A Good Old Fashioned Newsletter Fight

By Travis Johnson, Stock Gumshoe, February 21, 2009

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.


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14 Comments on "A Good Old Fashioned Newsletter Fight"

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spreadtrader
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spreadtrader
February 21, 2009 9:53 am

Fibonacci says this could go to 4.50 (62% retracement)and then fill the gap at 4.45. But the price action since February 4th is odd; and its more for gossiping gamblers than investors. If you like the crap tables, knock yourself out.

Elissa Stein
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Elissa Stein
February 21, 2009 11:18 am

This past week has been a particularly good one buy/writes in general.

Myron Martin
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Myron Martin
February 21, 2009 11:38 am

Ian Cooper worked for an Agora affiliate before joining Angel Publishing. He gets it right far more often than wrong. I read his material regularly when he was with Agora and his options track record was one of the best in the business.

Would not surprise me if there was some “bad blood” between Ian and people at Agora, but it is rare to find out WHY people leave one organization and go to another, but there have been quite a few moving from Agora itself to one of its many affiliates.

tjs
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tjs
February 21, 2009 11:38 am

re: ARNA
I bought at $5.02 and sold April 5 calls for $1.90. Liked that so much
that I bought more at $6.60 and sold more April 5s for $3.01. Incredible premiums!

dan
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dan
February 21, 2009 12:06 pm

subscribers to phase one know that rob NEVER recommended buying arna

he warned against buying arna directly several times

he recommended an options combo to protect against what is happening

paul
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paul
February 21, 2009 12:43 pm
The covered call idea from tjs is interesting, but that only works if the stock stays flat or goes up. Should the stock tank and not recover, you will be left holding the bag. I do agree that those premiums are very tempting. I’m not sure what the combo trade is that dan is talking about, but I think that a combo put/call trade with the April #5.00 strike price might be one way to play this one. This of course assumes that one of the newsletter writers is not only right, but very right in the short term direction… Read more »
Mark Bohana
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Mark Bohana
February 21, 2009 2:30 pm
Fibs indicate that 1/23 Low of 3.27 as A , B is the high of 7.42 and if C is considered the low at the present time of 4.83 than you have a 61.7% retracement, which in Fib terms means that no way this stock will go back on its next leg to the total of A to B or $4.15, chances are that it will go thru to 100% retracement back to 3.27 given a few pennies. Simply stated a retracement of .382 will provide CD=AB or more, CD=AB not to exceed @ 50% retracement, and AB not equal… Read more »
Double Eagle
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February 21, 2009 3:26 pm
QUESTION: What is this latest Newsletter all about? — reco from Kieth Fitz-Gerald of Money Morning touting his new “Time Trader Pro” [paste-in follows] “YES, please sign me up to become an elite, Charter Member of Keith Fitz-Gerald’s Time Trader Pro program. It’s designed to make me thousands of dollars a month, [NOTE: by trading on certain specific Thursdays] like clockwork, just by taking advantage of one powerful trade recommendation every month. And I get it all for an amazing, one-time, half-off Charter Member price. I also understand that nothing is being left to chance. With every recommendation, I’ll know… Read more »
JT
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JT
February 21, 2009 10:46 pm

Time Trader Pro sounds to me like writing (selling) naked puts or initiating credit spreads, but I’m only guessing. 🙂

Amish Rake Fighter
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Amish Rake Fighter
February 23, 2009 5:17 am

Just make sure you don’t bring a newsletter to a rake fight.

I bought this stock because any company who has spent that kind of money on a SAFE use of GCPR technology for obesity/weight loss has to be on to something. It’s too risky otherwise and they wouldn’t have made it to the Phase III trial.

Anybody remember the Phen Phen debacle ? That’s a similar technology, the main difference being, of course, is that that Lorcaserin doesn’t kill people.

What could possibly go wrong ?

Mikey
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Mikey
February 26, 2009 4:09 pm

Looks like Cooper was right.

Muriel
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Muriel
March 25, 2009 1:13 pm

Anyone watching “Wealth Daily”? Are they good?

Gravity Switch
Admin
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February 21, 2009 12:30 pm
Thanks for the additional detail. I got the impression from the ad that he was recommending both buying the stock and an option play. Here’s the quote from the letter: “There are 2 ways to play this opportunity. “The first is by simply buying shares of the penny stock, which Rob outlines in his full report. “But there’s a second play that you can use to get into the stock… and as a result – reduce your risk to almost nothing while shortcutting to 400% in possible returns. We’ve done this many times before at S&A Research…. “In short –… Read more »
Steve
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Steve
February 23, 2009 12:48 pm

The FDA.

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