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.
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.