I love Thanksgiving. I love that we all try to remember to slow down our lives a little bit, spend time with family and friends, and give thanks for the incredible blessings most of us enjoy and take for granted.
But I also love naming our annual “Turkey” teaser stock.
What is this? Well, if you haven’t been around these parts for long it’s the continuation of a tradition that started in November of 2008, when Stock Gumshoe was about a year and a half old. Here’s how I described it back then:
“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.”
Seeking out these Turkeys is made easier by our tracking spreadsheets, of course, which we’ve been keeping since we started solving these teasers for you in 2007… so we know which stocks were hinted at and teased as “God’s gift to the individual investor” over the years, and we know exactly what happened to them after that. You can browse those spreadsheets yourself if you like, they’re all on our Teaser Tracking page here, so you can also sniff around and see if your Turkey is different than mine this year.
So it’s not just that we identify the worst teaser pick of the past twelve months — though usually the Turkey is one of the worst few picks (there are almost always a couple stocks that are teased by newsletters which fall by at least 90% in any given year, and typically at least one that falls by 99 or 100% and disappears into bankruptcy). The Turkey has to stand out, too, for the absurdity of the newsletter ad’s promise when contrasted with the actual stock’s performance — you’re not going to win “Turkey of the Year” if you promise 20% gains and your stock falls by 90%… you need to promise us that crazy thousand-percent gains are right around the corner, and you need to make that promise with a straight face.
There are a few stocks that were picked over the last year or so that could make the cut in a normal year… going back to the very beginning of our sample period, we’ve got Anavex (AVXL), subject to absurd promises about its Alzheimer’s Disease drug from Ray Blanco at Agora’s FDA Trader just before Halloween in 2015, and Second Sight Medical (EYES), picked by Greg Miller at VentureCap Strategist at about the same time — both of those are down more than 60%.
But weak performance from a couple speculative and over-promoted biotechs doesn’t cut it this year, we need something bigger.
Natcore (NXT.V, NTCXF), which has been teased many times by Angel Publishing over the years, had a rough year as well — but that one’s been up and down for five years, thanks in part to those Green Chip Stocks folks, so even though we were told it holds the key to endless energy, and even though it’s down 60% in a year since they pitched it back in the Fall of 2015, and 50% since they teased it again in February, that ain’t enough.
Who else came close that might have pontificated on powerful promises more recently? Well, we’ve got Ernie Tremblay with a couple weak biotech stocks — he promised riches for Transenterix (TRXC) as the “bionic surgeon” whose FDA approval was “imminent” back in January… and that might have been enough to get his name engraved on the coveted Turkey statuette, but he started aggressively pitching that stock when it was around $2 and it has only fallen to about $1.65 now… so we give him a little pass on a technicality on that one, even though he was even more aggressively pitching the same stock up until the eve of the FDA’s expected response when the stock was near $5 a share and it’s down dramatically from that price. Plus, to be fair, the FDA rejection was a pretty big surprise to most folks on that particular bionic surgery tool.
And Tremblay also has the worst performer among the very recent teaser picks — I hate to name a “Turkey” only a month after it was first teased, an October teaser pick should really be a candidate for the following year’s Turkey of the Year contest, but his promotion of Cempra (CEMP) as the savior for sufferers of “Old Man’s Friend” was surely a stinker… and the FDA hasn’t even given a decision on that antibiotic yet, the stock has fallen because of contract manufacturing worries and, more importantly, because the FDA’s advisory committee was very concerned about some toxicity issues and just barely voted to recommend approval, so that makes investors start to shrink the potential market for the drug even before we learn about whether the FDA will actually approve it in December. Still, being down 60%+ in less than a month is a strong argument for Cempra to make it onto the podium.
As always, we had a few real “penny stocks” at the bottom of the tracking spreadsheets as well — no junior gold miners this time, thanks to the upsurge in gold stocks in the first half of this year, but several other teensy guys are contenders… including a couple silly penny picks from Alex Koyfman, like Bee Vectoring Technologies (BEE.V, BEVVF), which was pitched as a solution to “Einstein’s Prophecy”, and his lower-key tease about the artificial diamond stock Scio Diamond Technology (SCIO). But those were ridiculously small stocks, most folks would not have taken them seriously anyway.
And last year’s teaser about MagneGas (MNGA) came close as well — that was a pretty ridiculous story, about how somehow artificial gas for welding that’s made out of trash was going to revolutionize the energy industry, pitched by Dr. Kent Moors as a “hotter than the sun” gas molecule with the headline that “there’s never been a moneymaking situation quite like this in the entire history of energy!” That stock has been down pretty sharply over the past year, losing 75% since the teaser ad was covered here for the Gumshoe Faithful.
But unfortunately for MagneGas, it couldn’t hold a candle to the teaser pitch that Dr. Moors had started up about a month earlier, almost exactly a year ago… and that, as longtime Gumshoe readers will probably have guessed by now, is where we find our winner: Dr. Kent Moors and his “sand power” pitch about SunEdison (was SUNE, now SUNEQ).
If you don’t remember that particular story, SunEdison was once the silicon wafer company MEMC Electronic Materials and it went from making the wafers for others to making its own solar panels and building big utility-size solar installations… which was exciting and got lots of investors revved up, but eventually led to them building up a highly levered company as they borrowed buckets of money to expand more and more quickly.
Then the hedge fund folks got their talons into SunEdison, convinced them that the best way to “create value” was by expanding even more quickly and spinning their cash-generating utility project off to “yieldco” companies to feed the ever-growing investor thirst for dividends. That was exciting for a little while, and it allowed further levering-up because they raised plenty of money through those yieldcos to buy the projects from SunEdison… and then all of a sudden it stopped working, and it stopped being exciting, and the financial engineering started to fall apart.
That was all before Kent Moors recommended the stock — it had peaked around $30 or so, and Moors, I’m told, started recommending it to his subscribers in the $3-5 neighborhood (his teaser ad started rolling heavily when the stock was at about $3.25). So that seemed like maybe an opportunistic “buy low” opportunity, since Moors was convinced that every road to a solar future went through SunEdison.
But it was not to be — the financing dried up, SunEdison was already unable to generate enough cash to service its debt load by the time Moors was teasing the stock… and he kept on teasing it, over and over, for a couple months. It was a powerful and overwhelming ad, all about how this company had a unique way of creating solar panels from sand with a patented process, and there just wasn’t anyone better… and that, while perhaps true in parts, was not the whole story — the ad did not, of course, mention the fact that most other investors had given up on SunEdison, or that the balance sheet was a time bomb.
And Moors’ publisher essentially acknowledged how un-unique SunEdison was by very quickly rejiggering the ad in February or March, just as SunEdison was about to actually file for bankruptcy, so that they could use the same compelling ad about “one little company” that will control the future of this miraculous “sand power” to tease an entirely different company. That second version of the ad, starting a few months after the original SunEdison teaser, was about the much smaller and less important company JinkoSolar (JKS) — JinkoSolar has also been trending down ever since that ad started, but, unlike SunEdison, it’s not in bankruptcy.
SunEdison will probably go to zero, unless there’s some hidden stub of value underneath all that debt that I’m unaware of… and I don’t know exactly at what price Moors sold (I assume he recommended a sale by the time it dipped under a dollar leading into the bankruptcy filing, but maybe he held on to the bitter end — given his robust enthusiasm for the company and the notes I got from some of his subscribers, he almost certainly kept recommending a “hold” as it swooned down to $1.25 or so in February and March). But the future was pretty well foretold by the collapse in shares in the months before Moors recommended and heavily teased the stock, when a company loads up with that much debt and the share price collapses to the point where they can’t do an equity offering, the bondholders are in charge and stockholders stand very little chance of coming out of it with anything.
So there you have it — the Turkey of the Year is Dr. Kent Moors’ recommendation of SunEdison from November of 2015 through February of 2016… huge promises, clung to ardently, in a misleading ad that promised the moon and delivered bupkis. If you’ve got another favorite turkey for the year that was, let us know with a comment below.
And if you’re curious about all those Turkeys from past years, a list which includes such infamous names as Solazyme, Gasfrac, Raser Technologies, Tengion and HRT Participacoes, most of whom no longer exist under those names, you can see those past Turkey of the Year articles here. There has yet to be a rebound from a stock whose teaser ad won the Turkey, which is more of a commentary on how far they fall before they win that coveted award than it is on the weight of winning.
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P.S. I also always like to trot out my own dumbest investment in these annual articles… just to be fair, and to be clear that I’m fully aware of the fact that everybody has blind spots and lousy investment ideas that fail to work as expected. In my case, I’d say the worst holding I’ve had over the past year (and written about for the Irregulars) was the junior financing/royalty company Grenville Strategic Royalty (GRC.V, GRVFF) — I sold the balance of my holdings in that one after yet another disappointing quarter of writedowns back in August, my note about that to the Irregulars at the time is here if you’re curious about the details.