What’s the “Personalized Medicine” Pick teased by Extreme Fortunes?

by Travis Johnson, Stock Gumshoe | February 9, 2017 2:23 pm

Checking out Paul Mampilly's latest teaser pitch for 1,000% gains

Paul Mampilly[1] is out with a new promo for his Extreme Fortunes[2] newsletter, making this absurd promise:

“Anyone who joins my research service Extreme Fortunes, and invests $10,000 following my recommendations, will have the chance to earn a profit of $100,000… in the next year.”

So before we begin, let’s throw away that possibility. You’re not going to be able to think clearly about a stock if you go in with that kind of lottery-ticket mentality — and $10,000 is a lot more money than you would probably put into buying lottery tickets. Stocks do sometimes make 1,000% returns, though it’s extremely rare for it to be in a single year… and that promise implies that if you invest $10,000 into his basket of stocks or array of recommendations throughout the year you’ll have a chance at $100,000 in profits.

Some of those stocks are going to go down or provide very small returns, that’s just the nature of investing, so that means he has to have at least one pick that provides something far more dramatic, like 3,000-5,000% returns. (Alternately, if he said investing $120,000 a year, $10,000 into each pick each month, would present the possibility of one of those investments returning $100,000, the promise would be a little more rational but far less enticing).

But the newsletter publisher has something going for him: he knows that if Paul picks a stock that goes up 70%, subscribers will be delighted and will forget that they were promised 1,000% returns… and he also knows that while they’re promising those returns, they are NOT offering refunds on this newsletter, for any reason… so I’m not exactly sure what it is that’s behind that promise, other than Mampilly’s belief (probably sincere, I’ll give him the benefit of the doubt) that he can turn $10,000 into $100,000 for you.

But then they put “Paul’s Track Record” in the ad, and that makes it a bit more clear — it looks like he’s just adding up the percentage returns from each investment and somehow magically making it look like that’s your investment return. So to cherry pick the best gains he claims, back in January (of last year, presumably) he recommended Coeur Mining, which gave him a 738.87% gain, the GDX ETF, which returned 106.8%, and NVIDIA, which returned 108.56%…. and the ad implies that you can add that 738.87 to 106.8 and 108.56 and somehow turn that into a 950% return. That’s not how percentages work.

Those are great trades, of course, assuming that you could actually make them in real life (the CDE trade, for example, means you bought on his recommendation on January 15, 2016 and then sold at the absolute peak on August 9 for a ~740% return — people almost never sell at the peak and I don’t know when he might have recommended a sale … if you held to today, that return would be more like 400%)…

… but even making that trade perfectly doesn’t get you even close to having a 1,000% return on your investments with Paul Mampilly — just use the example he’s offering today of a $10,000 investment that he says he can turn into $100,000 within the year. If you had $10,000 to invest in those three stocks last January, and divided it equally, you would, according to the ad’s return calculations, end up with roughly $27,900 in CDE, $6,900 in GDX, and $6,950 in NVDA. That’s $41,500. So that’s a lovely return of 315% on your $10,000 investment in January, and a gain probably made in only about a half a year, so that’s worth celebrating… but it’s not the far more dramatic 950%+ return that they claim (they actually claim 1,124.71%, but that’s adding on picks made in May and June and July last year which returned anywhere from 3.5% to 44%). The math isn’t made up, but it’s misleading.

So ratchet your expectations down a little bit, and then we’ll go into looking at the actual “Extreme Fortunes” stocks they’re recommending today. It’s never good to count on 1,000% short-term returns, but it is possible to make huge gains on stocks that are selected well, particularly if you have a lot more time than that… and sometimes Mampilly does choose good stocks (though not always, of course) — right now he’s riding on some attention here in Gumshoedom because he has been banging the table for STMicroelectronics (STM)[3] since late last Spring and that stock has indeed done quite well (and, to be fair, I didn’t like STM when he was teasing it and I don’t like it now, so I’ve missed those returns personally).

That STM pitch was for Mampilly’s less expensive $79 “entry level” Profits Unlimited[4] letter, and when you’ve got some investors who are excited about a good pick or few you’ve made the time is ripe to hit them up for “my even better ideas” — at a much richer price, naturally. So Extreme Fortunes is now being pitched as the “upgrade” letter for $2,995 (no refunds).

Mampilly then runs through a long list of stocks that his strategy would, after “rigorous backtesting” using the “DNA of stocks that are primed to jump,” have identified as potential 1,000% winners. But those aren’t actually stocks he recommended — he has had successful picks, of course, as have all newsletter pundits, but he’s not satisfied with those claims of gains of 355%, 634%, or even 2,539% in Sarepta Therapeutics, which is the example he keeps coming back to — he has to imply that somehow he would, using the system he’s suggesting today, also have found multi-year 1,000%+ (or even 10,000%+) winners in past years.

Always be skeptical of “my system would have found these gems back then and made you rich, if only we had discovered this fantastic system and shared it with you then” claims — identifying AMZN as a 50,000% winner in retrospect is easy, but it was far more difficult to pick it in the late 1990s, or even after the dot com crash (would you have have sold AMZN when it was dropping by 90% in 2001? If so, you missed a lot of that potential return), and it was more difficult still to stick with it for long enough to generate those absurdly high 50,000% returns. Backtesting makes fortune-making look easy — and backtesting that doesn’t include the possibility that some of the stocks that satisfy your backtest criteria probably lost 50% or 80% or 99% is disingenuous (the “system” itself uses pretty loose criteria, at least as described in the ad, so you could probably use it to claim almost anything you want).

So what are those criteria? What is it that Mampilly says he’s looking for? He says his “DNA” for stocks that are “primed to rally 1,000%” includes a few steps:

First, he says you need to find out “if the company is an industry disruptor” — here’s how he puts it:

“Finding disruptors is one of the foundational pillars of grabbing a 1,000% gain.

“This could be a new drug, new technology, a new system for doing things, a new medical device… the list is endless.

“But it has to disrupt the industry.

“And — this is key — I pay close attention to the potential market size for this disruptive company.

“If the potential market is small, the stock can only climb so much. But if it has a big potential market, the stock can easily climb 1,000%.”

That’s nothing shocking for growth investors, of course — that’s what David Gardner[5] at the Motley Fool[6] calls “Rule Breakers[7]” stocks, and a lot of them fail… but the big winners do, like Amazon or Netflix or Priceline, generate staggering returns.

“Phase II is the number-crunching phase. Once I know a company is going to disrupt an industry, I need to make sure it has the potential to go up 1,000%.

“I look at a lot of numbers. Some are really basic.

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“For example, I want lower-priced stocks. Generally, I look for stocks that are priced between $1 and $25. Above that, and the odds of the stock going up tenfold diminish quickly….

“I also want companies with a market cap of $150 million to $3 billion. They still have a lot of room to go up….

“I want to find companies that currently have under $3 billion in sales, while growing sales an average of 10% to 20% a year.

“At this rate, a company would double its sales within five years … something which — without fail — catapults the stock price.”

And then he says that his other key criteria is “Insider Activity” — here’s how he puts it:

“Specifically, I look at insider buying[8] and selling.

“If the C-level executives of a company don’t own a good portion of their own stock, I don’t want to touch it. Full stop….

“Insiders need to have millions of their own dollars at stake.”

So those are the criteria — small cap stock, low-priced, insider ownership, sales growth… what, then, is the one stock he focuses on as the big buy to lure in investors? Here’s how he introduces it:

“This is the most excited I’ve been about an investment in years. I expect people will be talking about this company decades from now, just as much as they talk about Pfizer in pharmaceuticals. It has all the makings of being a mega-sized company… and just like all those companies, anyone prudent enough to be there, at the ground-floor, stands to make money hand over fist in the months ahead….

“This company is at the heart of a relatively new science … a science already disrupting one of the largest markets … health care.

“It’s called precision medicine.”

What other clues do we get? Here’s what I culled out of the ad for you:

“Early-stage firms have already reaped huge returns — like Illumina, which is up 3,000% so far.

“But the real winner is emerging at this very moment … the company I am going to share with our viewers today. This company is specifically planning to dominate the precision treatment of cancer … positioning it for the $107 billion haul for cancer treatment in the short term…

“In fact, the Swiss pharmaceutical giant Roche just invested $1 billion in this company….

“I project sales to soar 70% by the end of this year, it has a market cap under $1 billion and the stock is priced under $25….

“… in the last year, insider ownership has doubled….

“The Roche purchase woke a sleeping giant … Wall Street.

“Kleiner, Perkins, Caufield and Byers — one of the largest venture capital firms in Silicon Valley — has now taken a large stake in this firm…

“Institutional giants like BlackRock, Vanguard and Oppenheimer quickly followed.

“I expect this company could move very, very quickly. Again, small stocks mean increased volatility, so those following my recommendations should be aware of the risk, keep the buy-up-to price in mind and avoid ‘chasing the stock’ too far.”

OK, so that is a fairly easy pile to chew on for the Mighty, Mighty Thinkolator — we’ll have to use the electric start during this snowy weather, but I got it chugging along pretty nicely, shoveled the whole pile in for you, and got the answer out right quick: This is Foundation Medicine (FMI)[9].

Foundation Medicine is indeed a “personalized medicine” stock, focused on cancer treatment, and it fits all Mampilly’s criteria — it has a market cap of about $850 million, is growing revenue at about 15%, and has a huge investment from Roche (Roche spent about a billion dollars to get a majority stake two years ago — that sent the stock flying, since Roche paid a huge premium for that controlling stake, but it fell back down starting a few months later and has spent most of the past 18 months bouncing between $15-25… it’s at the top of that range right now, and it appears to me that it’s probably Paul Mampilly’s pressure driving it up, since the stock has climbed about 25% in two days.

I don’t know whether the company’s fundamentals mean it should be trading at this $25 price, but I don’t see any fundamental change between Monday and today, and it was trading at $19 on Monday… so in these kinds of situations it’s always important to be a bit wary. Buying pressure doesn’t necessarily keep stocks moving up forever, particularly if it’s just buying pressure from a newsletter recommendation… that newsletter will move on and recommend different stocks, or the pundit might even suggest a sell at some point, you never know. Or maybe it’s the beginning of a massive blaze of enthusiasm, and the fire has just been lit — I tend on the side of skepticism after these kinds of pops, but I don’t know the stock well.

Analysts are predicting continued revenue growth for FMI, but not anything that will be in danger of tipping them over into profitability anytime soon — they’re expected to lose $3 a share when they report in about two weeks, and another $3 a share in 2017 and $2 a share in 2018 on 20%ish revenue growth. They have already pre-announced 2016 numbers, in a press release that came out on January 9[10] and had little to no impact on the share price, so it seems silly to count on the earnings providing a positive surprise beyond that.

And the company also noted that this year, as they transition to a new CEO, they have the following non-financially-specific outlook:

“As part of Foundation Medicine’s commitment to being a partner for the patient journey, the company expects to advance a number of key business objectives in 2017. These include: advancing its universal, pan-cancer companion diagnostic assay through the FDA[11] and CMS parallel review process to decision and launch in the second half of 2017; broadening Medicare and third-party payer coverage for its clinical CGP products; growing clinical volume across its product portfolio, including expanded global market presence; and expanding its biopharma business, including additional companion diagnostic collaborations and SmartTrials clinical trial access programs.”

The business essentially develops and sells genetic tests (comprehensive genomic profiling, CGP). These are used both in testing patients and identifying strains of cancer, and in making assessments about which treatment is best for which variety of tumor a patient might have. That is certainly an interesting business, though I don’t know what the competition is like or whether FMI is likely to see their market share in the testing business balloon because of any specific tests they’re hoping to roll out this year.

And with that, I’ll leave you to it — it’s not a stock I’m buying, but the Roche investment is an important foundation for the shares and they do have positive trends in terms of sales and testing volume so there is a real business that is improving… whether that means it’s worth the $600 million market cap it had before Roche invested a couple years ago, or the $500 million it fell to a year ago, or the $850 million it popped to this week when it hit $25 a share, I have no idea — that’s a lot of volatility for a company whose numbers do not change all that much, and which is nowhere near profitability even with pretty solid revenue growth projected, so you’ll have to make your own call. Let us know what you think with a comment below.

P.S. On the “insider ownership” bit FMI has been hit or miss over the past few years — they do have some substantial insider ownership, though it pales compared to Roche’s giant stake, but there has not been any buying over the past six months, just the (fairly typical) steady stream of relatively small sales from insiders. Having insider owners in itself is generally “a good thing,” all else being equal, though if you’re looking for the impact on shares the only real academic research into this indicates that the only thing that indicates a stock has a better chance of rising is when multiple C-suite insiders buy shares with their own money (i.e., not just getting a grant of stock or stock options[12] that don’t cost them anything). Having employees who buy stock is far more compelling as a “tell” for possible good things happening than having employees who are given stock as part of their compensation.

Endnotes:
  1. Paul Mampilly: https://www.stockgumshoe.com/tag/paul-mampilly/
  2. Extreme Fortunes: https://www.stockgumshoe.com/tag/extreme-fortunes/
  3. banging the table for STMicroelectronics (STM): http://www.stockgumshoe.com/reviews/profits-unlimited/profits-unlimiteds-7-tech-stock-and-the-strange-industry-is-expected-to-surge-8000/
  4. Profits Unlimited: https://www.stockgumshoe.com/tag/profits-unlimited/
  5. David Gardner: https://www.stockgumshoe.com/tag/david-gardner/
  6. Motley Fool: https://www.stockgumshoe.com/tag/motley-fool/
  7. Rule Breakers: https://www.stockgumshoe.com/tag/rule-breakers/
  8. insider buying: https://www.stockgumshoe.com/tag/insider-buying/
  9. Foundation Medicine (FMI): https://www.stockgumshoe.com/tag/fmi/
  10. a press release that came out on January 9: http://investors.foundationmedicine.com/releasedetail.cfm?ReleaseID=1007033
  11. FDA: https://www.stockgumshoe.com/tag/fda/
  12. options: https://www.stockgumshoe.com/tag/options/

Source URL: https://www.stockgumshoe.com/reviews/extreme-fortunes/whats-the-personalized-medicine-pick-teased-by-extreme-fortunes/


326 responses to “What’s the “Personalized Medicine” Pick teased by Extreme Fortunes?”

  1. EFtrader says:

    Also, not to defend Banyan Hill Publishing, but there is another legit reason why they charge $3000 for the service- that is to keep every John and Joe on the street from having access to the information. Some EF subscribers might think they are helping themselves out by giving out the pick in the short run to pump it up, but in the long run, if EVERYONE on the street knows the pick, you are just hurting yourself! Besides, you paid crazy money for it, why would you want to share it with everyone in the world for free?? At least charge for it! Most people on these discussion forums just want it all for free; they wouldn’t even pay to become a member of StockGumShoe, which is only $59 per year! I definitely have a problem with that.:)

  2. EFtrader says:

    On a different note to my fellow EF subscribers out there, I think Banyan Hill has gotten really sneaky with their possible “front runners activity” with the EF stocks. Not sure if everyone knew, but Paul supposedly released an announced “Special Report” pick after the market closed on Friday 1/19/18, so that stock didn’t spike at all that day. But if you look further back, that stock actually spiked 30-40% already the day before on 1/18/18! So my guess is they loaded themselves big time on with the stock and when everyone goes in to buy, they will sell. I was surprised to see that the stock continued to climbed today! Regardless, I think all the subscribers need to write to them, question them and complain again!:) In the past, the stock would spike like an HOUR BEFORE release, now it’s the DAY BEFORE. They have gotten smarter…..

  3. EFtrader says:

    Just food for thought. On last week’s EF podcast, Paul explained that there is no way Banyan Hill Publishing could have participated in any “pump and dump” or “front runners” activity because all the editorial staffs are prohibited from owning any stocks they recommend the readers to buy. But Paul’s EF stocks are supposedly touted to generate 1,000% returns right? So it just makes you wonder how much money are the editorial staffs getting paid? It’s only logical to assume whatever they are getting paid, have to be more than 1,000% return potential to make it worthwhile right? 🙂

  4. EFtrader says:

    Does anyone have any experience or feedback with the 2 new premium services that Banyan Hill is promoting: namely Ian King’s Crypto Profit Trading and Matt Badiali’s Front Line Profits? Both promise over 1,000% return and of course again no refunds are allowed. Would love to hear what others think or if anyone actually subscribes to them. I have Extreme Fortunes and a few other services that I will be more than happy to share and exchange. If interested, please feel free to email me EFtrader2017@gmail.com to discuss.
    Thanks.

  5. Dan says:

    Great article, very thorough dissection of the marketing hype. I just received an e-mail about this and it is still the same presentation, over a year old! So Foundation Medicine is now $81 (well done Paul) but should we still buy it considering he recommended it at $25?! The least they could do when promoting a $2,900 product is have an up-to-date presentation.

  6. somewhatcautious says:

    Extreme Fortunes I think is pitching MYGN ticker symbol but I don’t see much upward movement at this time. Maybe just watch it but it is in the personalized medicine category to end all disease. What I have come to realize is by the time you join a newsletter the pitchers have already been in and bought the stock at low price and when it escalates they can give you the 100% gain stories, etc. If you don’t sell off everything you already own and buy into their portfolio it won”t work as they describe. I bought jr gold miners a year+ ago and just watch it edge up a notch and down and lower now so need my money to work so buying some dividend and some growth. Would like to know the 5 hot chinese stocks that Louie Navellier is pushing now. Sounds interesting but his price way too much for my budget and everything hyped to the moon. Thanks for reading.

  7. MattB says:

    IS THIS TIME TO SELL AND SIT IDLE FOR SOME TIME???

  8. somewhatcautious says:

    I bought into Extreme Fortunes as well as a couple other Banyon Hill publications and lost thousands on their recommendations. Embarassed to admit I just bought into Agora Financial and Zach Scheidt Black Box front trade pitch . Supposed to include a tablet computer in the very expensive price. Have called and still no tablet and “shipping the end of the week” is the standard answer. The recommendations are sent early Wed mornings so everyone can buy along with the “front traders”. I think no truth can be found here. Something really fishy here as the recommendations mostly drop like rocks and you immediately start losing money. No recourse as the fee is not refundable. These smooth talking advisors will gladly separate you from your last dime and then tell you that investing has risk. Stay far away and study Buffets method. He studies a company and gets to know before he buys and pays no attention to all the “noise” out there. Better to buy the top stocks at lowest prices and be patient in waiting for an entry point even if it takes months to do so. Learning to invest is like a college degree…expensive.

  9. Sree says:

    FMI – any advise on holding this stock ?

  10. EFtrader says:

    Well, it’s about time. Paul finally hit something big for EF and TM.
    I, along with a few like minded individuals have formed a small group where we share all the pricey, premium subscriptions. We also discuss trades, share ideas, experiences and give feedbacks on what we learned as we conquer the stock market. Currently, we have access to almost every single “premium” subscriptions out there. The only 2 we are missing is the 10 Million dollar portfolio and the Rapid Profit Trader. If anyone has these subscriptions and would like to join our “Dream Team” group, please let me know.
    Thanks and happy trading!

  11. EFtrader says:

    Things have been working out great for me and my “Dream Team” group. We share all the investment newsletters out there, as well as ideas with each other in the group. Currently, we have access to literally almost every single “premium” subscription service out there. The only 2 we are still missing are: the $10 Million Dollar Portfolio and Chap Shoop’s Quick Hit Profits. If you have either one of those subscription services and would like to join our group, please email me for info. We are only seeking like minded individuals who believe in win-win situations for everyone. Thanks.

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