Today I thought I’d take a look at the latest teaser pitch from Extreme Fortunes, a “no refunds” monthly stock-picking newsletter that they’re currently pricing at $2,995/yr., positioned as the “upgrade” letter from Paul Mampilly’s Profits Unlimited over at Banyan Hill and focused more, they indicate, on smaller-cap stocks.
Mampilly, by the way, headlines no less than eight different subscription services at Banyan Hill right now, so he must be spitting out ideas right and left. And he is super-bullish right now, here’s a little quote from the ad presentation:
“I am more bullish now than I’ve ever been in my life.
“More bullish than I was after the tech wreck unleashed the full potential of companies such as Amazon, Microsoft and Google.
“More bullish than I was after 2008, when stocks such as Netflix, Facebook and Tesla rose to power.
“Right now, we have a perfect storm — a convergence of three powerful economic forces — and those forces will push the economy and the market into regions of titanic growth.
“The early winners are already surging, such as Carvana, Wayfair, Zoom — and dozens of others. And folks following my research are already profiting from them.
“This is perhaps the most significant chance investors have had in 123 years to quickly build incredible wealth….
“America 2.0 companies are flourishing now, while old-world companies that we will soon see as relics completely flounder.”
And, naturally, he thinks he has the stocks that will benefit from this “America 2.0” and send your portfolio flying… here’s his first mention of what he sees ahead for his favorite stock:
“We’re talking about quadruple-digit, peak profits … enough to turn every $10,000 into $100,000 over the coming year … simply by hitching your wagon to the economic rocket that’s already begun to blast off.
“Plus, potentially an even more immediate gain of 1,460% within 12 to 36 months by leaping on Paul’s No. 1 Super Bull investment.”
He bases his bullish thesis for the future on continuing growth…
“First, you have to understand what really pushes massive economic growth.
“Those things are cheap money, innovation and eager consumers.”
OK, so clearly innovation has accelerated as we’ve been forced to adapt to “work from home” and “everything else from home, too” over the past six months… and obviously “cheap money” is a big tailwind for the economy as the Federal Reserve and governments of essentially every nation look for ways to stimulate economic activity and fight the depressing economic force of the global COVID-19 pandemic. Whether that means “eager consumers” will continue to drive economic activity or not, I guess time will tell — probably a lot of that depends on how long the pandemic keeps it’s boot on the neck of businesses, particularly small businesses. Whether we’re headed into another massive economic boom coming out of the pandemic, or a depression, or stagflation, I have no idea… but clearly Paul Mampilly is optimistic.
And then we get into the teased “Super Bull” stock…
“I have one huge investment for the people watching this broadcast, the most important single stock to own right now for a potential gain of 1,460% in the years ahead.”
He talks about the parameters for his Extreme Fortunes stocks, including that he wants them to be “industry disruptors,” that they should be small, with market caps between $300 million and $3 billion, and with sales below $3 billion but growing at, on average, 10 to 20% a year. And he wants “scarcity,” either a scarcity of shares available or a company that provides a unique and in-demand product or service without much competition. So I guess that’s the universe of stocks we’ll be choosing from, but what other clues does he drop for his 1,460% gainer? More from Mampilly…
“This is the most excited I’ve been about an investment opportunity in years. I expect people will be talking about this company decades from now, just as much as they talk about Qualcomm, Intel or Micron Technology. It has all the makings of being a mega-sized company … and just like all those companies, anyone prudent enough to be there, at the ground floor, stands to make money hand over fist in the months ahead….
“This company will be a key player to the rise of America 2.0. But not because it produces microchips, or computers, or cars, or batteries.Are you getting our free Daily Update
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“What it does is above and beyond — because it enables everything we see unfolding right now. And it has recruited some of the world’s top minds for it.
“The CEO’s pedigree alone is significant.
“Then you add in the other executives with fame as Silicon Valley veterans, communication tech innovators and more.
“In short, the sheer caliber of people at the helm here is stunning … and it’s why I believe it will emerge as one of the most significant companies of our time.”
And while the transcript says that it’s a sub-$10 stock, with a market cap below $1 billion, I actually went in and listened to the presentation (yes, I love you — otherwise I’d never waste an hour like that)… and lo and behold, they actually left most of the clues out of the transcript… here are a few of those more specific clues:
“We’re talking a pristine triple-crown win: highly desirable and disruptive products, with surging demand and scarce competition.
“And it has only 38 million shares out…
“The CEO worked worked for years at Lawrence Livermore National Labs.”
And then some specifics about the business…
“It is a key supplier for a very rare and very costly material called indium phosphide.
“This semiconductor is integral to linking 5G base towers, creating high resolution radar systems for robotics, security scanning systems and other imaging systems….
“Also a major player in gallium arsenide, which is absolutely vital for industrial lasers, 3D sensing, and industrial LED lighting.
“Also produces germanium, which is used in satellites and solar cells…
“This company holds the keys to all of it. A one stop-shop for America 2.0.”
We even get a little stock price chart, showing that the stock more than doubled within just 30 days, from under $3 on April 1 to about $5.60 on May 1. That was a wild month, so a lot of stocks doubled, but that does provide us with some solid confirmation for our clues.
And we’re told that the stock has a $5 share price “as we speak,” a $200 million market cap, “almost $100 million” in sales, and a projection that income will grow by 412% in 2021.
So what’s our stock? Thinkolator sez this is AXT, Inc. (AXTI), which is a supplier to the semiconductor industry… and a stock that has been teased a few times in the past, most recently by Ian Cooper and Michael Robinson back in 2018. Those pitches were mostly about the “magic metal” properties of gallium arsenide, and how that would take over the world as the next big substrate for semiconductors, but Mampilly is not that specifically focused on gallium.
Here’s how the company describes itself:
“AXT is a material science company that develops and manufactures high-performance compound and single element semiconductor substrate wafers comprising indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge). The company’s substrate wafers are used when a typical silicon substrate wafer cannot meet the performance requirements of a semiconductor or optoelectronic device. End markets include 5G infrastructure, data center connectivity (silicon photonics), passive optical networks, LED lighting, lasers, sensors, power amplifiers for wireless devices and satellite solar cells. “
And though their second quarter was “just OK” when they announced it in late July, with revenue down from last year but rebounding a little from last quarter, and with the business roughly at break-even (they posted net income of one cent per share). Here’s what did get investors a little bit excited — this is the quote from CEO Morris Young for that quarter:
“We view 2020 as a turning point in our business. There are clear signs in the marketplace that strategic applications like 5G, data centers, and passive optical networks (PON) are strengthening. In addition, we believe new applications across our portfolio are creating exciting incremental opportunities beginning later this year. Further, with the relocation of our gallium arsenide manufacturing largely completed and production ramping, we are now focusing on elevating our manufacturing and business processes to serve the needs of increasingly sophisticated applications and customer requirements. In total, we believe we are positioning ourselves for renewed revenue expansion and improving profitability.”
I continue to be think of AXTI as pretty “meh,” and I don’t think I’ve ever owned it — they’ve been around for more than 20 years without ever really “breaking through” when it comes to building the business up to a meaningful scale, the annual revenue has been in the range of about $75 million to $110 million for a decade now, waxing and waning somewhat but never really showing sustained growth. Maybe they really are at the point where things begin to take off, but If so I don’t see any obvious signs of that other than the CEO’s optimism. There is a forecast that they will grow their earnings by 400%+ next year, from about four cents in 2020 to 18-20 cents in 2021, but that’s just from a couple analysts. The forecast is also for $105 million in revenue in 2021, which would be their best year since 2001, but the analysts have always been a bit optimistic on that front — if they were right in their year-out forecasting, AXTI would have had revenue higher than that in 2018, 2019 and 2020, too.
They are finally completing the move of their primary factory, so that should probably help the business settle down after a couple weak years, and they were hurt by the trade war cutting into the business… but they’ve also been a small-time supplier in the chip industry for decades, and it’s really hard for me to envision dramatic change. It’s not impossible, of course, but there’s a fair amount of competition in the semiconductor materials space and I’d have to be much more informed about the really unique nature of AXTI’s products, and the demand for those products, to be confident that they’ll have a super-bright future — and since I’m not a chip manufacturing expert, I’ll let the market tell me what’s going on. So far, that’s “not much.”
Interestingly enough, after that lusty spiel from Mampilly in the presentation, he includes this snippet in the order form…
“This is Paul’s No. 1 pick for the supercharged America 2.0 Super Bull market. A firm he believes will be integral to the development and growth of the world’s new companies. According to Paul, this investment could surge upward of 1,460% in the months and years to come … and now, with the convergence of three titanic economic forces, it’s more important than ever to get in!”
But they they add this caveat:
“NOTE: The investment in the report, ‘The Ultimate Super Bull Investment’ has exceeded our recommended price range. So Paul is replacing this recommendation with not one, but two brand-new stock picks every bit as capable of exceeding 1,000% gains. Complete your order below to get Paul’s top two new stock picks for today.”
That’s just bizarre and nonsensical. If Paul Mampilly was certain this would be the best investment imaginable, with 1,400% gains very likely as it builds the future, thanks to being in the catbird’s seat for all kinds of new technological advancements that are key for 5G and all sorts of other stuff, and with patent protection to assure it will remain in the lead… why is it a huge win at $5.60 or so after a big surge in the month of April, and his top recommendation at some point in August, a month during which it has ranged from about $4.50 to $6 (with that surge to $6 very likely caused by Mampilly’s attention), but then somehow unappealing as it “exceeds the recommended price range” at $5.50 today? The company has not changed in the last month, not in any way that really matters, and the price is still quite close to where it was when we first saw this ad circulating.
This is not a stock that I’m particularly interested in, but the idea that it was the most appealing investment in the world, with huge gains of 1,400% ahead as the “triple crown winner” and his best idea for “America 2.0”, and now it has risen five percent… so it’s no longer appealing? That’s just stupid. And it reminds us, of course, that when it comes to newsletter promoters, selling is more important than thinking — and the idea that now there’s something even better than the idea that Mampilly got you to drool about a few minutes ago, but still top-secret, is just about the most salesman-y thing you can do at the end of that spiel. All that’s left is to try to sell you the undercoating and the “protection plan.”
And a few readers have asked about the other picks teased by Mampilly in his spiel — those don’t really include much in the way of clues, but I can at least toss a few guesses out for you to chew on if you like. Here are the hints they drop:
“The first stock is a revolutionary medical tech company with a breakthrough for people with diabetes — a technology that allows continuous glucose-monitoring with minimal maintenance by the patient. Its technology is 12 times more resilient than competitors. It has already received enormous financing from BlackRock and Oppenheimer … and it is priced at almost nothing right now.”
That must be Senseonics (SENS), whose implantable glucose monitor does last 12X as long as conventional “temporary” implants. And yes, it’s a tiny company whose share price has dwindled as the revenue has collapsed — they suspended the commercialization of their 90-day implantable monitor earlier this year, which was the source of their revenue, and withdrew their guidance and sought new funding as they work to get the 180-day monitor approved, hopefully by the first quarter next year, and then the 365-day monitor maybe after that. Patients seemed to have had success with the 90-day monitor, but they were exploring strategic alternatives even before COVID, and the disruption to business from the pandemic appears to have pushed them over the edge for the moment. They got a new partnership with Ascensia, including new financing in the form of some convertible preferred debt and a distribution agreement, so I guess they’ll survive — whether they’ll thrive, I have no idea.
“The second stock gets us into the battle with heart arrhythmias — specifically, atrial fibrillation. Thanks to a revolutionary new technology, one company is blowing all others out of the water — with twice the effectiveness of competitors. In the last few years alone, its revenue has more than quadrupled, and it’s on track to more than double in the next two years.”
Lots of companies are working on new products for atrial fibrillation, including big fellas like Boston Scientific (BSX) and Medtronic (MDT), but since we’re talking small caps I’ll guess that Mampilly is hinting at BioSig Technologies (BSGM), which pretty well matches on those revenue clues… but is really just a wild guess. They’ve been focused on some antiviral stuff lately, like everyone else they’re working on a COVID-related product, but before this year the company was primarily focused on their Pure EP system for improving biomedical signal processing and therefore helping to improve catheter ablation treatments.
“The third stock is a leader in the ‘smart’ tech of the future, with automobiles, offices and more being built using its patented technology . Its technology is critical for the arrival of new “smart buildings,” which I believe will be everywhere in the near future.
That could be literally almost anyone in the “Internet of Things” business, I won’t even hazard a wild guess.
The fourth stock is a go-to for some of the world’s biggest companies — I’m talking 40% of the Fortune 500. The reason is simple — it’s able to use its proprietary modular technology to cut corporate energy expenses in half. On top of that, the U.S. Department of Energy declared that this technology will have a dynamic impact on the world’s energy consumption, which I believe will lead to massive gains for us.
My best guess on that one is Bloom Energy (BE), which has been teased for quite a while by the Oxford Club’s Dave Fessler as the “stock of the decade” thanks to their modular fuel cell generator systems. I don’t know if they have worked with 40% of the Fortune 500, but they have certainly installed power systems for a lot of large companies.
“The fifth stock is a leader in the Internet of Things revolution — perhaps one of the most significant leaps of our lifetime. It’s estimated its particular technology could soon connect trillions of devices around the world. It is perfectly positioned to become a leader in a market that is estimated to grow almost 500% in a few years.”
Again, that could be dozens of companies so I won’t hazard a guess… but if you’d like to throw your guesses on the pile for any of those five, or let us know what you think of AXTI’s prospects, well, we’d be delighted to hear your thoughts — just type them into the happy little comment box below.
And as always, your fellow readers would like to know what you think about the newsletters you subscribe to — so if you’ve taken a spin with Mampilly’s Extreme Fortunes, please do click here to share your experience with the rest of us. Thanks!
Disclosure: Of the companies mentioned above I am invested only in Amazon and Google parent Alphabet. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.