Navellier Continues Pounding Gran Table

By Travis Johnson, Stock Gumshoe, June 26, 2008

Just a quick note for you, in case you happened to miss it … Navellier’s publisher is apparently enraptured with the “guaranteed double in one or two weeks or your money back” offer, and it’s happening again. For a stock we’ve already written about that failed it’s first couple tests.

A few weeks ago Gran Tierra Energy (GTE) was the focus of this campaign from Louis Navellier for his Global Growth service. The first time I saw this ad was on June 6, and the promise was that GTE, then at about $6, would double within 14 days. So that means a double by June 20, which was last Friday.

Didn’t happen.

He also said that “I guarantee you’ll thank me by next Friday,” which would have been June 13. I don’t subscribe to his service, so I didn’t feel the need to thank him, but nor have I given him any money that I expect back.

On June 6 when this campaign started, as far as I can tell, GTE closed at $6.07.

On June 13, it was up almost a dollar, to $7.01.

And on June 20, when the double was expected (that would be $12 for the mathematically challenged), the shares closed at $7.45.

They then trickled down over the last several days to close yesterady at $7.02, but, with this latest teaser campaign blanketing our inboxes and the price of oil going up again, GTE is having a good morning — up to $7.50 or so.

And the latest promise? It’s more or less the same thing, now we’re guaranteed that we’ll thank him by next Friday, and that the shares will double by July 11.

Man, this is exhausting. My calendar is all cluttered with days when I have to remember to thank Louis, and days when I need to check to make sure GTE has doubled. If he keeps moving the goalposts on me, I might just never score.

There is little downside for Navellier and his publisher, of course — if he promises a double in two weeks but it only goes up 20%, probably a lot of folks are still going to be happy and won’t cancel their subscriptions or ask for their money back, and in the meantime they’ll get a couple newsletter issues from him and have the opportunity to be impressed with what he has to say or with his longer term track record. And if they do ask for their money back, I’m sure he’ll happily give it — this is the way that most big newsletter publishers do business, make almost any promise you can think of to get them in the door, then hope that the product is impressive enough that the attrition won’t be too bad, even if that particular promise is unlikely to be realized.

And who knows, GTE might well double eventually — it certainly has gotten a lift from steadily rising oil prices and, I would bet, a not-inconsequential lift from Navellier’s steady push of the stock in his email campaigns. All this during a time when it seems likely that GTE won’t be reporting any news of dramatic consequence, since their next earnings release won’t be until well into August (though you never know).

Just to provide my opinion, I do not have any suspicion that Navellier is pumping this stock so he can dump it. His stock grader service does rank Gran Tierra Energy as an “A”, which is his highest ranking, and I have no doubt that he’s recommending it because he thinks it’s a good investment according to his grading system (Navellier’s recommendations are driven primarily by quantitative analysis — combinations of earnings momentum, sales growth, etc.). Navellier is the eternal growth optimist, he’s not pumping these up just so he can sell them, a jump in the share price of 10% is much more likely to make him buy more shares than to sell or short them.

But that doesn’t mean that his massive email campaigns don’t influence the stock price, or that the shares won’t fall back if he moves on to the next stock. This happened to GTE to a limited degree, as the emails dried up for a few days and the shares stagnated a bit (for other reasons, too, I’m sure), and it also happened earlier this week for Fuel Systems Solutions (FSYS) — his marketers tested the same ad strategy with FSYS with an email campaign last weekend, and as soon as the market opened the shares shot forward nearly 20% … but they fell back almost to the Friday closing price by Tuesday afternoon, and I’ve not seen that ad campaign again yet (the shares are slowly climbing back up, but they’re still way below the highs they hit on Tuesday).

Almost makes you forget that there’s a real company behind all this — GTE is an analyst darling, too, and is trading at a forward PE of about 12 (even though they missed their earnings estimate in the last two quarters, and there are only a few analysts covering them) … but this is the breakout year for them, production-wise, so the trailing PE is well into the 200s. That means the next 12 months are probably full of both promise and potential peril as their sales and production ramp up … and if Navellier keeps teasing this one in the short term, the price may be very volatile while we await news or their next earnings release … I don’t know if it’s going to double anytime soon, but if Navellier keeps promising that it will there’s a fair chance that his continued attentions will help push it higher. He’s already helped push it up to close to a $1 billion market cap, but it’s still small and can move like a greased pig given the right motivation.

Full disclosure: I don’t own any of the companies mentioned above, but I did suggest to the Irregulars that a call option trade on GTE might be worth their attention about two weeks ago, and I do have an order in place to sell GTE puts for August, since I’d be willing to pick up shares at a lower price — order hasn’t been bitten on as of this writing but it may be by the time you read it. Selling a put means you’re agreeing to buy a stock at that price before the set date if the put buyer exercises his put option, so it is essentially a long position — if the stock drops, the put has every chance of being exercised and losing money for the put seller, with the possibility of losing the total contract value of the put (the price target of the put, so $7.50 for a $7.50 put) if the stock happens to go to zero.


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9 Comments on "Navellier Continues Pounding Gran Table"

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Stan
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Stan
June 26, 2008 5:27 pm
Yes, Gumshoe, I have kind of laughed when I see a new email campaign for the same stock, but a different target date. He certainly loses some credibility when he does that. However, despite the strange marketing campaign, the stock fundamentals and technicals look good. It’s also a 4-star stock on Motley Fool CAPS. Also, it’s important to mention that Quantum Growth is Navellier’s premium newsletter and has far better returns than the Blue Chip Growth. It’s his best-returning advisement letter. The results have been very impressive. I wouldn’t think that there would be too many clients of it since… Read more »
LEH
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LEH
June 29, 2008 9:59 am

Lame Louie also called for a monster tech rally the past two weeks—NOT! Idiot cost me $$$ by holding onto NVDA when I was tempted to sell but changed my mind after reading his oh-so-confident nonsense. The guy’s a fool and a tool IMO.

Ciaruffolo
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Ciaruffolo
June 29, 2008 2:03 pm

Another awful hint from Navellier was about DRYS.
He was sayinf SELL DRYS on Apr. 14 (DRYS was around 68$).
Then he said BUY DRYS on May 19 (DRYS was around 105$).
By June 11 DRYS was 77$.
I could have clipped a coin and got a better result.

He also said SELL WDC on Apr. 28 at around 29-30$.
Then he said BUY WDC on June 9 at around 39$.

Another recent one: BUY AIXG on June 2 at around 15$. It went to 12.5 in one week.

hosca
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hosca
July 1, 2008 3:29 am
I suspect that Navellier’s grading system has an excessive focus on past performance of the stock’s price. It tends to grade highly stocks which have a history of rapid increase whereas stocks whose price decreased decrease also in grading. Shortly saying, if Navellier has some stock a “strong buy” and then for external reasons (decrease of the whole market for instance) the stock price tumbles for 20% (no apparent fundamental changes detected), the stock will start to be rated “hold/sell”, although common sense would provide to the contrary for buying more for a more advantageous price. Some recent examples from… Read more »
Jeff
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Jeff
July 1, 2008 7:08 am
I jumped on the bandwagon with this one at $8.17 and then watched it drop to the low $7 range, after a bounce back up I decided to dump it at my buy price since the stock seems a bit volatile, and being new to stockgumshoe, I didn’t realize how heavily promoted Navellier’s letters are. The hype of Navellier makes it difficult for me to trust his picks, even if he does have a good track record. An interesting note on Navellier: I received an invitation to Quantum Growth at half price since I am an “Outstanding Customer.” I guess… Read more »
fireball
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July 2, 2008 5:03 pm
i love the gumshoe. been reading for a long time. u are the best letter i get. i take lots of freebies that are going to make me millions if i just buy….. u know. guess it is time to make a donation or became an irregular. anyway when i look at the real stinkers that i am waiting to unload or already have unloaded all but one came from mister 10zillion percent. the other came from mister boots on the ground hsu. i think he wears those boots in case he steps in the manure he is spreading. thanks… Read more »
NeverLift
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NeverLift
July 14, 2008 7:08 pm
I have been a subscriber to Navellier’s Quantum Growth for almost three years. I spreadsheeted his performance for the prior year, after my first short-term subscription, and, based on that, started following his recommendations. My spreadsheet is very thorough, and even lets me test the results with just his top N stocks. Typically, N around 12 did best, and continued to do so. So, I paid for a two year subscription about a year ago. And, over the last year, his picks have been disastrous! As of his July 7 edition, the return over the prior year was -37%. A… Read more »
Jerry
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Jerry
September 24, 2008 7:35 am
Just found this site, very nice, wish I found it sooner. I subscribed to LN Blue Chip and Emerging Growth in late ’07 based on a write up in Business Week. I’ve been very disappointed in both letters. Most of his recommended buys and sells have been quite poor and sold for losses and, as mentioned in other comments, he keeps touting how well the picks are doing and very very rarely mentions the poor picks. Granted, it’s been a tough year, but would have been much better off w/ out his letters. Don’t waste your money, stay away from… Read more »
Gravity Switch
Admin
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June 26, 2008 5:42 pm

Thanks Stan, and you’re welcome in the Irregulars any time. After your comment I noticed that I had added the “Quantum Growth” tag to this one instead of Global Growth — sorry, this was indeed a Global Growth ad. The FSYS one was for Quantum Growth.

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