Stock Gumshoe

I haven’t written much about Rob Fannon and his Phase 1 Investor newsletter lately — this is the high end newsletter published by the folks at Stansberry and Associates, it’ll run you about $4,500 a year, and it’s largely focused on biotech companies.

So is their advice worth more than the advice from less expensive newsletters? I can’t tell you that — I’ve written about half a dozen or so teaser stocks that Fannon has put out there for us, and most of them have not done terribly well, but they certainly haven’t done as badly as many, many other stocks. Everything’s relative, and biotech is more hit-and-miss than most sectors — his picks for the Medical Investor newsletter, which he runs with George Huang, have done a little better, largely because they include several health care REITs that have held some value during this awful year. And Phase 1 isn’t tracked by Hulbert, so there’s no objective report of performance that I know of.

But that’s all really beside the point — If there are some Phase 1 subscribers who’d like to share with us their experience with that newsletter, I’d be delighted to hear it. But what I really want to know is: What stock does he think we should buy today?

Or, put more bluntly, which stock is he talking about when he says, “Don’t let this chance at a 10-bagger pass you by.” Read the rest of this entry »

This teaser comes in from the folks at Stansberry’s Phase 1 Investor service, which is their uber-expensive $5,000 subscription newsletter that purports to find the best opportunities in the smallest stocks.

They have developed what they call the L-2 Indicator that tells them when to buy stocks, in this case gold stocks: “the ‘L-2 Indicator’ is the most accurate strategy we’ve developed to predict the moves of tiny natural resource stocks. And using it, you could’ve made up to 8,800% gains – in a matter of weeks…”

And, for the headline attention-grabber part of the teaser, “S&A’s secret “L-2 Indicator” predicts Read the rest of this entry »

This teaser and the solution come in from our old friend Streetsifter, who has written up a few solutions in this space in the past — t0 the great appreciation of your Gumshoe. His solution has been confirmed by a few other readers who I know do a good job sniffing out solutions, so he’s probably right, but I’m actually quite short on time today so I’m posting his words with very little editing, and I personally haven’t looked into the stock much yet.

What follows is from Streetsifter, in his version on the oddball Gumshoe writing style …

For $2,600 – “almost half off” of the normal $5,000 annual fee – you can subscribe to Rob Fannon’s Phase I Investor newsletter and receive the name of the “tiny California firm” that has developed the “Gen-dX” test that predicts whether patients will get cancer. Or you can simply keep reading, and let the Gumshoe provide the solution.

The teaser includes clues to the identity of the biotech firm that developed the test, providing such details as:

• 39,000 patients have taken the test in the past two years
• the company’s share price has nearly doubled in the same two years
• three members of the management team previously “held senior positions in another well-known and highly profitable biotech company”
• the company’s revenue for last year grew by 461%
• “A clinical test trial sponsored in part by the National Cancer Institute is already underway for its colon cancer test.”

Stock Gumshoe Forum participant “Womanwithportfolio” shared her suspected solution on the forum, and Streetsifter, a paid-up Gumshoe Irregular who has provided us with correct solutions in the past has sent in his confirming data … which all leads to …

Genomic Health (Nasdaq: GHDX)

The Redwood City, California firm markets the FDA approved cancer test under the trade name Oncotype DX at a cost of over $3,000 per test. They have three senior management staff who migrated from Genentech, Inc.

Genomic Health’s 2006 Schedule K showed total 2006 revenue of $ 29.174 Million vs. $5,202 million in 2005, exactly matching the touted 461% increase. The current share price is around $23.30, vs. a high of $11.75 in the third quarter of 2005, confirming the double.

And their website confirms that 39,000 patients have taken the test in the past two years.

However, like most young biotech firms, the company has yet to show a profit. Potential investors should heed the firm’s 2006 Schedule 10 warning:

“Since our inception in August 2000, we have incurred significant losses and, as of December 31, 2006, we had an accumulated deficit of approximately $125.1 million. We have not yet achieved profitability and anticipate that we will continue to incur net losses for at least the next two years. We expect that our research and development, selling and marketing and general and administrative expenses will continue to grow and, as a result, we will need to generate significant product revenues to achieve profitability. We may never achieve profitability.”

Based on that statement, is it likely the Genomic Health can – as the Phase I Investor teaser ad suggests – mirror the 1,943% gains of biotech firm Illumina or the 604% gains of Immucor? That’s something that the Stock Gumshoe can’t say with certainty. What I can say with certainty is that you won’t need to shell out $2,600 for the solution to the teaser ad. Thanks to Womanwithportfolio, and especially to Streetsifter for his contribution to this posting.

OK, back to the Gumshoe’s words here — sorry I haven’t spent much time looking at this company myself, but I hope to in the days ahead, and I thought getting this out there would provide some more opportunity for the Gumshoe faithful to throw their two cents in.

My non-company-specific reaction, taken without any look at their filings or their prospects, is to note that, as always, they’re probably not as alone in this endeavor as the ad for the newsletter might indicate — genetic testing and diagnostics, and especially genetic screening for various diseases, particularly cancer, is certainly the flavor of the week on Wall Street.

There are a lot of companies in this broader business category (long-time Gumshoe readers might remember the “SNiP Technique” teaser of a while back, which was for a couple diagnostics companies — and also from Rob Fannon, though for his lower-brow Medical Investor publication), and though the Phase I Investor service aims to be one of the high end subscriptions that gets “a select few” into less-well-known names, if you just believe in the trend toward more genetic diagnostics and screening and are happy with good returns instead of lottery ticket potential, there’s no reason not to also look at the big diagnostics companies (Quest et al) while you’re at it. It’s certainly true that often the winners when new technology comes in, are the big companies who are best positioned to push it forward into the marketplace.

Sorry to not get into more detail on this one today, but many thanks to Streetsifter for making sure that the solution got out there to all of you despite my time crunch — let us know what you think, and if I come up with anything to add I’ll be sure to share.