Turkey of the Year!

By Travis Johnson, Stock Gumshoe, November 27, 2008

Happy Thanksgiving, everyone! Or at least, Happy Thanksgiving to the Americans among you — I know I missed the Canadian Thanksgiving by a month or so, and I hope everyone else around the world has had a chance to give thanks for whatever it is that makes your life meaningful.

Personally, part of what makes my life fun and meaningful is this — writing about stocks and newsletters for you. And I thought today would be an opportune time to revisit some stinkers … and to choose the Turkey of the Year, and perhaps even carve it up a bit for you.

This honor is not bestowed lightly — to be named Turkey of the Year in Gumshoedom, you must have been a truly awful stock idea, chosen within the last twelve months, and, preferably, you should stand for all that is entertaining (and misleading) in stock newsletter teaser ads.

And within the last twelve months there have been a half dozen or so picks that are down at least 90%, so there was no shortage of candidates. If you went back to look at the whole history of Gumshoe Mania on the spreadsheets, adding another nine months or so of picks to that last year covered herein, you’d have even more options — roughly 10% of the stocks I’ve written about in this space are down by 90% or more, and a few rare delights have fallen even more drastically still: Centerline Holdings (which even looked promising to me way back when, before the mortgage meltdown) and Atherogenix are both down fully 99% from the price when they were touted, and there are several well-known stocks that were popular with the Gumshoe faithful that got immolated — Crocs and Neuro-Hitech both got a lot of attention in this space, and both are down by about 98% as I type.

Neither of those was picked within the last twelve months though, at least not for the first time, so the winner of the Turkey of the Year is …

Potash North.

This Turkey was chosen by Andrew Mickey for his Fear and Greed newsletter — you can read my writeup on the stock here (it’s a grand article, if I do say so myself). That newsletter appears to now have disappeared from the earth, or at least from the Taipan website, and Mickey has come close to doing the same. He went from being among the more aggressively promoted stock pickers by Taipan to being out of a job, apparently. Don’t know why (he’s now at Q1 Publishing), though the picks of his that we sleuthed out in this space wouldn’t inspire much loyalty among any subscriber base — his larger newsletter, Breakaway Investor, still exists but is now edited by Christian DeHaemer. (DeHaemer, just to be fair, almost beat Mickey to the Turkey this year — his pick of CGX Energy, spun with a fabulous tale of lifting blockades in the Gunboat Basin, is down about 91% since he touted it last December).

Believe me, i don’t mean to pick on Andrew Mickey personally — I’m sure he has also made plenty of good picks, and the fact that his ads were so aggressive doesn’t necessarily mean that his subscribers didn’t receive perfectly reasonable advice, I’ve heard from both fans and detractors over the years. But someone has to win.

Before I went in and scoured the tracking spreadsheets to find this Turkey, I was curious and tried to guess what it might be — would the “winner” be a mortgage company or a bank, maybe something that went bankrupt and disappeared altogether, or would it be a commodity play of some kind or a microcap Chinese stock? Those seemed the likely candidates as former highflying favorites that inspired a legion of newsletter teaser ads, and that flamed out gloriously as this year crawled toward stock market armageddon

It turned out to be the commodity thing, of course, and no commodity was more enthusiastically embraced by the investing public than potash — it ain’t as sexy as gold, but it sure made a lot of people a lot of money, if only for a relatively short while. Potash North still exists, it’s traded primarily on the Vancouver exchange up north at symbol PON (pink sheets at PTNHF for those celebrating Thanksgiving today).

This had the virtue of being not only a hot pick in a flaming hot sector, as biggies like Potash Corp. and Mosaic set new records earlier this year, but also one that was backed by some famous names in the commodity space (including a Lundin). Not only that, but it also went public in spectacular fashion at just the right time — the shares quickly leaped over $4 when the year was young, and were still at $2.85 when Mickey picked them in June (and promised that they had the potential to go to $45, if I remember correctly).

Today, you can pick up as many shares as you like for about 15 cents each — and that’s after a bit of a rally on Wednesday. This one is down 95%, officially the worst performer that was touted during the past twelve months … and with plenty of time to spare, it’s only been five months since Mickey turned on on to these northern fertilizer hunters. I don’t, of course, have any idea whether or not he (or his successor) eventually told his subscribers to sell this one — I don’t subscribe to any of these newsletters, so I don’t know those details. My tracking spreadsheets represent what I like to call an “impulse investor” — someone who buys each of these stocks on the day they’re touted, and never sells.

The company still exists, they’re still getting permits and looking for potash — and having comically odd stock offerings to raise money (their last offering, in August, brought us a press release saying that an administrative error had been made and their investment banker had bought an extra 800,000 shares by mistake, an order which would be rescinded … and then a followup press release a few days later saying that heck, all was forgiven, and the bankers would take those extra 800,000 shares anyway, error or no error).

I have no idea whether this company will ever amount to anything, though with their commodity collapsing in price they’re doubtless going to have more trouble than they would have had last year in this business, and opening up a potash mine is no small feat in any market (that’s part of the reason that there are so few of them, and thus partly why the price spiked so heartily in the biofuel-driven ag boom). Who knows, the world will probably still need plenty of fertilizer every year … though it’s starting to look like Mickey’s ad for this one was a bit of fertilizer of a different kind. And that fertilizer, commonly retrieved from the wrong end of a cow, is my favorite kind — it keeps me in business as your friendly neighborhood Stock Gumshoe.

I hope that those of you with thanks to give enjoy giving it, and that families and friends everywhere are together in peace and harmony today. Enjoy the break from the markets, and I’ll be writing again soon.

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