“Micro-Quake Plays Poised to Rock Your Portfolio …” [part one]

identifying a biotech breakout candidate from Keith Fitz-Gerald

By Travis Johnson, Stock Gumshoe, August 19, 2010

Earlier today I posted a guest article from “A StockGumshoe Aficionado” that went into the nitty-gritty on the claims of this particular newsletter and its “system,” you can read that in-depth article here, and along the way you may pick up a bit of an education about some of the red flags to look for in other newsletter promo pieces.

But our friend opted out of the task of identifying the actual picks that Keith Fitz-Gerald is actually looking at as the next winners for his Micro-Quake Alert subscribers — now I have to tell you, after reading that lengthy guest article you might not have much of a stomach for the actual stock picks, but still, I’ve promised to try to reveal these “secrets” whenever I can … so, onward we press …

The ad tells us that these are:

“The Next Micro-Quake Picks to Make 5… 10… Even 40 Times Your Money or More

“Here are Keith’s newest low-risk, high-profit-potential Micro-Quake plays poised to rock your portfolio…”

So what are the stocks? We get some hints about three of them, let’s go through ’em in order:

“NEW MICRO-QUAKE PROFIT OPPORTUNITY #1

“Micro-Quake has just identified a small biotech company that appears ready to cash-in on [the cancer] market.

“Here’s what helped this company meet Micro-Quake’s stringent criteria:

“The company is cheap – trading at just 6.65 times earnings

“722.3% increase in sales over the last 12 months

“Net profit margin 58.79%

“Beat last quarter’s earnings estimate by 155.56%

“357.8% increase in quarterly earnings growth over the last 12 months

“And here’s the icing on the cake.

“Keith’s team discovered that this company has recently reported success in treating colon cancer cells.
Treatments for colon cancer are through the roof. When this company succeeds in getting FDA approval for their treatment, as Keith suspects, profits will soar!”

Well, we toss all that into the mighty Thinkolator and, despite a few anomalies, the almost certain answer emerges quite quickly: this must be Immunomedics (IMMU)

According to Yahoo Finance’s collation of the numbers, IMMU did indeed have a profit margin of 58.79% over the last twelve months … which is, of course, unusual for a small biotech (a group for whom any profit at all is out of the ordinary). And they did report a 357.8% jump in earnings, though that was an increase in earnings, not in earnings growth — still, good enough to pass muster and give me enough confirmation that I’m pretty sure the Thinkolator’s answer is correct.

And they did recently report some success in treating colon cancer cells — though it’s worth noting that those cells were in animals in preclinical trials, so if this is indeed the stock they’re touting than saying that you suspect the FDA would approve it is mighty optimistic … they might, sure, but not until years of testing confirm efficacy and safety. The main focus of their pipeline is a group of monoclonal antibodies used in fighting cancer, lupus and a few other diseases — they recently released good results for their lead drug, which targets lupus, and apparently that one has also been fast-tracked for review by the FDA (meaning they review it faster, not that it’s pre-approved).

Interestingly, they also have a couple of compounds in their pipeline that are classified as “orphan” drugs — that’s a special status that affords extra patent protection and other inducement to spur research spending, mostly for diseases that affect small populations. You can see their pipeline here if you’re curious.

For what it’s worth, the big growth numbers for IMMU in recent months came in large part from big milestone payments from their partners, they do have a couple of products for sale but they’re not exactly blockbusters, so while the trailing PE is right around 6, the few analysts who follow the stock expect them to return to biotech normalcy and be losing money again by this time next year. For any company like this with a monoclonal antibody platform the real hope is either a big buyout from one of the large pharma companies, a breakthrough discovery that works as an effective drug and becomes a blockbuster, or a huge drug built by someone else on their patented antibodies that feeds them a steady stream of fat license fees. I have no idea whether that’s likely for these guys or not, but they do certainly get a lot of attention for their promising lupus drug … and for that period, albeit brief, of delicious profitability.

Out of time for now, I will try to follow up soon on those other two teased picks, which are another biotech and a gold explorer — will a winner emerge? Well, that’s your call … if you’ve got an opinion to share, I’m sure we’d all like to hear it, just use that friendly little comment box below.

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7 Comments on "“Micro-Quake Plays Poised to Rock Your Portfolio …” [part one]"

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AlanJenkins2
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AlanJenkins2
October 27, 2010 2:55 pm

In the lead-up to this teaser,they claim that various stocks all started as micro-caps,and include Apple as one of those stocks..Well,,it just ain't so ! Apple did start small – but as a private company,and its stock was not for sale.I know,since I tried to buy some,about 30 years ago.By the time Apple listed publicly,it was not a micro-cap,although its shares did become very cheap later.

Investor
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Investor
November 4, 2010 2:27 pm

Well, looks like Amburger hit the nail on the head with his writeup. Micr Quake Alert now has a huge legal disclaimer at the end that pretty much says they made it all up!! http://greenlaserreviews.com/2010/11/04/cause-and

Fluoxetine-Cod
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December 13, 2010 7:54 am
daveletsgo39
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daveletsgo39
August 19, 2012 1:07 pm

wen i first started trading ,after takening my account from my broker.i paid for a couple of these newsletters.and pay i did.i managed to get back to even.and grow my account. i often wonder how these guys sleep.as i suspect the practice the ‘ole’ pump n dump

Jim K
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Jim K
December 1, 2010 12:56 pm

I had a terrible experience with MicroQuake. Better it's called "mega quack", as the picks have been losers, all. I believe there should be a class action lawsuit against these jerks!

Jim K
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Jim K
December 1, 2010 12:57 pm

In fairness, they did email that they would refund my $700 after I complained.

Jim K
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Jim K
December 1, 2010 12:58 pm

But their picks cost me thousands.

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