor was touting a trade and/or investment based on expected Phase III results from Arena Pharmaceuticals for their anti-obesity drug, Lorcaserin, which are expected at the end of March. And the stock did blow up like a roman candle, moving up by better than 50% in about a week (I wrote about it early in the day on February 4, the stock closed at $4.45 that day, it hit an intraday high of $7.42 on February 12). Not surprisingly, there has been news coverage of the company but no real “news” just yet, and the excitement has died down somewhat (though the ads are still running), and the shares have abruptly reversed and are down to about $4.85 as I type this.
If Ian Cooper managed to catch the high on February 17th, he could have recommended puts when the shares were as high as $6.99, but at least they were probably somewhere in the $6-7 range, so yes, odds are pretty good that any put option play could have been quite profitable over the last few days of this week.
The ad is nice and long, as so many of them are, and Cooper goes into some detail about the drug and the stock (without naming it, of course — he’s a teaser, too). He even essentially endorses the findings of Fannon, that the drug does have some significant potential and may be a huge blockbuster if and when it gets approved sometime next year.
But he says that, using Fibonacci and Bollinger Bands, among other charting techniques, that he identified the hype-driven price spike and (correctly) predicted that since this was a volatile biotech moving on nothing but new exposure and hype, the price should retrace its gains. And so far, it kind of has, though not all the way.
So he actually makes a “double barreled” recommendation — he wants to buy the puts to play the fall in the stock, and also buy the stock to take advantage of the great long term potential and the buying that investors might do on the current pullback. That’s enough action (and enough opportunities to be wrong) to make my head hurt, but perhaps it will continue to work. He said that the time to buy the stock will be sometime “before April 2,” so apparently he also believes that the announcement will end up driving the shares higher.
I don’t know that we learn anything new here, and it’s certainly possible that Fannon’s stock/option strategy for this pick might have been similar to Coopers, I don’t know. But it is fun to see one newsletter editor throwing a little sand in the face of another or treading on their ideas, even if they might both end up being right in the end (or wrong, of course). Rob Fannon’s ad essentially got us hooked on the upside of Arena Pharmaceuticals (ARNA), and it looks like Ian Cooper is doing the same thing — after first saying that he’s riding it down as it falls off of its hype-drive highs of last week.
I’m not on Fibonacci’s speed dial, so I don’t know if ARNA has retraced enough of its gain yet that you’d want to get long yet or not based on that strategy — it has retraced much of its little spike, but the shares have been as low as $3 or so within just the last couple months, so you can make your own call on that.
If you’re feeling nimble or prescient and are trying to ride this trade along with Cooper … or with Fannon … let us know. And of course, if you’ve ever subscribed to either Phase 1 Investor or Small Cap Trading pit, click here to review them for your fellow investors.
Personal Capital is an advertiser with Stock Gumshoe, but Travis also uses it every day for his personal accounts and finds it invaluable. Here's what he said: "They offer a great (and genuinely FREE) 'second opinion' for your financial plan, but what I love most is their automated financial dashboard -- it will look at all your assets and debts, tally up your asset allocation, project where you'll be at retirement, and suggest ways to manage risk or improve returns. It's free, I think their free tools are great, and I think it's worth checking out -- you can do so here.