This is a quote from a promotional email that several of you have sent to me recently:

“It may come as no surprise that George Soros’ hedge fund holds 66,800 shares of Apple. After all, just about every major fund owns a chunk of this tech titan.

“But what you may not know is that this savvy billionaire holds a staggering 11.2 million shares of a tiny $8 tech stock that’s about to take the world by storm.

“I’ll say that again: One of smartest, richest billionaires on the planet has a stake in a tiny $8 tech company that’s 167 times larger than his stake in Apple.

“Why? Potential. Pure and simple.”

It sounds amazing, right? The ad is for a newsletter called Growth Stock Strategist from Investing Daily, and promises a special report about ““The Tiny Tech Stock That Could Make You Rich.”

So what’s the ad talking about? Well, Growth Stock Strategist is now apparently helmed by Linda McDonough, who they say is the founder of that newsletter… but the ad is essentially the same as the one that’s been running for well over a year as a teaser for the Roadrunner Stocks newsletter that was headed by Jim Fink for the same publisher. Roadrunner Stocks seems to have disappeared, so presumably it’s been subsumed into this new letter… and they’re still using the same ad, so it must be working to lure new subscribers into the fold.

The pitch was first sent out, under Fink’s name, when they were calling this the “best $6 tech stock” late in 2014, and the same ad was running for much of the early part of 2015.. then the company they were teasing was bought by another chip company, and they teased that combined stock for a while (we covered that new version of the ad last August).

And now we’re seeing it again from Linda McDonough, and from what I can tell the name chance from Fink to McDonough is the only real change — the ad makes essentially the same argument and promise as the prior version, including the specific gains they hint at when they say “the tiny company I’m about to show you has the potential to turn every $10,000 invested into a life-changing $214,290….”

So yes, this is still a pitch for Lattice Semiconductor (LSCC), which bought out the previous teaser target Silicon Image (SIMG) over a year ago (for $7.20 in cash, if you’re curious).

If you want to see the full rundown of the teaser ad, and my sniffing around into the clues, you can check out the article from last Summer here, the points haven’t changed.

What caught the eye of so many folks this time around is the George Soros connection — so what’s the story with that?

If you’ll remember from a few paragraphs ago, the push was that “one of smartest, richest billionaires on the planet has a stake in a tiny $8 tech company that’s 167 times larger than his stake in Apple,” and that Soros was making a big bet because he liked the potential of this stock.

So what’s the story with Soros’ share holdings in Lattice Semiconductor? Well, at the end of 2015 his funds owned zero shares LSCC… and in the first quarter of this year that had been bumped up to a bit over four million shares. So where’s that 11.2 million number coming from?.

That’s from the 13F filing with the SEC from LAST SEPTEMBER, at that point the Soros funds did indeed hold 11.266 million shares of Lattice Semiconductor (LSCC). Soros also controlled about 10 million shares in the previous quarter at the end of June, 2015, so there’s also no particular evidence that he made much money on it — we don’t know what he does between quarterly reports, but the big move for LSCC was when it dropped down about 30% in the third quarter last year before recovering all of that by the end of the fourth quarter. Since then it has been on a gradual decline from $6 and change to $5 and change this year.

The lesson? Big names like Soros are used by newsletter ad copywriters (and others) to sell ideas, and to give you the impression that you’re traveling in very fawncy company when you choose to buy a particular stock. That data that anyone can access about the US holdings of any institutional investor is always old (it’s filed based on the holdings of those investors on the last day of the quarter, and the filing isn’t made public until 45 days after the quarter ends), but it can also be very misleading when taken out of context. In this case, the funds controlled by George Soros currently have 0.05% of their holdings in Lattice Semiconductor. That’s not five percent, it’s five one-hundredths of one percent.

What’s the outlook for Lattice now? Well, as I noted more than a year ago, it’s cheap based on forward earnings estimates… but in order for that cheapness to benefit shareholders the analysts have to be right about their growth forecasts. So far, they haven’t been.

Last Summer, this is what I said about LSCC when I looked at that older version of the teaser ad:

“Analysts hope there will be some earnings growth in the future, but they’ve pushed that profitable hope further out now — since the merger was announced, estimates have been coming down for Lattice… particularly for this year, with some softness in revenues last quarter and in this current quarter, but also for next year. Now, analysts forecast that LSCC will earn five cents a share this year (a month or two ago that number was 36 cents per share) and 57 cents per share in 2016 (down from the prior estimate of 70 cents). So if you think analysts have a chance of being right about 2016, which itself will probably be back-loaded because the company has been talking about their newer growth products getting traction in 2016, then the stock is trading at a forward PE of about 7. That’s quite a bit cheaper than (much) larger competitors like Altera (ALTR) and Xilinx (XLNX), both of whom have also seen their forecast earnings dropping for this year and next year, but I don’t think there’s any particular reason to have a lot of faith in the analyst forecasts for LSCC — they’ve been way off so far, and the company is in the middle of integrating a huge acquisition.”

How do those numbers look now? Well, we could almost repeat those words — “analysts hope there will be some earnings growth in the future, but they’ve pushed that profitable hope further out again.”

LSCC ended up losing 13 cents a share for 2015, and the expectation for 2016, now that we’re halfway through the year, is that they will earn 33 cents a share in 2016… and since they lost a penny in the first quarter and are only projected to earn two cents in the June quarter when that’s reported, the earnings are indeed still expected to be back-loaded into the second half of the year. And if you go out another year into the future, those analysts are now expecting 59 cents per share of earnings from Lattice in 2017.

That’s a recipe for worry. It might work out, and the company is continuing to say optimistic things about the future and about design wins hitting later in 2016 and seasonal strength coming near the end of the year… but analyst expectations keep getting lowered and have been almost continually falling for a year and a half, and the company keeps coming in short of those expectations even after they’re lowered.

That means the stock is going to look cheap based on forward earnings estimates most of the time, but there’s no trailing PE (they lost money over the past four quarters) and the current-year PE for 2016 is on the high side (about 16) since you have to give them the benefit of the doubt and think they’ll somehow earn 30+ cents in just the final two quarters of the year.

In cases like these, to give yourself any confidence in a company that has so far really faltered, you need to dig into the company and the industry and see if you can determine whether there’s really a reason to think they’re bottoming out… is there competition in their important segments (there almost always is in semiconductors, and it’s typically brutal as margins get pressured by price cuts almost every quarter)? Are they in a high-growth segment where things might jump higher for everyone? Next-generation low-power wireless, where they seem to have a decent position in WiGig and HD Wireless chipsets, is supposedly growing… but growth hasn’t picked up as quickly as expected over the past few years, and I don’t know whehter they have any unique patents or relationships or a strong brand that might protect them from competitive pressures if growth really does materialize.

Personally, after an admittedly superficial look at the fundamentals, I don’t see a reason to bet on Lattice being a big winner — it’s possible, but I haven’t put in the time to understand whether they have a technological edge, partly because I don’t put much faith in the analysts or management after a year of “synergies” from the merger has still not generated any earnings power (one bright side? There’ve been big depreciation and “one time” restructuring charges after the acquisition of SIMG, so the cash flow has been a bit better than the earnings… not good enough, but better).

I might just be too skeptical, given the weak financials and the continual overpromising by this newsletter about LSCC shares, so perhaps you’ll see the potential that I’m not seeing. If you’ve got a different opinion, LiI’d be delighted to hear your thoughts… just use the friendly little comment box below. Thanks for reading!