2014’s Turkey of the Year

What's the biggest stinker of the last 12 months?

By Travis Johnson, Stock Gumshoe, November 26, 2014

It’s a tradition to give thanks at this time of the year, and one of the things we are supremely grateful for is the never-ceasing parade of promises that the financial newsletter industry throws our way in their perpetual search for new subscribers. After all, without those overhyped promises in their teaser ads we’d have no use for the power of the Mighty, Mighty Thinkolator… think of the mischief that powerful machine would get into without a worthy challenger to keep it busy!

So every year, I look back on our tracking spreadsheets and see which of the terrible teased stock picks catch my eye — the “Turkey of the Year” is not always the absolute worst performing teased stock pick, but it’s among the worst and among the most aggressively hyped… and that’s saying something, since almost every teaser pitch focuses on the potential that a stock might double or triple (or better).

To give you some context, so far in 2014 75% of the teaser stocks we’ve revealed for your edutainment have done worse than the S&P 500. About a third of the stocks are in the green, but unlike past years there’s not a single stock in the teaser tracker that has doubled (or any that have gone down by more than 95% — usually we get at least one bankruptcy or complete washout).

I try not to bestow the title on stocks that we probably knew were total gambles that could evaporate instantly, like junior mining stocks or early stage biotechs, so we’re not calling out Alex Daley’s tease of Prana Biotechnology (PRAN) for Casey Extraordinary Technology, for example, and the wattle does not go to one of the tiny little nanocap stocks like Applied DNA (APDN, teased by Ray Blanco this year and Patrick Cox in past years) that’s probably just as deserving — but after browsing through the last twelve months of teaserdom one stock caught my eye, so this year the “Turkey of the Year” is one that failed not because of a FDA decision that went against them, or a mine that flooded, but because a big new project is starting even more slowly than thought, and, really, the business wasn’t nearly as good as management (or the newsletter) claimed.

And this was not a “flash in the pan” stock that was hinted at once by a small newsletter, it was aggressively teased multiple times by two different established newsletter publishers… and, as coincidence would have it, the stock has been going down for a long time but it really collapsed just in the last few weeks.

So who is our Turkey of the Year? Solazyme (SZYM), teased by both Motley Fool Hidden Gems last December and by Jimmy Mengel’s The Crow’s Nest just last month.

And really, probably the most egregious (or at least, poorly timed) pitch is Mengel’s for SZYM, since his spiel was based on the fact that you had to get in right away for a windfall from an upcoming announcement…

“Prepare yourself now for a $107,000 windfall…

“But only if you move BEFORE this company’s next big announcement””

That was on on October 1, and a couple weeks ago, on November 5, the announcement did indeed come — but contrary to the promise of a windfall, the announcement was that their revenue was failing to meet expectations, and that future sales would be even more disappointing because of problems ramping up their first huge, commercial plant in Brazil. The Motley Fool quite aggressively teased and touted Solazyme at an even higher price than The Crow’s Nest ($9.50 or so), but they did so much longer ago and didn’t as clearly promise a specific windfall within a short period of time.

Are you getting our free Daily Update
"reveal" emails? If not,
just click here...


Does this mean The Crow’s Nest or Motley Fool Hidden Gems are terrible? Not necessarily, we don’t know what they told their subscribers, or the dozens of other things they might have recommended to their followers beyond the heavily hyped pitches for Solazyme… and everyone, of course, makes mistakes. I make lots of them — I own one of the many other stocks that could have been a contender for “Turkey” this year, East West Petroleum, and have certainly owned or written favorably about many other stocks that have been clobbered over the years. The “Turkey” is Solazyme’s stock, not necessarily the folks who fell in love with it.

And does it mean Solazyme is a lousy stock to buy now? Again, not necessarily — it is a real company, despite the fact that its plant in Brazil is starting up in very disappointing fashion, and it might be that this washout will be enough to right the ship, reset expectations, and give them a chance going forward… they do have some financial flexibility, since they have enough cash on hand to cover their long-term debt, so they shouldn’t be on the verge of bankruptcy, but it is still a very challenging business, reliant on gaining new customers for their high-value-added oils and ramping up what is clearly a complex and challenging process to industrial scale.

There’s no way they can compete in commodity products (like transportation fuels), not with oil prices falling, but despite the past hype for Solazyme as a biofuel company they’ve seen that writing on the wall for a long time and have been focused on nutrition, cosmetics and specialty chemicals… areas with less price-sensitivity for differentiated products, but still extremely competitive markets. So there’s still the hope that the company can find customers… though they obviously have to fix the rampup of the Brazil plant first, and it’s clear that production ramp-up is going to be well below the projections for at least a couple of years.

What it really means, I hope, is that we can take this moment to be thankful for that big old lump of grey matter above our eyeballs — the frontal lobe of our brain that will help us to learn, once again, from the mistakes we make when we allow marketers and promoters to get inside our heads and plant dreams of wealth and windfalls. And when it comes time for our New Year’s resolutions we can resolve to be patient, to think things through, and, when gambling on wild stories and breakthrough dreams, to keep our bets small.

With that, I wish for you a wonderful Thanksgiving holiday… I hope you’re comfortably ensconced with friends, family, and happy memories, and that you can enjoy a nice long weekend of peace before we return to uncover the facts behind the new teasers that will certainly hit your mailbox over the holiday break. See you in December!

P.S. This is obviously very subjective, and based on my thoughts about the pitches of the past year — do you have a better “Turkey” to nominate in the world of teased and promoted stocks? Let us know with a comment below.


20
Share your thoughts...

avatar
9 Comment threads
11 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
17 Comment authors
Jeff McDermottDan TobiasJon Starkbob kochnowiczBill Church Recent comment authors

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Tim Carp
Guest
Tim Carp

SZYM is a good nomination for TOTY. DDD is also a good one as the Fools were still touting buying in when the stock was at the $90 mark.

Add a Topic
5971
webmind
Member
πŸ‘27
webmind

DDD may be a very good stock now for patient investors. You can sell calls and lower your cost basis while waiting.

Add a Topic
5971
slowtalker
Member
πŸ‘6
slowtalker

Do not forget BNIKF!

Bob
Guest
Bob

talk about turkeys, how’s your favorite SeaDrill doing?

Add a Topic
433
SoGiAm
Member
πŸ‘11361

SDRL
15.99 -4.72 -22.79%
Pre-market: 14.65 -1.34 (-8.38%)
Nov 28, 7:49AM EST
NYSE real-time data – Disclaimer
Currency in USD

Alan Harris
Guest
Alan Harris

Ha!!! I vote RGDO. Wipeout !

mapmaker66
Member
πŸ‘1

RDGO AND BIOC – 2 BIG LOSERS. THANKS DR.KSS

Add a Topic
3932
mary
Member
πŸ‘789
mary

Don’t blame others for your decisions. I’ve lost a lot on WPRT, but am not blaming motley fool. Dr. Kss understands the science behind the companies, but he cannot foresee dishonest management!

Add a Topic
329
Add a Topic
3932
anton669
Irregular
πŸ‘6

My vote is RIG. Dont expected a 53% drop !!!! Neither Carl Icahn :)))))

Add a Topic
92
bradyoung
Irregular
πŸ‘5
bradyoung

I nominate WPRT! Westport cannot seemingly get off its downward slide.

mary
Member
πŸ‘789
mary

I’ve lost so much in WPRT that I have decided just to hold forever….kept thinking it couldn’t get worse, then it did!

brkda88
Member
πŸ‘1
brkda88

Ive been with the Fool for years and rarely do they sell anything.I sell when I feel its time to cut losses.The winners far outweigh the losers.

jjdulian
Irregular
πŸ‘12
jjdulian

I looked at that one last Feb. and almost bought it. But no problem–I found plenty of other things to lose money on instead!

koifish46
Member
πŸ‘20
koifish46

I think the turkey of the year is not a stock but a person. I nominate Money Map Press newsletter writer, Michael Robinson. Last August he promoted Stellar Biotech (SBOTF) and stuck his turkey neck out by guaranteeing that the company would be up listed to NASDAQ or NYSE by the end of November. He stated that if it did not up list by then he would refund the subscription price to those suckers that bought into his hype. I haven’t heard how that went, but would like to know if anyone has the answer.

Add a Topic
5971
Add a Topic
605
Add a Topic
1251
webmind
Member
πŸ‘27
webmind

Michael Robinson has made some pretty good calls from what I can see.

Add a Topic
1251
Jon Stark
Guest
Jon Stark

GT Advanced Technologies (GTATQ) has to be one of the busts of the year, after Motley Fool was pushing pretty hard for their role in the iPhone 6…and then they go so spectacularly bankrupt

Add a Topic
329
Jeff McDermott
Guest
Jeff McDermott

http://www.nasdaq.com/press-release/solazyme-shareholder-alert-by-former-louisiana-attorney-general-kahn-swick–foti-llc-reminds-20150724-00841 NEW ORLEANS, July 24, 2015 /PRNewswire/ — Kahn Swick & Foti, LLC (“KSF”) and KSF partner, the former Attorney General of Louisiana, Charles C. Foti, Jr., remind investors that they have untilAugust 24, 2015 to file lead plaintiff applications in a securities class action lawsuit against Solazyme, Inc. (NasdaqGS:SZYM) if they purchased the Company’s securities between February 27, 2014 and November 5, 2014, inclusive (the “Class Period”), including purchasers in the Company’s registered public offerings on March 27, 2014. This action is pending in the United States District Court for the Northern District of California. What You May Do… Read more Β»

Add a Topic
77