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“Trump’s Revenge” and “Trump’s Secret Legacy” … Checking out Gilder’s “Will This Weird Device Be in Your Home Soon” Pitch

Who are those teased "Three Spectrum Millionaire Makers?"

By Travis Johnson, Stock Gumshoe, March 21, 2022

This teaser pitch from George Gilder has been filling up my inbox lately, but it’s also an older pitch that has for some reason been rejuvenated — this time, with a Donald Trump connection to help grab investors’ attention (when in doubt, throw the name of a polarizing politician into your teaser ad… it will catch peoples’ eye and inspire either love or hate in a lot of readers, which makes you more likely to read the ad — advertisers don’t care who the president is, but they hate apathy).

Here’s the intro to the latest version of this ad, the ad still carries a November 2020 date but this part seems to be new:

“In his final year in the White House, President Trump oversaw a game-changing decision that could create $15.1 trillion in new wealth for America

“According to a tech insider with close ties to Google, Apple and Microsoft, it will “rewrite the rules of what’s possible.” And if America’s #1 futurist is to be believed, it could help everyday Americans make a small fortune.”

So what’s the story? I first revealed these “secret” stocks on December 15, 2020, and those haven’t changed… so some of this article is a repeat from the piece I posted back then, but I’ll go through and provide an updated take below. The basic meat of the tease, and the companies being pitched, are unchanged from when we first covered this 15 months ago… but, of course, the price and outlook for those stocks has probably shifted to some degree, so we’ll try to look at them with fresh eyes.

The basic spiel is that Trump’s legacy will be the next wireless standard for WiFi, which can enable much faster and higher-bandwidth wireless networks… and maybe create meaningful competition for Verizon and AT&T’s cellular networks. I’d say that’s stretching things when it comes to any connection to politics here, but that’s pretty common int the newsletter world. He’s selling subscriptions to the George Gilder Report, which is his entry-level newsletter ($79/yr).

Here’s the final bit of urgency from the order form about what he’s offering here, just to start you with a little summary…

“My brand-new report Three Spectrum Millionaire Makers, in which I reveal the names of the three stocks I expect to soar as a result of the Federal Ruling. (Remember, last time it took just two months to create one of the greatest stock opportunities in American history.)”

The big picture argument is that the US is going through a telecom revolution akin to the mid-1980s, when spectrum was initially freed up for cellular telecom through the auction process.

“Docket 81-413 was a seminal event in American history.

“Moments like that don’t come around very often.

“But one occurred very recently – on July 27th, 2020.

“On that day the FCC opened up NEW bands of unlicensed spectrum.

“One that’s FOUR TIMES bigger than the spectrum liberated in 1985.

“This time around it’s known as Docket 18-295.

“And though it’s not the sort of thing that makes front page news…

“It has the technology world buzzing.”

And he includes a couple quotes from bold-face names in technology:

“Facebook’s Director of Wireless called it ‘clearly one of the most important wireless announcements in a long time’.

“Broadcom’s Vice President of Marketing said it’s ‘a definitive moment in US wireless history… the most substantive decision any Commission has made on unlicensed spectrum in almost 25 years’.

“Intel called it the ‘most significant contribution to Wi-Fi in nearly 20 years’.

“Apple said ‘it sets the course for the next generation of Wi-Fi networks’.”

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So that’s the big-picture driver, the FCC announcement in early 2020 that the 6 GHz band will be opened up to use by WiFi networks, which will free up a lot of new bandwidth for unlicensed operators (like, your own hot spot… or the larger WiFi networks at your local football stadium or shopping mall).

The common terminology here is that we’re moving on to the next generation of Wi-Fi networks, called Wi-Fi 6E, which will be 2-3X faster than current Wi-Fi networks, with the 6 GHz spectrum allowing faster data transmission than existing Wi-Fi networks, and increase the bandwidth available by offering up a broader band of usable spectrum, helping to ease congestion. Wi-Fi 6 is available now, using the latest and better wireless standards, but devices that use Wi-Fi 6E, which adds the capability to use that newly available 6 GHz spectrum and therefore cut down on congestion in places where a lot of devices are connected to the network (or a lot of networks are bumping into each other, like in urban neighborhoods), were just beginning to be available when Gilder’s teaser first ran in late 2020, and the transition seems to be well underway now — though it might take a long time to make a big difference for most people, since the new spectrum will only be usable by new routers and devices that have upgraded 6E hardware.

As with many tech stock prognosticators, Gilder is probably right on the direction… and exaggerating about the instant impact and instant profit, since you need urgency to sell newsletters.

Here’s some more from Gilder on this big shift:

“And that’s where the technology hidden inside THIS device comes in…

“Inside is a computer chip that was built within a month of the FCC’s decision.

“And it allows new technology to access – and SHARE – the 6 GHz part of the spectrum for the very first time.

“If history is any guide, this may well prove to be the single most valuable technology of the 21st century.

“So much so that every single major tech firm in America is backing it….

“To be clear: these companies are usually direct competitors.

“But in this one instance… they’ve teamed up…. the list runs to nearly 800 major multinational corporations…

“… hundreds of multi-billion dollar companies are about to RUSH to use the new bandwidth the FCC just unlocked.

“In fact, it’s going to be a stampede…”

And that’s where we’re apparently going to see riches flowing…

“This will kickstart a tech ‘arms race’ to dominate the market…

“In the next six months, every major tech firm in the world will race to get to market first.”

How do we do this? Who’s going to make the money? Here’s how Gilder puts it:

“See, your phone or router can’t simply tune in to the newly-opened spectrum.

“To access this “virgin territory,” it needs special technology….

“The companies that make spectrum sharing possible are effectively the “gatekeepers” of the new industry.

“They’re the ones that make everything else possible.

“History proves… these firms were some of the best performing stocks in the world last time this happened.”

And he sees this new surge of faster broadband networks creating hundreds of billions of dollars in new wealth as technology marches forward, inspiring new use cases and new products, and driving adoption of more connected devices, which is essentially the same “Internet of Things” and “everything is connected” future we’ve seen evangelized for years now.

Who wins? Well, after all the big picture “futurist” projections that are really what made George Gilder famous, we do get to some specific hints about investments he likes as a play on this future… he packages that as a special report he calls “Three Spectrum Millionaire Makers,” so what kind of details does he include to tantalize us (and feed the Thinkolator)?

“Chances are, you’ll see new routers designed specifically to work in the new part of the spectrum. (Netgear and Linksys are already developing hardware. And Intel says it’ll have chips ready for January 2021.)

“That gives you – at the outside – a few weeks before this story breaks out into the open.

“But don’t think you can wait around until then to make your move…

“You see, I’ve discovered that the computer chips required to tap into the new 6 GHz band are already available on the market right now.

“I’m betting they’re actually inside new “Wi-Fi 6E” routers already.

“And they’re made by a company that already supplies high end computer chips to some of the biggest companies in the world.”

More about that stock:

“It’s is [sic] easily the world’s #1 ‘spectrum sharing’ technology firm. It had chipsets built within a month of the government even legalizing the 6 GHz band. It supplies Apple, Google, Microsoft (all trillion dollar companies), and scores of others. If firms want to roll new devices out, they’ll need this company’s tech.

“The last time I recommended this stock, it soared more than 20x in the next four years – and it’s a must own once again.”

That could conceivably be either Qualcomm (QCOM) or Skyworks Solutions (SWKS), I expect, both had those kind of 20X runs in the late 1990s into the peak of the dot com bubble (and during Gilder’s heyday as a stock picker)… though he’s almost certainly talking up Qualcomm given the more direct exposure to WiFi and “spectrum sharing” MIMO technology on both the router and device end, and the fact that they announced their new Wi-Fi6E chips for both routers and devices roughly a month after the April FCC announcement.

Qualcomm is still probably the most direct play on both 5G and Wi-Fi6E chips, and it’s among the largest technology companies in the world… and they had an extraordinary run in 2020, finally, a year or two after it was expected, as 5G demand finally began to pick up and the volume of wireless upgrades surged because of the sudden “work from home” push for equipment. The stock is still rationally valued, with a valuation that has fallen considerably as the earning shave grown in the past 18 months (forward PE is only 13 now, trailing PE is 18), and with a decent dividend yield (nearly 2%). Back when we first covered this ad, analysts expected QCOM to earn $7 a share in 2021, and growing another 10% or so in the year following, and that turned out to be very pessimistic — they posted $8.54 in adjusted earnings in 2021, and analysts now expect almost 40% earnings growth this year. The future expectation remains more conservative, as tends to be the case for big chip companies, analysts never want to go out on a limb with those kinds of estimates because the semiconductor business has tended to be so cyclical in the past, falling hard when producers overbuild supply and misjudge demand, so now the expectation is for only about 7% earnings growth in 2023 and 2024. I’m not an expert on Qualcomm, and don’t currently own the shares, but that seems awfully cautious to me.

The big fear for Qualcomm, and the reason for that 2023 caution, is probably Apple’s modem — investors have long feared that Apple, who hates having to pay through the nose for Qualcomm’s modem chips, will be developing its own modems for future iPhone models and bypassing Qualcomm, or that other up-and-comers will continue to pressure Qualcomm’s lucrative per-device royalties on their chip designs, and at least on the Apple front, that fear seems finally to be coming to fruition — there are many reports that Apple will be using its own modems starting with the 2023 iPhones.

Qualcomm has been through many cycles, they’re really just getting that strong growth from 5G wireless upgrades, and should also be benefitting from the emergence of the WiFi 6E standard, but the number of wireless devices sold with Qualcomm modems and paying royalties for Qualcomm technology is still the big driver of their revenue (or better yet, full Qualcomm chipsets, their Snapdragon chips are used by most of the big brands outside of Apple). Their hold on the wireless market is pretty clearly slipping a little, there’s more competition than there was for the 4G upgrade cycle… but they’re still doing awfully well, they’re still the titan of wireless connectivity, and the stock is pretty reasonable here.

And what else does he hint at?

“The second stock you’ll hear about is going to be central to bringing this new technology right into your home. It already supplies close to 58 million homes and businesses across America. Its network is already growing at an exponential rate – doubling roughly every 18-24 months. As Wi-Fi 6E rolls out across America it’s THIS company that will likely be on the frontlines.

“Chances are, this company could soon be installing its tech in your neighborhood – or even your home.”

The best match there, sez the Thinkolator, is Comcast (CMCSA), which does indeed reach about 58 million homes and businesses with its high-speed cable broadband, including mine — and, therefore, supply the best high speed internet option for most of those end points, given the lack of fiber to the home or real competition in most areas (I live in one of the many “Comcast monopoly” areas). That would mean they’re the likely seller of improved home internet access through upgraded home wireless networks, since many of their customers just rely on Comcast to also run their home or small business Wi-Fi network (which is essential, of course, since almost none of us use ethernet or direct wired data connections anymore — even our desktop computers generally get their internet connection wirelessly).

And yes, their trajectory has generally been that they’re doubling their network capacity every 18-24 months (though not actually doubling their customer count every two years, of course).

Comcast has been pretty nimble about the transition to cord-cutting, with people giving up their cable TV in droves to switch to streaming (Netflix, Roku, etc.), but they’re also a pretty powerful conglomerate with huge content ownership, like the new NBC-driven Peacock streaming product, and they’re trying to walk that tightrope between cable boxes and streaming hardware carefully to keep hold of as many customers as they can, integrating streaming into its Xfinity X1 products… and, of course, charging more and more for broadband internet to make up for the declining customer base for the big cable TV “bundle.” They also pay a decent dividend, about 2.3% now, and while they’re not growing either revenues or earnings in any big way (earnings fell last quarter, though revenue did rise) they do have a steadiness from their huge installed base — even though people are cutting the cord, they’re not all doing it at once… and nobody is giving up internet access if they can help it.

Comcast makes things a little more complicated by being more than just a broadband company, of course, so one of the reasons for their dropping earnings last quarter was the drop in ad revenue on some TV networks (partly because election ads finally paused a few weeks after the 2020 election), and they also have had ups and downs with the temporary closure of some of their huge theme parks, including the Disney-scale Universal Studios resorts in Florida and California. Right now, they’re essentially back to where they were in 2019, trading for about 15X earnings and expected to grow earnings by about 10% a year. Not bad for what is at heart a utility company stapled to the NBCUniversal entertainment content company, though I confess I have trouble getting all that excited about Comcast’s growth potential. The share price is right about where it was in November of 2020, when Gilder’s ad first ran, so you at least haven’t missed much so far.

And one more…

“The third stock you’ll hear about just made one of the smartest acquisitions in its history. It now supplies nine of the world’s top ten global internet network operators – and the top six internet content providers.

“I’ve known one of the founders of this company for more than two decades, so this company has been on my radar for a while – and now is the time to make your move.”

Not a lot of clues, but the Thinkolator has a guess… and it’s a pretty solid one. The best match here is the optical networking company Infinera (INFN), which should, along with its networking competitors, continue to be a beneficiary of the surge in demand for more and more bandwidth and more data transmission. If that’s correct, then the move they “just” made was to buy Coriant, though the deal was announced in the Summer of 2018 and closed on October 1 of that year, so it’s old news these days.

That does match the “nine of the top ten” and “top six” hints, though, as per Infinera’s pres release at the time, and it’s also a match in terms of the past Gilder connection — George Gilder has presumably been in contact with at least one of the three Infinera founders as they’ve both spoken at the same conferences… and one of them, David Welch, has spoken at Gilder’s “Telecosm” conferences at least a couple times in the past. Gilder has recommended, written or spoken about Infinera many times over the past 20 years or so (sometimes negatively, as Infinera’s specialty in optical-to-electronic connections went against his dreamed-of “all optical” world), and there was a Gilder headline (article is for subscribers only) that indicates a still positive opinion on the stock (“Infinera Continues to Impress… There’s just no stopping this company….”)

I can’t claim any great insight into Infinera, but the chart of the past decade indicates something of a failure to launch for the company — maybe now is the time to make your move if things are about to start to look up for Infinera, but the past decade has largely been a disappointment. Here’s a graphical representation of that, the blue line is INFN’s share price, which is roughly where it was a decade ago (up 9%), the orange line is the slow and rather tepid growth in revenues, which have doubled… but doubling revenues over ten years isn’t enough to cut it for a company that’s supposed to be an emerging technology leader. And the actual investor returns have been disappointing largely because they haven’t turned this into a profitable or growing business in any real way — the red line is the free cash flow per share, and the green line their earnings (both of which are negative — acceptable for a startup, but clearly disappointing for a networking technology leader closing out its second decade as a public company):

Still, that doesn’t mean the future will disappoint as the past did — what matters is what happens next, and there is a little optimism on that front. Analysts are anticipating a return to profitability in 2022, when they expect adjusted earnings of 12 cents (and then 49 cents in 2023), thanks to revenue growth of about 10% and a substantial improvement in margins. If so, that would mean this $2 billion company that has so far burned through about $1.5 billion in 20 years might start to become a real and sustainable business. I should warn you, however, that those expectations for 2022 and 2023 are essentially the same as had previously been expected for 2021 and 2022, and the company failed to meet those expectations last year… which is why INFN is still right around where it was when Gilder first pitched these “spectrum millionaires” in November of 2020.

Still, hope springs eternal. If Infinera every stops disappointing investors, and starts to get valued based on that anticipated earnings potential, then it’s currently valued at about 50X forward earnings but only about 17X 2022 earnings… which is OK if they hit those 2023 estimates, but I wouldn’t blame you for being a little skeptical of those forecasts (yes, the pandemic threw a wrench into business for everybody… but INFN estimates have generally been trending downward for years… and three years ago, those same analysts were forecasting 60+ cents in earnings per share for Infinera in 2020).

Maybe Gilder’s got this one right, and he certainly knows the company better than I do… but there hasn’t been a lot of profit in the optical networking or other networking hardware companies in recent years, despite the steady and dramatic buildout of next-generation data centers. That means he’s at least making a prediction that’s outside the consensus, so that’s interesting, but I’m not jumping to invest in INFN at the moment… even if, yes, I agree that the bandwidth blowing through data centers and telecom companies over the next decade is likely to be on a scale that we can’t really even comprehend right now. And data centers are in the process of upgrading to 400Gig ethernet and incorporating yet more optical networking, which should be good for everyone… but so far hasn’t really brought the windfall for the optical equipment companies that was expected. Maybe it will.

So this is, like we’ve seen so many times, a tease about a secret little chip… but not really a recommendation for a specific secret chipmaker (even Qualcomm, which does make chips, can hardly be considered secret or contrarian — it is the most well-known wireless chipmaker in the world), so this seems to be more of a broad bet that this latest advancement in WiFi will spur more business for a lot of companies who sell into that sector. I wouldn’t be against that, personally, but nor am I champing at the bit to own these specific “spectrum” stocks at the moment… and so far, none of these three have lit the world on fire in the past 15 months or so since the ad started running. The ad still carries a November 2020 date, and this is the performance of those three companies since then, compared to the Nasdaq Composite and the S&P 500…. not terrible, but weaker than the broad market averages. Meh.

Force me to buy one of these, and I’d go with the one that is both strongest and cheapest: Qualcomm. I don’t own the shares, but I expect the Apple modem fears are probably overdone, at least at this valuation for QCOM shares. It’s certainly true that the semiconductor world is wild and wooly right now, so we could see plenty of volatility, but that’s the first one I’d look at today… and maybe I should, I’m certainly under-exposed to the extremely high chip demand that we seem to see everywhere right now.

Your opinion, of course, might vary — that’s why you get to decide what to do with your money. If you’ve any thoughts on the potential for this Wi-Fi6E upgrade, or other winners you think are more interesting if you don’t favor these three, please do let us know with a comment below.

And we got a lot of feedback about George Gilder when we first covered his return to the newsletter world with his “don’t buy 5G, buy 15G” pitch a couple years ago, but if you’ve subscribed to his George Gilder Report please do click here to share your experience with your fellow investors. Thanks for reading!

P.S. I’ve left the original comments for this article attached, so you can see what other folks were thinking back in December of 2020 — sometimes a little context helps.

Disclosure: Of the stocks mentioned above, I currently own shares of Google parent Alphabet. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.

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vipulsea
Irregular
vipulsea
December 15, 2020 6:05 pm

Is this the same George Gilder of the Dot Com Era – If it is – there is no interest to invest in any of his picks – he was the poster child of the “telecom/fiber revolution” of the 1998-2000 era and when they got pounded, he disappeared – he should stay disappeared.

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bojon13
Member
bojon13
March 8, 2022 1:58 pm

oh , one of those gurus, maybe he should guru his head up his %^*( !!!

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12 monkeys
12 monkeys
March 21, 2022 5:04 pm
Reply to  vipulsea

OMG! G. Gilder?? I once subscribed to his newsletter in the late 1990s! he was THE worst stock-picker ever! JDS Uniphase?? THE biggest bankruptcy ever–(over #150 billion). and “Global Crossing”?? another huge FAIL! I made the mistake of buying these stocks. he was dead wrong about the future of the WWW.

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kelstocks
kelstocks
December 16, 2020 5:17 pm

You got that spot on. Ive paid for his life time membership when he offered at $149 last year. I fou d his thinking intedesting after reading his book “life after google”. Prior to that I had not heard of him. He has bought INFN @ $5. I jumped on at $8 and im glad I did. Last week INFN spiked due to a deal they made with BroadBand Tower in Tokyo. I added to my portofolio more shares after the press release because this reinforced more Gilder thesis as to why the optical networks are the future and as we move towadd iot and 5g this technology is a no brainer.

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12 monkeys
12 monkeys
March 21, 2022 5:07 pm
Reply to  kelstocks

get away from him! he is THE worst trader of the dot.com era. JDS Uniphase?? $150 billion total loss! Global Crossing?? another mega-fail. he got it so wrong! almost every pick he made is now long since bankrupt.

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Vivian H Lewis
December 16, 2020 6:12 pm

good grief I own Qualcomm and Comcast although my beat is non-US stocks and I never heard of George Gilder. Either this is easy picking or I am especially lucky!

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wayne holmes
Guest
wayne holmes
March 18, 2021 1:26 am

Mr. Gilder was most believable and I couldn’t wait to spend my $79. But, dealing with his admin about logging in to his report that contained the tickers made the experience the most frustrating purchase of my life. First, they had received my payment, but there was a 24 hour waiting to access the thing. Then, they couldn’t find where I had actually purchased the subscription. I tried to explain to the 1st, 2nd and third lady that the $79 showed up on my bank(card)statement. I never could log in, but I now have the tickers which is all I am concerned with. George, your fellow marines say Semper Fi, anyway. You gave one hell of a talk, but everything else reminded me of a light bulb hanging down from the ceiling and it took me back to the 50s.

erug
Member
erug
April 27, 2021 1:57 pm

I wonder if initial s G G has the same credence as Gordon Geco. Just s a spoof.

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GeneH
GeneH
March 9, 2022 4:55 pm

George has given a lot of good picks in the last 2 years. Many have gone up, as has the overall stock market. Coincidence? Perhaps. But he did recommend qualcomm at $65, tsm at $49, and tsem (tower semiconductor at $18. All of these have done quite well. I’ve noticed that his picks since late 2020 have done poorly, but again, unknown to many, there has been a huge ongoing rolling correction that has hit his newer picks. One might say, “timing is everything”

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art
Member
art
March 21, 2022 2:14 pm

STM is well positioned in the LEO satellite space (pun intended)
orbiting now around $42 with a target of $63
any thoughts?

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denariisolid
Member
denariisolid
March 22, 2022 11:11 am

Noticing GPN, covered many moons ago by Gumshoe, is on a premium pullback. Add 1 or 2 why not.

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Craig Swartz
Member
Craig Swartz
March 22, 2022 11:32 pm

I seem be getting George G’s report, although I can’t recall paying $79 for it.
He does know semiconductors well, & I’ve always found semi stocks are my most profitable sector. They’re the magic in everything, they keep improving, and I see no end to that trend.
And, Way to Go, Dude, CORRECT! on those 3 stocks which are among his 20+ current recommendations! I just buy most of them, & if it goes down more than 20% it is OUT. The result is a far “Greener” (less Red) portfolio.

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Coloroddy
Irregular
February 16, 2023 8:55 pm

I saw George G speak on a panel at FreedomFest 2022 in Las Vegas. He gave a terrific 15 minute talk about capitalism and prosperity. I was impressed, especially given that he is getting up there in years. I bought his Wealth and Poverty book as a result. I am not sure about his stock picking abilities, but I sure liked him as a person. FWIW

backoffice
Irregular
February 8, 2024 11:57 pm

His new spiel is about some type of fabric, aluminum, graphene with a quality unmatched,

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