by Travis Johnson, Stock Gumshoe | November 25, 2009 3:12 pm
I have instituted a little tradition here at Stock Gumshoe, each Thanksgiving I like to pick out my favorite “Turkey of the Year[1]” … the teaser stock pick that promised millions, but fizzled despite the best attempts of newsletter writers to promote the stock to new subscribers.
And if you’ve been around this space for a while, you probably realize that choosing just one is pretty tough — in late 2008 the job was made even more difficult by the market malaise, and I had plenty of picks to choose from that were down by 90% or more. Though the roster of possible dreadful stock picks is a little bit thinner now, the outlandish promises are as thick on the ground as they ever were … and we do have some doozies on our PuPu Platter.
Last year around this time it was Potash North [2]winning the “Turkey of the Year” prize, well after the newsletter editor who chose it had moved on to other pastures. That one, by the way, no longer exists as an independent company, it was absorbed into Potash One[3] — if you bought it when Andrew Mickey[4] touted it and are still holding the Potash One shares you got after the merger, you’re down about 75% … which is actually a bit of a recovery from the “down 95%” that you would have been fretting about as of last Thanksgiving.
This year, we’re blessed with a real doozy — the same stock, recommended by two different newsletters this year as a hot idea that you should subscribe to their service to learn about. The stock has done poorly since recent recommendations, obviously, but that’s not enough to make “Turkey of the Year” (we’ve had plenty of poor performers in the past year, no one’s got the stomach for all those turkeys) … it has also done significantly worse than many other stocks in the same sector, during a year when the sector itself has been getting a lot of favorable attention from investors; and, of course, we were promised … well, a rose garden.
The stock? Raser Technologies [5](RZ)
And you can take your pick of “Turkey seller” culprits, the big ones pushing RZ this year have been Nancy Zambell[6] and the Oxford Club[7], who both got on board this one in 2009 while it was between two and three dollars — though, to be fair, the Oxford Club folks and others were also pushing this one hot and heavy back in 2008, with the stock nearer $10 a share. Today? It’s right around $1.25.
Nancy Zambell launched her Buried Treasure Under $10[8] letter not that long ago, while the markets were in abysmal shape, and she got a lot of attention quickly in this space and elsewhere — and Raser Technologies was one of the stocks she pushed hardest this year.
After teasing folks with the stock a few times this Spring, she moved on to actually claiming credit for it and promoting it as one of her good ideas, but that didn’t last too long … just long enough for us to learn that she says she picked it for her subscribers at $2.65 back in March, which means she pegged it extremely close to the lows (at the time). She wrote about it later saying that it “just hit $4 but we’re holding for $6 and maybe better,” and later ads in June and October seemed to refer more obliquely to this geothermal[9] favorite. If you’ve looked at the charts, you’ll note that there’s plenty of reason to be shy about mentioning the name over the last six months.
The problem was, and is, that Raser has been in rough shape financially, which probably more than anything else is what has driven the shares down to these levels (along with some technical disappointments at their maiden project). Geothermal plants, even the “lower temperature” plants that Raser builds, are very expensive, and they’re sitting on huge losses over many years. So they’ve been selling additional shares to raise money, and restructuring debt, and figuring out other ways to raise cash for their expensive projects, including the pre-sale of electricity to Anaheim and other places that are hungry for green power.
Unfortunately, they haven’t yet been producing as much electricity as they expected at their one operating site, and of course the electricity they have been able to produce so far costs a lot more than they can charge for it, since they’re operating just the one tiny plant so far, and at less than expected capacity … if you want to pile on a bit, despite the fact that it seems a little cruel at this point, I’d recommend following David Phillips, he’s my favorite Raser skeptic and writes often about them on his 10QDetective blog[10], but water[11]-dampens-raser-technologies-future/?tag=shell;content">he had a good piece published on BNET back in October that you can see here. That’s not to say he’ll definitely be right in the end, it’s always possible that Raser could revive themselves, get more funding, and become a market darling again … but he’s sure been right so far, despite the fact that he has been pilloried by RZ bulls for his pointed comments.
And no, sadly, for those who bought into Zambell’s excitement, it didn’t get to six. It barely held four dollars, though it sat near that point for a couple months during the Spring rally. When July came it brought with it a big dilution, taking a quick 20-30% out of the shares, then a gradual decline for most of the Summer … until, near the end of the Summer, we saw the Oxford Club get back in the Raser game …
The Oxford Club[12] had been touting Raser for quite some time, in an ad that got rehashed a few times but, as far as I know, started heavy rotation early in 2008. Originally it was an ad about “What George Bush was told behind closed doors,” touting Raser as the company behind the discovery of “new oil[13]” that would “single-handedly” solve the energy crisis, and “put OPEC on notice.” And as every good teaser ad does, they implied that this was the absolute best investing idea they’d ever had — in this case, the wording was, “I can’t remember another opportunity in the history of The Oxford Club that was as potentially as explosive – and lucrative – as this one.”
So they weren’t strangers to this stock, and they knew the clobbering it had taken from that first tout to the August prices of a bit over $2 (though it perhaps took them some time in the editing room to get the ad cleaned up, they touted it as a $3 stock … which sounded hopeful then, and sounds wildly optimistic now). Still, in mid-August they came back and told us that this top-secret $3 Utah company could “Bring down OPEC.[14]”
And it wasn’t long after that we saw some more sadness for the shares, when they announced that the government had not approved their application for a loan guarantee, so now here we sit … at just over a buck.
Does this mean Nancy Zambell or the Oxford Club folks are any worse than others? Or less lucky in cherry-picking the ideas they use to sell us their newsletters? Zambell’s track record is unknown at this point, I assume she’s done well with her low-priced stocks in general this year, but her letter hasn’t been around for long enough to get a fair track record. We’ve got just a few reviews of Zambell’s letter in at Stock Gumshoe Reviews[15], though they’re generally positive, and a lot of reviews for the Oxford Club’s Communique[16] that average out to, well, average. To be fair, the Oxford Club has, according to Hulbert, done far better than the market over the last five and ten years.
The folks behind these ads are really marketers, after all, not much different than the folks who sell us laundry detergent or blue jeans … and they tell us what they know will make us intrigued, or greedy, or just plain excited.
And sometimes, a story works so well at bringing in new subscribers that it doesn’t matter what the underlying stock is doing, you just have to keep using it — at least, that’s what I imagine when I picture the back-office machinations of a newsletter publisher … I’ve heard from many newsletter editors and writers over the years, the folks who actually choose the stocks and write about them, and quite a few of them are a bit embarrassed about the advertising that goes out over their name.
Geothermal power is still a hot topic — we’ve seen plenty of recent ads and punditry going out on this idea, too, but Raser has definitely not been the way to play the theme so far, just about every geothermal stock I’ve ever written about has outperformed Raser, including Ormat (ORA), the biggest “pure” play on geothermal, Calpine (CPN)[17], and US Geothermal [18](HTM) as well as most of the wee geothermal juniors.
As always, it pays to remember that whether or not you like or believe the editor behind a well-known newsletter, there’s at least a decent chance that it’s not their investment strategy and timing that’s determining what marketing letters get sent out in any given month … they sell you using what works to get your attention, not necessarily using their best current investment idea.
Which probably makes them all a bunch of turkeys — but hey, without newsletter marketing balderdash your friendly neighborhood Stock Gumshoe’s favorite pastime would disappear into the mist … so bring ’em on, I’ve got plenty of cranberry sauce.
Have another turkey to nominate? Or a golden egg? Are you a friend or foe of Raser, or of either of these newsletters? Let us know with a comment below — and have a wonderful Thanksgiving!
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go sgs
I think, sadly, that you’re wrong about Razer. Since the earth’s core is 15 million degrees (source AlBore) there’s plenty of energy there for eternity. Don’t be such a wetblanket. Rock on geothermal :>))
I’m not quite sure where you get your information, but the center of the earth is approx 4000 miles deep and the temp is estimated at 10,000 degrees F. WE CAN’T DRILL 4000 MILES INTO THE EARTH! If it were that easy, we would have our energy crisis solved! We could just keep drilling to the other side of the earth and tap there resources or crawl through the hole and take what we want. Sound a little stupid? It should!
Could you give your readers a thumbs down on a this company.
info@MonsterStox.com
I have been watching their high caliber touts on a few stocks. I pity the people who fell for them. And to add insult to injury this company actually lies about the stocks advances. I have written them but to no avail. Too bad because they are saying this stock at 09 cents went to 1.00 not to long ago. So I have been using the the Gumshoe approach and kept an eye on them. They are so much lower than the Turkey of the Year award, it would be difficult to fine the right definition.
my best to you and keep may you continue to keep us alert and smiling.
joe dennie
Regular
What about Razer’s development of some kind of green technology to make the Range Rover get 100 miles to the gallon. That story was what put the stock on “top shelf” last spring/summer
Shoe,
If you’d like to turn that turkey
into a turducken (http://en.wikipedia.org/wiki/Turducken)you can use the Dendreon (DNDN) fiasco for the duck..
jay
Maybe Christmas you could do a newsletter of the year that actually does a good job? Chris
Do these letters rely on customers taking them at blind faith?
Anyone that does their due diligence on Raser will know that they have been over promising (or just hoping) that their ideas will work out?
Low temp electrical generation is a fantasy.
High temp is high mainetenance!!!!
With so many good stocks these days why do the “suckers” keep looking for the fast buck?
I seem to remember someone touting that Dendreon was going to come out with horrible results and they urged shorting the stock at around $4, as i recall. They were 100 percent wrong and the stock is now over $27. Now that’s just WRONG!!!
To you and your family, Travis……Happy Thanksgiving.
Turkey of the year, DXY, the US Dollar.This has been plucked, baked, boiled and roasted.I feel sorry for the believers that rushed to the “safety” of treasuries.Sadly, there is no relief in sight.Big Ben has vowed to keep rates at .25 or zero well
into 2010 and beyond if necessary. We are helpless to change this, but can profit if we have the fortitude to face reality. Follow the Chinese example and divest the dollars for tangibles.That way, you get to eat the turkey.
Kudos to you Gumshoe for doing what you do. I fear that if I had to pay for all the newsletters I’d have no money left to invest.
So you’ve given the Turkey of the Year. How about the winner of the year from everything that has been touted as “Get in on this now or your you’ll be kicking yourself for the rest of your life”. Is there ANYTHING that has performed as predicted? Should I be booting myself in the pants?
Keep up the good work.
Would like to throw in my nomination for Turkey Stock (and Turkey Advisor) for the year. Verenium and Andy Obermueller of Street Advisor. Within days of his recommendation VRNM announced a stock split which cut the value by almost 50%, where it still languishes. Similar situation where finances were hurting due to the capital costs involved with development of alternative energy stock companies. Be careful in these alternative energy stock company investments, as the capital investments normally needed are significant barriers to entry and come at a significant costs to the early investors.
Jennifer
Yes, I fell into the Razor thing, but it does seem like a viable technology to create steem powered electricity. It only makes sense.
You want real Turkeys? Just follow my purchases!
Bald Eagle (BEEI), Genova (GVBP), Landstar (LDSR), Neohydro Tech (NHYT), Phantom Fiber (PHFB), all stocks and ideas that failed. My real Turkey of the year is Volkswagon ADR (VLKAY) which is down from mid $70’s to low $20’s. I’m in deep with over 800 shares, buying it on the way down after spending a month buying in mid $60’s and selling mid $70’s and making over $7k. Now I’m down 55% with value loss of over $26k. It should come back, but this is my IRA and didn’t see this coming. Hard to get news that’s correct on this ADR.
My recent turkey is long Dry Ships with some January calls. What a dud! Lansing’s pick.
GeoThermal is snake oil. Everyone who has ever tried it has failed. There was one place in the world that worked for a while; the Gysers Project in Northern California, and only because it is ‘dry’ steam. Unfortunately the formation has been over-drilled and it is now in irreversible decline.
Doug Casey has been pumping GeoT recently, probably because of Rick Rule’s massive investment. And of course S&A’s resource guy. I tried to warn them both and was met with silence.
The appropriate investment in GeoT is to go long as the company is being hyped, and then short them brutally as the reality cows come home to roost, and they always do. Here is a copy of the email I sent to S&A in an atempt to try and protect the other subscribers.
I’m not sure why I bother; the 12% letter didn’t pan out for me and Jeff Clark’s directional calls cost me dearly this year. Porter’s rants make me physically sick to my stomach. Rule strikes me as arrogant as Porter. Maybe it is out of a desire to try and warn the other subscribers…..for whatever reason….here you go;
Doug Casey hyped GeoTherm recently as well….probably due to watching Rule sink all that money into the idea. I tried to warn him too and was met with silence.
Here is your quote; “Geothermal companies can produce electricity 24 hours a day without any interruption. This energy is cheap, it’s clean, it requires no additional fuel, and it’s profitable without any government subsidies.”
None of this is true. It’s not even profitable WITH gov’t subsidies.
Geo Thermal is not viable on a large commercial scale. There is one place in the world that it USED to be, but not anymore. The Gysers project in northern California was viable until they over-drilled it, and now it is in irreversable decline….past “peak steam” you might say. The only reason it was viable in the first place was because the formation is a very rare one that produces ‘dry steam’.
Here is the problem in a nutshell; the steam carries with it a load of suspended solids which precipitate out when the pressure and temperature changes at the surface. This causes two major problems; scaling and/or corrosion. In order to keep those solids in solution and not allow them to clog up your piping (which necessitates loads of downtime and tremendous expense) you can instead add huge amounts of very expensive chemicals to the solution to keep those solids dissolved and flowing, instead of sticking to your piping and clogging up the works. The problem with that is; the chemicals you add are extremely corrosive so you have to, once again, endure loads of downtime and expense replacing a bunch of plumbing or buy incredibly expensive titanium plumbing that will not corrode.
Current thinking is to try to employ a submersible heat exchanger down the borehole, but it so far hasn’t worked in terms of cost-effectiveness; the steam side gets damaged by precipitated solids and the whole unit suffers from heat damage and has to be replaced so often that, in the end the operators realize that it cost more to fight the situation than to just abandon the effort.
The whole idea has been understood to be a perpetual motion machine fantasy and everyone who trys it abandons the idea after it is realized that scaling and corrosion cannot be overcome enough to produce a sustainably profitable system. The appropriate investment would be to short the companies that are throwing their money away on this unproven fantasy.
Small household systems have proven to be economical, but are just basically heat-pumps and don’t use actual geo-thermal steam heat as it is being tried on the large scale molten rock/flash steam/ recovery projects. A small scale system cost about 15 grand minimum for a house and about 6 grand per ton; e.g. if you have a house that needs 3 tons of hvac it will cost about 18 to 20 grand to install a geo thermal unit.
I’m telling you right now that just as sure as the nose on your face this large scale Geo Thermal idea is no more than ocean front property in Kansas. I triple dare you to print this response in the daily feedback.
Captain Kirk
It’s a venerable old turkey (from 2007) but its turkyhood is so noteworthy that I thought I’d mention it—Playfair Mining (PLYFF). Tungsten, remember? It has lost as much as 99% of its value since then, although recently it has rocketed up to about -97%. I decided to go long way back in ’07. Not a good decision in hindsight, but who knows–it just has to get from the current $0.057 back up $1.30 or so for me break even.