“From ‘Strong Buy’ to ‘Back up the Truck'”

By Travis Johnson, Stock Gumshoe, March 29, 2010

I can’t pick on Robert Hsu too much for this, because it’s just about the most popular turn of hyperbolic phrase around for tv pundits and newsletter writers … but really, I’ve had just about enough of “back up the truck.” Not only does it not make much sense — does backing up the car mean you’re only buying a few shares? — but it encourages the all-or-nothing bets that damage so many portfolios.

Still, when he tells us to “back up the truck” I can’t help but want to figure out what he’d like to … I don’t even know how to say it, “back up the truck with?” Or toward? Whatever, let’s dig in and identify the stock, shall we?

“In tonight’s issue of China Strategy, I’m not only upgrading the buy rating on one the most phenomenal companies I’ve seen in years … but also adding a new ratings category: Back Up the Truck.

“I know that this kind of ratings description sounds quite gimmicky.

“But frankly, this is only description I could think of that not only communicates the superior strength of this recommendation, as well as the ground-floor profit opportunity at hand that few others can see.

“’Super-strong buy,’ I’m afraid, simply wouldn’t cut it.Don’t Miss This

“However, once you see my full write-up on this, I know you’ll agree “Back Up the Truck” describes this money-doubling opportunity to a ‘T.'”

OK, so it’s a money-doubling opportunity … and Robert Hsu isn’t going to give us much more etymology on why backing up a truck is an aggressive investing strategy … how about the clues?

“Surprisingly, it’s a technology outsourcing company that’s stealing market share from multibillion dollar Indian companies and rewarding investors along the way.

“Here’s how:

  • “The company was originally formed in 1994 to help Microsoft and IBM localize their software into the Chinese, Japanese and Korean languages.
  • “As a result, the company—with more than 5,000 IT professionals—already provides world-class services to corporations in the U.S., Europe, Japan and China.

  • “This is how the company has been able to steal customers and profits from Indian IT firms for the past five years—growing from 98 customers in 2005 to 241 customers in 2008, including Microsoft, IBM, Hewlett-Packard, EMC Corp., NEC Corp., 3M, Huawei and Lenovo.

“This is why last quarter’s revenues increased 43% while net profit jumped 40%. This is also why the company’s stock price up a whopping 345% in the last 12 months. This is also why the company is clearly headed for another double in 2010.”

OK, so who is this Chinese company that’s apparently doing the Indians one better?

Well, I’d like to say that I really had to warm up the Thinkolator on this one, and dig deep … heck, I could even tell you that I had to “back up the Thinkolator” to figger this one. But I’d be lying — I can tell you that this company is VanceInfo Technologies (VIT) … but Robert Hsu can tell you this, too, and has done so in some free articles lately.

So not only does he think you’re silly enough to think it’s reasonable that he has a super-duper-extra-strong buy category called “back up the truck” … but he also thinks you’ll pay to learn about an idea that he’s already tried to tell you about for free.

I know, I know, that’s not the real reason most thinking people subscribe to newsletters — they don’t (or at least shouldn’t) sign up just because a hot stock is teased and they just want to learn the name. They should be looking to buy thorough research, maybe some educational materials, an entertaining read, etc. But in reality, so many newsletters wouldn’t build their ad campaigns around a teaser pick unless that was the idea that worked best at snagging subscribers. So yes, there are probably a lot of folks who signed up for China Strategy just to find out who this “back up the truck” company is.

And back in February, Robert Hsu told anyone who would read his free blog that VanceInfo was his Chinese outsourcing play (and yes, it also matches all those clues — have no fear, I did percolate the thinkolator for at least a few minutes, just to make sure). And from what I’ve gathered in a quick look around, it seems that Hsu has been touting this st