I think it’s likely that a lot of you have seen this ad, from Nick Hodge for his Alternative Energy Trader service, and it’s not all that disguised so I expect quite a few of you have also already figured out the name of the company teased … but it’s getting a lot of play, and I’m getting a lot of questions, so I thought I better write it up quickly for your edutainment.
Alternative Energy Trader, by the way, is yet another “bump up” subscription from the Angel Publishing folks — I guess it’s the next step up from the Alternative Energy Speculator, which itself hasn’t been around all that long and was seemingly an “upgrade” from Green Chip Stocks (Trader will cost you $999, Speculator $499, Green Chip less than half that — a nice little progression as you drive each subscriber up the latter to the next rung). That’s not to say there’s anything wrong with this, it’s what essentially every one does and it’s the logical way to extract more money from a group of subscribers — though I know from reading thousands of reviews of newsletters that the constant “upsell” drives folks crazy almost as often as does poor performance.
But we had a point today, yes? Getting to it, never fear.
From my days as a direct mail copywriter for nonprofits and charities, back before my beard started turning grey, I remember that the first thing most people read is the P.S. at the end of the letter — so let’s check that out first, this is how the letter ends:
“P.S. I forgot to mention something to you. Because this company is so small, we can only open 500 spots for Alternative Energy Trader. With nearly 400,000 readers, we just can’t open this opportunity to everyone. So starting right now, you’re on the clock — only the first 500 who respond get in. No exceptions or extensions. This is the only way we can make sure everyone gets the same fair shot at those 18,000% gains.
“P.P.S. Late-Breaking News: On April 27th, the company I’ve been telling you about cleared a huge hurdle. In a unanimous decision, an Idaho Commissioners’ Board approved a key change that allows for this company to build its industrial complex on a 5,000 acre plot of land, provided that complex involves building a nuclear power plant. With this development, your 18,000% gains are closer than ever. But remember, you must move fast to be one of the 500 people I’m releasing full details to…”
The teaser is built around a company that’s trying to build a nuclear power plant in Idaho, and the tease is that there was a secret meeting between a U.S. executive (for the teased company, naturally) and the South Korean Prime Minister, when they talked about the crux of their deal, and that Hodge got a secret “unauthorized photo” of that meeting.
And the basics of the deal? Importing South Korea’s nuclear power plant designs (the APR 1400 reactor) and using them to build a new nuclear generation plant in Idaho, on land that is now appropriately zoned and in an area where they apparently have at least some local support to build such a plant. Hodge gives some reasons for why this investment will make you 200 times your money:
“Reason #1: The secret meeting backed by $54 billion worth of U.S. government cash
“It’s common knowledge by now that Obama is embracing nuclear energy…. tripled the amount of loan guarantees for nuclear power to $54 billion in his budget request.
“He’s practically hemorrhaging money to get nuclear energy in place as soon as possible.”
We’ve certainly heard that before, and it spurred quite a few nuclear stocks forward after the State of the Union address. This deal is a specific one, though, so let’s learn some more about it:
“When the ink dries on their deal with Korea, the small nuclear energy outfit I’ve been talking about will have inroads to the some of the most effective, powerful, and economical reactors in the entire world….
“… they’re likely to soon be granted permission to erect brand-new APR1400 nuclear reactors on an obscure plot of land in Idaho.
“But that’s not all this firm’s deal with Korea would hand them…
“According to the terms of their talks, if other North American energy companies decide to go through Korea for similar reactors, this firm would get paid a hefty commission on every reactor built.
“And not only here in the United States, but on the entire continent.
“It’s nothing short of incredible what this small company (it has just a $35 million market cap) has been able to accomplish in such a short amount of time…”
And as to the financing of this future nuclear plant?
“They already have a $70 million deal in place with a Connecticut firm that will cover the costs of everything from applications to securing the land and water rights they need.”
He did have a “reason #2” why this one would make you rich, too, but I’ll just paraphrase: “sometimes small stocks on the cutting edge go up dramatically.” OK, we can accept that … as long as you say “sometimes.”
And the third reason you’ll become wealthy from this investment?
“Reason #3: I’ve already been right about this company… TWICE
“As you might assume, building nuclear reactors isn’t easy…
“In fact, the road of approvals is long and tedious.
“But this company has numerous advantages. According to recent information, not only will thousands of jobs be created through construction and plant operation, but reactors will also change the financial landscape in Idaho.
“Other businesses will be required to support the folks working at the plant, which is expected to create nearly $3 billion for the state’s GDP during construction.
“Most of that money will go to the local area while clean, low-cost energy is being created for the region.
“That’s why this company has received overwhelming support from the community (80% of local citizens have voted for this company’s progress), and is coasting at record pace towards becoming THE American nuclear franchise.
“And although it’s little more than a formality for these guys, they still have to go through the process of approval — for legal reasons.
“The thing is, every time a new approval takes place, the share price of this company jumps drastically. It has literally doubled over the span of just two days.
“For instance, on January 15, 2010, I knew there was going to be a zoning meeting, and I was certain the outcome was going to be favorable…
“So I recommended the stock to a close group of folks I share my secrets with — and 48 hours later, they were sitting on 110% gains.”
He gives another example and show some charts, essentially just showing a big jump from 10 to 20 cents in January, then another from 11 cents to 17 cents in April. Which should reinforce how volatile the stock has been, and that it has fallen back when it rose on prior occasions.
And that’s all more than enough, of course, to name the stock for you — though I actually hesitate to do that, given how much attention it has already received, and how ridiculously the stock has spiked in just the last month or two … and it’s up 25% just today as I type this. But you’re all grown-ups, so let’s just acknowledge that this is …
Alternate Energy Holdings (AEHI, trades on the bulletin board)
And yes, the latest political approvals, early though they may be, have had a big influence on the stock, as has the attentions of our friend Nick Hodge, and the company’s own promotional work.
This is a holding company set up to invest in alternative energy, though the potential nuclear plant in Idaho is by far their largest asset and their principal focus. They explain it all on their website here, and the most significant “major hurdle” cleared recently was the local commission’s approval of the change of their plan to designate AEHI’s site in Payette County as industrial land, specifically for a nuclear plant.
And AEHI is nowhere near a $35 million market cap these days, it’s closer to $175 million now, though that’s not surprising for a stock that has gone up something like 500% over the last couple months, with the vast majority of that change coming in the last two days (20 cents to $1 at one point on Wednesday, it’s at 75 cents now). And the promotion from this newsletter appears to be a major factor in the move, there was a press release on Tuesday but it appears to me that it was essentially just repeating the same news that they had announced in late April about the commission’s approval.
So … as far as I can tell the project is real, and it does have political and potential financial support on at least some level from the Governor, the local Commission, and, broadly, the federal government, though it’s still very early days. AEHI has funding in place for $70 million from an investment group, in this case Source Capital in Connecticut, which will help to pay for stuff like land and water rights, and the initial engineering studies and approval process … after which AEHI expects the land to become dramatically more valuable, thanks to those expected approvals and the completed studies, and they seem to believe they’ll be able to borrow against that land for the additional $8-10 billion required to actually build the reactor(s), which in the company’s scenario has them beginning construction in 2-1/2 years and turning on the lights in late 2017 (I’m no expert, but a given company’s plan is almost always a very optimistic one, especially given nuclear power projects).
And if I were them I’d raise a lot of money right now by selling stock now that it has tripled in two days … but that’s just me. Will it make you 200X your money? Well, Hodge’s subscribers have got to be awfully happy so far if they got in at 10-20 cents and held on for this week’s ride, though it almost always pays to be skeptical of a one day move of 400%.
I haven’t delved deeply into all of AEHI’s plans, and they may well become the first pure-play nuclear power generation company to build their own brand new modern-design plant over the coming decade … but as to whether the stock should be worth five cents or five dollars, the company seems still to be mostly a partially-funded idea at this point, so to me that’s all in the mind of the beholder.
So whadda you behold? Let us know with a comment below.
Oh, and I mentioned how much I love the P.S., so I should include one of my own here:
P.S. Unlike some investment newsletter publishers, the folks at Angel Publishing note in their disclaimer that their writers, editors and employees can own the stocks they write about, and trade them at any time — which would be a real motivation for them to pick penny stocks, since even with my much smaller readership I know that if I wished I could reliably bump a penny stock up by at least 5-10% by writing favorably about it and buy and sell shares to profit from those moves.
Of course that would be unethical, in my opinion … but it seems that it’s often perfectly legal as long as you disclose it — you can get away with a remarkable amount of chicanery as long as you tell people that you’re treating them badly.
Let me be clear that I don’t know if the Angel editors do this, but their disclaimers apparently allow it — the actual language in the ad I read was this: “The publisher, editors and consultants of Angel Publishing may actively trade in the investments discussed in this newsletter. They may have substantial positions in the securities recommended and may increase or decrease such positions without notice.”
I’d urge you to always read the disclaimers in the ads and newsletters you receive — folks like Stansberry and the Motley Fool, to name a couple, are very clear, according to the disclaimers Stansberry editors can’t own the stocks they write about, and Motley Fool editors and writers have to disclose ownership and can’t trade within a certain number of days of publishing a new piece about a company (that’s the same basic rule I follow, by the way, I disclose any conflict as I’m writing and don’t trade in any covered stocks for three days). And stock promoters who are simply advertising a stock, like the “Day Trading Robot” guys who constantly come up with new names and websites also disclose if they’ve been paid by someone to promote a stock — no one wants to be caught in the SEC’s crosshairs, and publishers know that most of us aren’t going to read their disclaimers, anyway.
On the flip side, some investors hate to follow investment writers who don’t have their “skin in the game” … I don’t mean to pick particularly on Angel Publishing at this point, but the thoughts happened to come to my mind when I read their ad. My main point is, however you feel about newsletters and promoters and their rights and responsibilities, please read the fine print.
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.