I almost can’t even write about this one without laughing.
That headline is not made up, Robert Williams has a pitch out that compares his silly “open letter” to the head of the European Commission threatening an absurd “class action” suit to get rid of the Euro, to Gandhi’s letter shaming Hitler, Einstein’s letter to FDR about Hitler’s nuclear ambitions, and Thomas Paine’s “Give me liberty or give me death.”
Seriously.
OK, maybe not seriously — I assume that even a newsletter publisher couldn’t make such claims to a friend or colleague with a straight face, so hopefully he’s just allowing his copywriters to take leave of logic in their attempts to get your attention and urge you to sign up for his newsletter (this time he’s selling something I’ve not heard of before called Digital Fortunes, which is an “entry-level” letter at either $30/year or $149 a year, depending on where you look, edited by Louis Basenese).
But we’ll take them at their word and pretend that this is a real thing, at least for as long as it takes to figure out what the stock is that they’re teasing… yes, just like Gandhi and Einstein, Robert Williams is writing this letter to sell some subscriptions, and he’s using hints about a “secret” stock recommended by Basenese that will pop to get you to turn over your credit card number. (What, you don’t remember those newsletters of days gone by, Mahatma’s Hot Picks or Einstein’s Relative Value?)
So, as we shield our brains from logic and take the ad at face value, what’s the story? Why is Robert Williams writing this “notable” letter to the president of the European Commission, and threatening to sue?
Mostly, as I interpret the convoluted wrinkles of the pitch, because the euro is losing value versus the US dollar… and that means some stocks are not as valuable as he’d like them to be.
The horror.
Here’s the intro to the ad, in case you haven’t had the pleasure of this particular giggle:
“The Letter That Killed Europe…
“And the unlikely company now sitting on the doorstep of history….
“Albert Einstein sent a letter to President Franklin Roosevelt in August of 1939 warning him that Germany would soon develop a nuclear bomb.
‘A new phenomenon will lead to the construction of extremely powerful bombs. It could be achieved in the immediate future. This seems to call for quick action on the part of the White House.’ – Albert Einstein
“Had Germany been allowed to develop the bomb first, the Nazi flag could be flying all over the world.
“Einstein’s brief, poignant 502-word letter radically altered the course of history.
“Is it about to happen again?
“The letter below holds similar power…
“Love Him or Hate Him? The Letter’s Author…
“Robert Williams is a well-known advocate of Main Street investors….”
What credentials do they claim for Williams? That he predicted Uber would be successful, and he once predicted a Netflix stock split. And that his Wall Street Daily has 478,000-plus readers.
The implication, as I read it, is that this — once you add in the “historic” letter Williams sent to the EU — is enough to put him in the category of Gandhi, Paine and Einstein.
I’m not entirely sure I agree, but there you have it.
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Here’s some more from the ad that gets into the actual stock he’s talking about:
“This time, Williams is fighting on behalf of his readers. According to Williams, a certain technology company should be trading 245% higher than where it presently is.
“U.S. government documents prove that the company is fundamentally sound, and poised to skyrocket based on its technological prowess and demand factors, which begs the question…
“If the company is so great, why are shares trading for roughly $10 instead of $36?
“Well, the problem traces back to the European Commission and the euro currency itself.
“In its complete mismanagement of the euro, policymakers – according to Williams’ research – have done serious damage to shareholders.”
Which, of course, smacks of nothing so much as a tantrum (I said it would be worth more, dammit, how is it that global macroeconomics could possibly make me wrong? I’m telling Mom!)
More from the ad:
“Invest Ahead of a Potential Shareholder Lawsuit…
“Williams believes the company’s tens of thousands of investors (his readers included) got a raw deal. They had the foresight to invest alongside a company ready to rank among technology’s elite, like Amazon and Google. Yet the euro crisis has temporarily derailed its efforts.”
And that letter…
“Williams sent an ‘open letter’ to the President of the European Commission, Jean-Claude Juncker. In his letter, Mr. Williams threatens to advise shareholders to sue the European Commission over the mishandling of its affairs.”
We won’t address the details of actual lawsuit threat, since I can’t maintain even a veneer of impartiality when talking about something so goofy, but I do want to find out what this stock is. Here are our clues from the “open letter” that Williams is sending or has sent:
“Dear President Jean-Claude Juncker,
“Your mishandling of European affairs has interrupted the historic rise of certain U.S. companies with operations in the eurozone.
“My interests concern the most dynamic of them, _______
“_______ trades on the NASDAQ under the ticker symbol _______
“Analysts (conservatively) peg fair value of the stock at $38/share.
“However, the spectacular collapse of the euro has squelched its ambitious growth.
“_______ recently suffered a $679-million reduction of its market capitalization.
“Euro-related weakness can be wholly blamed for the (temporary) decline in the company’s stock price, which presently trades for roughly $10/share.”
And the threat:
“Unless dissolution of the eurozone is undertaken by December 31, 2015, I will encourage a lawsuit on behalf of every _______ shareholder, which could hit your desk as early as January 4, 2016.
“Imagine the impact that a class-action lawsuit would have.
“Similar cases have settled for hundreds of millions of dollars.”
Stop laughing! OK, now some specifics about the stock:
“I’m writing on behalf of thousands of everyday people who had the incredible foresight to buy shares of _______.
“These folks would be enjoying millions in profits had it not been for the euro crisis. It was guaranteed to happen….
“The company in question, _______, remains perfectly positioned in the lucrative microchip industry.
“Its products serve exploding markets for a) wearable technologies, b) cloud computing, c) electric vehicles, d) driverless cars, e) solar panels, and f) smart meters.
“However, despite growing its profit margins across virtually every segment of business, _______ recently suffered a decrease in revenue.
“Since the decline was the direct consequence of euro-related weakness – not an underlying problem with its core business – a rebound in the stock price is highly likely.”
And then the examples of the impact the Euro’s decline had on this company’s results:
“The ‘Metal Oxide Semiconductor’ segment enjoyed robust growth, yet suffered negative euro effects of (-2.4%).
“The ‘Diodes’ segment enjoyed robust growth, yet suffered negative euro effects of (-5%).
“The ‘Optoelectronics’ segment enjoyed robust growth, yet suffered negative euro effects of (-7.7%).
“The ‘Resistors and Inductors’ segment enjoyed robust growth, yet suffered negative euro effects of (-8.2%).
“The ‘Capacitors’ segment did not expand, yet still suffered negative euro effects of (-7.6%).”
So what company are they talking about?
Thinkolator sez these hints all point to: Vishay Intertechnology (VSH) — though there’s room for a tiny bit of uncertainty in that, so we’ll say that I’m 98% sure this is a pitch for VSH.
Why the lack of 100% certainty? Well, VSH is listed on the NYSE, not the Nasdaq as teased. And the results, though those specific numbers are indeed from the company’s 10-Q, are stale — the currency impacts cited are from the first quarter, which ended on April 4, so they’ve reported two subsequent quarters. Still, those exact numbers bring a pretty compelling match between the company filings and the Basenese/Williams tease (-2.4% for foreign currency impact for MOSFETs, which is the acronym for metal–oxide–semiconductor field-effect transistors, -7.7% for optoelectronics, etc.), and Vishay is a US semiconductor company that has been hurt this year by the fall in the Euro.
And the stock did “suffer” a $679 drop in its market capitalization “recently” — though that all depends on the specific dates and what you mean by “recently,” of course. The market cap got as high as $2.4 billion last year, and dipped as low as $1.4 billion this year. It’s right around $1.7 billion now, with the share price around $11.50. If we assume that the WSD folks liked the stock back in May when the data in the tease was current, the stock is only about 10% below where it was when those first quarter results came out (that’s a recovery of sorts — it was down 25% or so for a while in September and October).
Of course, the argument that it’s all about currency impacts is specious at best — here’s a bit on that from Vishay’s 10-Q:
“Despite the negative foreign currency effect on revenues, we were able to maintain our profitability. Our percentage of euro-based sales approximates our percentage of euro-based expenses so the negative foreign currency impact on revenues was substantially offset by the positive impact on expenses. Despite revenues below our expected run-rate, our pre-tax results were as we would expect based on our business model.”
So yes, the “we’re going to start a class action suit against the European Commission” bit is absurd… but what about the potential for Vishay Intertechnology? T
hat you can guess at on your own — there will not be a successful class action suit against the European Commission to force the shares up by 250% or whatever the WSD folks are teasing, and it’s difficult to see a reason for the shares to be at $38 anytime soon… but that doesn’t mean it’s necessarily a terrible investment. Our goal, as always at Stock Gumshoe, is just to strip away some of the marketing hype so you can think about an investment on its own merits, without stars in your eyes about some theoretical (and highly unlikely) 200% gain in the next 27 days.
I have not done a deep dive into the numbers, but I checked their last decade or so on a few key metrics, and they look to be fairly ho-hum to me right now — annual revenue has ranged from about $2-3 billion, and right now the TTM revenue is about $2.4 billion; earnings per share has averaged about 70 cents each year for the past decade, and that’s where current trailing earnings stand; the share price has ranged from a couple dollars to $18 (and a tighter range of $8 to $18 over the last five years), and it’s in the lower part of that range now at $11.50.
That doesn’t mean the company has no chance of great growth from here, just that it’s been fairly moribund for a while. And analysts have low growth expectations, they see sales growth of only about 2% next year and earnings growth of about 11%, but they also anticipate that earnings per share will fall over the next five years.
So you can’t, at least, accuse Basenese and WSD of being bandwagon jumpers — if the Thinkolator is right and VSH is the stock they’re touting with the silly “class action” campaign, then they are at least being contrarian. The average analyst target is right around $11.25, about where the shares trade right now, and the average recommendation is “hold.” You almost never see companies with worse analyst expectations than that, not unless they’re at risk of bankruptcy or something — “sell” recommendations are still vanishingly rare on Wall Street.
I don’t mean to imply that Vishay is in trouble — they’re not, as far as I can tell, they have almost a billion dollars in cash (enough to offset their debt and pension liabilities and still have at least a couple hundred million left), and they have been consistently profitable except for this most recent weak quarter… they even pay a 2% dividend.
So… do you think they’re on to something at WSD, that growth in automotive, mobile device or other end markets will drive more revenue and earnings growth for Vishay than analysts are expecting? Have a better solution than the Thinkolator’s for this one? Any other thoughts to share with Gumshoe Nation? Let us know with a comment below.
P.S. There’s no sign yet that Robert Williams is planning to sue the Federal Reserve for slowing quantitative easing, possibly raising interest rates, and allowing the US dollar to stay strong, which hurts exporters. Stay tuned.
P.P.S. I desperately wanted to go on for several more pages about how crazy Robert Williams’ “open letter” reads, and poke more fun at it, but I resisted. You’re welcome.
Looks like Mr. Williams experienced a time/space warp, how else can one get to Fairyland?
Drink no wine before its time… Never let a crisis go unused……
Let no gimmick go unused to hype a stock????? Nah doesn’t have that ring to it.
Sorry but Thomas Paine did not write “give me liberty or give me death” — that was in a speech by firebrand Patrick Henry (made at the Second Virginia Convention in March of 1775 which was held in Richmond, not the colony capital of Williamsburg). Paine wrote “Common Sense” which was a call to revolution from Britain but he was more clear-headed than Henry and less bombastic.
Ah, I was so focused on the silliness of the ad that I didn’t even notice that mistake — thanks!
Should we suggest an actual Paine quote to them? Maybe “It is error only, and not truth, that shrinks from inquiry.”
As a lawyer, I wouldn’t consider taking the case for a 99.5 % contingency fee plus out of pocket expenses.
C’mon—you’d get all-expense-paid trips to the UK and Europe!
I don’t know how many other people sent this one in to Travis but I am still laughing along with him. It seems promos are getting more ridiculous all the time, so either they work or the various newsletter publishers are hurting and really desperate to get new subscribers.
An hour before I read the piece by Travis i had sent out a strongly worded complaint to a publisher with which I have a lifetime membership that was sold on the premise that it entitled the subscriber to “everything they publish for life” but a year or so ago they sent me a promo on a “Micro Cap” service based on the premise that just 3 investments of an initial $500. if properly timed could make you a millionaire in 30 days by rolling profits into a series of stocks, (easy to project after the fact), but I challenge them to prove that anybody, including the analyst actually did it. Their excuse for not putting me on the mailing list is that because it focussed on micro caps they had to limit the number of subscribers.
To-day I got the very same promotion with the same spiel of their only being able to accept less than 500 new members at $2500. a pop (regular $5000. of course), so they are hoping to raise at least a million dollars. nice promo if it works. What I asked myself, (and them) if the premise is so successful, and the number of subscribers has to be restricted because of the micro cap stocks profiled, what happened to the previous 500subscribers? Guess they must all be millionaires and no longer need to use the service. Travis has a turkey of the year award for the worst performing stock of the years, but I think we subscribers should start a voting method for the worst hyped promo of the year. Either that or maybe we should start a class action lawsuit against the worst of the publishers for false advertising.
These ads that would have you turn $500 into a million neglect to tell you that by the time you had a basketful of stock to sell you would bring the market for that stock down on yourself. Just because a quote is for a price of x doesn’t mean you can sell as much as you want for that price. Every bid is only for a certain size.
Myron, I think the ridiculous exaggerations and claims used by the publishers are indicative of desperation for new subscribers. Perhaps many more people are on the sidelines in recent years, or more and more people are getting savvy about the claims, thanks to Travis et al, and aren’t getting suckered. I get a lot of material from the Weiss folks and the number and near-pleading tone of e-mails hyping JR Crooks’ new service (I forget the name of it) and Larry Edelson’s new Supercycle Trader has made me think the response to both these hypefests has been at best lukewarm. I even got a call from Weiss asking me why on earth I wasn’t subscribing to Supercycle Trader! Ah well, they gotta pay all those employees.
Yes Dave, “Crooks” new service could be indicative, but you are right the desperation has become very apparent across the board with most of them. There are still a few honest and factual analysts out there, but they are becoming few and far between.
I have a completely unrelated question re: Chipotle stock. I bought it very cheaply, at about $85/sh. I only have a few shares. Since they don’t offer a dividend, I’m wondering if I should sell when they go up again (as I”m assuming they will), and take the large profit (although since I own so few shares it won’t make me a lot), or just hold on in hopes that they offer a dividend someday?
I am not sure if you are looking for a response from Travis. I’m extremely new to everything about stocks (only 1 1/2 months) and don’t own any (playing a stock market game to learn more though) but figured I’d lend my own opinion.
If you really only own a few shares (like 10 shares), you can maybe hang tight to sell when the stock goes up or hold them for a dividend, should there ever be one. I would wait to see if the stock price is affected negatively by checking for when the next earnings report comes out. I’d let loose if the price drops close to $500.
Is it common for companies that don’t pay out dividends to have a nice, rising stock price? I feel like you should definitely hang on to them then. I would hope when they start paying dividends that the stock price of a company valued that high not fall, otherwise I’d sell and buy back at a lower price when it bottoms out or settles.
Hi Ava. Why did you buy the stock? What is it that is or was appealing about the company and its prospects for you? Presumably you didn’t buy it for a dividend, because they’ve never paid one (many growth companies don’t, they reinvest their earnings to grow more — and indeed, growth companies sometimes get punished by investors when they initiate a dividend).
Chipotle is an interesting case because the stock has been taken down, at least in part, by what seems like it should be a temporary crisis (the e. coli in a few stores)… many investors probably fear that this will harm the brand, but in most cases strong brands bounce back from temporary setbacks like this. The real question is whether you think they’ll resume their growth trajectory and continue opening up new restaurants at a breakneck pace to keep the earnings growth going — the multiple the shares trade at, roughly 35X trailing earnings and 40X free cash flow, is pretty similar to what it has been for most of the past five years, down a little bit but not by much, so if investors decide that growth has disappeared and cut Chipotle down to something closer to a market multiple the stock could certainly fall another 30-50%. So far, analysts still see them growing earnings at 15-20% per year, and that’s a rare and wonderful thing for a stock so it’s not crazy, in my opinion, to put a 30-35 PE multiple on that kind of earnings.
But I wouldn’t expect a dividend unless the company has guided to that, and it wouldn’t be a big one or offer much specific support to the shares if they’re falling. It’s really about whether you think the company will continue growing earnings, and what kind of multiple you’re comfortable paying for those earnings.
If you follow a stop-loss strategy to take some emotion out of selling, as many folks do, then you would have sold somewhere in the low-$600s or high $500s, depending on whether you used something like SmartStops volatility stops (about an 18% stop loss now) or a plain ol’ 25% stop loss trigger.
If your analysis of a company changes and you think it’s no longer a worthy investment, there’s little sense in waiting for it to go back up by 10% before you sell. You can’t predict whether it will bounce back or not, and even the most ardent chartist can only give you a probability based on past stock movements (and many different chart analyses might disagree) — the choice is yours, and I’d suggest making the decision based on your assessment of where the company is today and what you think the prospects are, not based on your personal return to date. The stock doesn’t care when you bought it. Or you can be wishy washy, as I sometimes am, and take some profits off the table so you recoup at least a bit of your investment and let the rest “ride” — that removes some risk to your capital, but you’re still exposed to the stock if it keeps rising.
Trading in and out of a stock as it ebbs and flows is usually a losing proposition unless you follow a very disciplined technical strategy — human nature means most of us are tempted to buy high and sell low, and that and other hardwired psychological triggers drive our thinking on a subconscious level and make trading in and out of your positions difficult. Works for some people, but not for most.
Travis: Normally you provide a link to the entire pitch by these lunatic copywriters, but for some reason you did not in this one. Can you add one just so I can understand the context of the entire pitch? I do NOT find the pitch funny at all, and in fact have decided to get my name off all of their mailing lists, and cancel my one subscription published by the same company (Nova X because I find some of Michael Robinson’s picks to be profitable).
I sadly have a “free” subscription to this Digital Fortunes newsletter because it replaced some other free newsletter published by the same company (I never read the old one) and all I can say is the Thinkolator is amazing. How you made the connection to Vishay from the clues you included in the email, unless you have a search engine against all 10Q and 10K’s I have no idea, but you are amazing.
Why Vishay as a recommendation when they have done nothing for a decade? Well Digital Fortunes has a mix of very speculative, long term horizon stocks that may or may not materialize into something significant (like virtual reality, drones and self driving connected cars), and I suspect they needed to “sprinkle” some more conservative stocks in the mix to keep the risk level accessible to the average investor, and to collect some dividends. Vishay is considered low risk by Basenese (most of the recommendations are his), and based on the history you provided, it sounds like a strong probability to continue flat. In 2015 the balancing strategy has not helped, since even their conservative picks are mostly underwater. I have only invested in two of their selections in 2015 (one winner and one not) so they are not worth the email space, or my time to read. The ridiculous spiel is truly a sign of desperation and there is no way I would trust any recommendation from anyone who allows that kind of crap to be associated with their name. In fact, I am embarrassed to even admit I get the newsletter.
Sorry, sometimes I forget that not quite everyone has seen the whole thing. You can see the whole ad here if you’re curious: http://pro.wallstreetdaily.com/WCXEUROZONE/EWCXRC05/
“Nothing succeeds like excess”
Oscar Wilde [1854-1900]
Hello Travis and everybody else on this amazing site,
I have been looking for an advisory service for a while. This wonderful site tales them apart like no tomorrow which brings me to this question: Is there anyone out there that does have a successful advisory. I need to find one that will replace my useless 401K and stop me sinking below the waterline. Surely with all the knowledge Travis and this groups has SOMEONE has found and advisory worth following, one that makes more profit than loses and is worth following. Am I in dreamland? Is there no such thing? Are they all useless and just there to sell subscriptions? I saw a promotion for Jim Rickard’s Kissingercross stunt yesterday. Is this just more on the same? Does anyone have or has has made a list of advisories in “order of failure as there doesn’t seem to be “any order
of success”? A desperate man searching for SOMETHING that does deliver on their promises. I thought an :expert” was someone who knew their stuff. Well that’s what it means the real world. Kind regards to you all. Thanks, Archie
Hi Archie,
I don’t track who might be the best, since I’m just going from their heavily hyped ads and not from their actual portfolio performance. Hulbert does that to some degree for Marketwatch.
I tend to think that anyone who trades individual stocks should be their own advisor, dig in as deep as they can, and get information from lots of different sources (including, perhaps, several newsletters — they often offer a good perspective, some interesting ideas to follow up, or ways of thinking about investments)… investing in individual stocks is a hobby that takes time and knowledge, and might not be worth it even if you have the time or interest because almost everyone (traders, pundits, etc.) does worse than average most of the time.
Those who want to have someone else really make the decisions for them are probably usually better off with a real financial advisor (my preference would be fee-only, not commission) who can suggest asset allocations and managers based on track records and performance, and be more accountable and specific than a newsletter or impersonal advisory service. Or even with one of the robo-advisor systems that recommends index-based ETF portfolios (or similar) for very low cost.
agora made an an offer to provide all their publictions for a onee time fee of 5000 bucks
Travis, have you seem the tease by Matthew Carr (The Oxford Club) of the “Silicon Valley’s Next Big Thing”? He says you should be able to turn $ 2,500 into $34,000. That would be a nice return.
That doesn’t ring a specific bell, but similarly worded things have certainly popped up lots of times. If you’ve got the ad, please forward it along to ILoveStockSpam@gmail.com
Travis, Robert Williams is giving me the opportunity to “skim currencies” that is to get information from Martin Hutchinson about what companies are going to get a windfall because of doing business in dollars when they deal with US business and then having to convert dollars to their lesser valued currencies–all of which will propel their currencies upward. The service normally costs $5000 per year, but I can buy it for only $1,750 per year as a charter member. Huge amounts of money can be made.
It sounds so altruistic that he would offer me the opportunity. One wonders if such enormous gains will be made so easily, why they even bother with me; why not just practice this “skimming currencies” and lie on some beach? Anyway, any feedback?
Travis, Made a mistake, should have written that will raise their stock prices rather than “all of which will propel their currencies upward”
Clearly if these newsletters believed their own BS, they would trade options and not sell newsletters.
They sell newsletters because that is what they are good at. They all know how to spin a great story. Sometimes they are right and sometimes they are wrong, but they all collect subscription fees while they spin. If they are lucky, they get to use their “success” to sell higher priced newsletters. If they are unlucky, they offer services for $49/year or less to get a new crop of potential suckers to sign up.
It is a simple and successful business model that reveals its true worth when many of their letters fail and you see one newsletter outfit after another fold into another.
We see the same in investment advisory services as failed firms fold and their best writers join surviving services.
The letter’s asking price right now(May 2016) has dropped to $875 a year (payable as $1750 upfront for 2 glorious years of Currency & Capital, with another of their newsletters thrown in for free!). What a deal! The letter’s price is dropping like a stone, but Bollinger Bands suggest that it will pop back up any day now, so we all better take advantage of the deal!
Robert Williams latest is the H.E.I.S.T trade that will make you a millionaire next month! He guarantees giving you back a million if you lose….. HOWEVER the small print of the guarantee makes it clear it is not paying you back dollars, just giving you credits to buy more subscription to his services, if his trade makes yoiu just one cent gain, even that guarantee is out of the window. For the guarantee to be valid, you better have paid the full price and be one of the “first 750 to get in”.
Check the guarantee out:
” Publisher agrees to “backstop” the Extreme Alpha subscription costs. The total backstop shall be limited to no more than one million dollars’ worth of subscription credits, and will only be “paid out” to Subscribers who call the Member Services team between 9 a.m., Wednesday, April 19th, 2017, and 5 p.m., Tuesday, April 25th, 2017, and if all the following criteria are met:
The H.E.I.S.T. trade Publisher is recommending today is showing a loss (negative gains), or has been closed out for a loss, in Extreme Alpha’s published track record at or by close of market hours on Tuesday, April 18th, 2017;
Subscriber is one of the first 750 people to become an Extreme Alpha subscriber today [include actual date];
At the time of claiming any credits promised by the guarantee, Subscriber must hold a fully paid-up subscription with the Extreme Alpha service; a