This is another one from Louis Navellier, this time for his Global Growth newsletter — he’s going out on a bit of a limb with this one, saying that the stock will double in less than a week …
“All thanks to its mammoth Colombian, Argentinean, and Peruvian reserves. Buy this one today and I guarantee you’ll thank me a thousand times on June 13—or you won’t pay a dime.”
So … will he be right? And which stock are we talking about here?
Let’s go backwards, and talk for a sec about whether or not he will be right. This is a popular advertising ploy, promising dramatic short term performance, then saying that if they’re wrong and you’re dissatisfied, you get your money back.
Of course, they also know that once you subscribe to something, you’re (if you’re like most people) going to believe that it’s successful, at least in the near term — to ask for your money back is both a distasteful task for most folks, and an admission that you’ve ordered something you didn’t really want. Most people don’t do it.
And on the other side, Navellier’s marketing folks know that their marginal cost to send an email to each new member is almost nothing — if you do sign up based on this ad, then cancel your subscription and get your money back, they haven’t lost much. It doesn’t cost them any more to pay Louis and his researchers for 10,001 subscribers than it did to pay them to write to 10,000. And once you’re in the door, they’ve got a chance to impress you with the rest of the product, and show you the current picks that are making money, which means there’s at least a decent chance you’re going to stick around for a while as a paying subscriber even if their short-term promise of a double in this particular stock doesn’t come through.
So it’s hard for Navellier’s folks to lose in this situation, right or wrong.
Which doesn’t mean that this won’t be an interesting stock, nor that it won’t really double (anything can happen, after all) … just that I doubt they’re really looking at this as a huge bet on their part that the stock will perform as touted, even though they probably really believe it has a chance to do so. It’s primarily an advertising technique.
Now that we’ve got that out of the way … what’s the stock? I’m assuming you still want to know about that, yes?
OK, we get a few clues, aside from the fact that it’s a $6 stock that Naveller tells us he thinks will double by Friday (that’s this Friday, not next Friday, since the email’s been around for a few days).
They’ve got those oil reserves in Colombia, Argentina, and Peru. (Navellier mentions that these are the US-friendly countries South of the border, unlike Venezuela or Ecuador. I would say that’s maybe becoming a bit more arguable, particularly with Peru and Argentina, but they’re certainly friendlier than Chavez’s Venezuela.)
Here are the other clues we get:
“What’s more, this company’s quarterly revenue is exploding twice as fast as the big oil companies’—at an amazing 373% year over year! So it’s no surprise the stock is up a shocking 478% over the past 12 months.
“PLUS, with analysts now estimating the company’s sales growth to exceed 710% for the current quarter, you could easily expect a double in the next 14 days as the pension funds and oil and energy funds realign their holdings to improve their second-quarter performance.”
This is certainly a more timely newsletter ad than the last one we looked at from Navellier, since it is quite rare that the predictions will be as immediate as “a double in 14 days, guaranteed” … but does that mean it will happen?
Navellier says that this stock is already up 60% in the last month, and has doubled in the last 90 days. More clues, yippee!
So … ready to plop down $5,000 for a subscription to find out the name of the stock?
That’s an exaggeration, actually — apparently this one is “on sale” again for $699 for three months. Still not chump change, of course. Or if it is, I’d like to hang out with that chump.
So what is the company? Impatience grows!
“Rising oil prices will catapult this Canadian oil stock from $6 to $12 in the next 14 days without or without you. The best time to buy it is now—before it reports next quarter’s earnings.”
OK, that’s all we get in the way of clues. Some folks have already hazarded a few guesses on this one in the forums and on some earlier comments on the site, so let’s see if they’re right … a few moments on “liquefy” in the Thinkolator and we learn that Louis is promising a double in …
Gran Tierra Energy (GTE in both NY and Toronto)
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Not sure what he’s talking about with that “get in before the quarter is reported” business — they’re on a calendar quarter, so they won’t be reporting the June quarter for quite some time … they just reported their last earnings on May 12. So you’ve got plenty of time before the next earnings release if that’s what you want to wait for.
It was at about $6 when this email started circulating last week — and as you might imagine, given the emailing heft of Navellier’s publishers, it has gone up a bit. Certainly we’re far from a double so far, so you’ve still got some time if you accept the premise — it’s just under $7 right now, you’ve got two days to see if it’s going to get to $12 before Navellier’s deadline.
If you don’t subscribe to Global Growth, however, I expect Navellier won’t give you anything if he’s wrong — and whether you’re an Irregular or not, I make no promises about the prospects of Gran Tierra and won’t be paying you, either. Sorry, you’ve got to figure out on your own whether it’s worth an investment.
So what do we know about Gran Tierra, other than the fact that analysts really are predicting 710% sales growth for this next quarter?
Well, they are a new company — formed just a few years ago, with mergers and add-on acquisitions used to build up their reserve and exploration portfolio in South America. They don’t have any debt as far as I can tell (they have a facility, but it doesn’t look like they’ve used it yet), though they’ve done a fair amount of capital raising over the last few years.
They did double their reserves last year over 2006, so that’s quite promising, and they’ve announced that they’ll be doing a reserves audit at the end of June, probably to be followed at some point by an updated number — and the number will probably go up, since they’re continuing to make new discoveries and book reserves as new wells are completed, particularly in Colombia most recently.
And their earnings have been growing like gangbusters, albeit from a very low level — they’ve been profitable for less than a year, and those first quarters of earnings alway show up as massive percentage moves. They’re still trading at a huge multiple to current earnings, you’re really betting on their growth continuing to come through if you buy today — trailing PE is about 250, but forward PE comes all the way down to 13 if the analysts are correct. So far, the few analysts who made quarterly predictions for the last couple quarters have been proven a bit too optimistic, but there have been some shut-in production problems and some “one time” expenses that have hurt earnings a bit lately, which can easily crush the estimates when the raw numbers for earnings are so teeny.
Louis tells us that “you could easily expect a double in the next 14 days as the pension funds and oil and energy funds realign their holdings to improve their second-quarter performance” … so essentially, the short term bet is that because they are continuing to pump oil at higher and higher prices, and because more production is expected to come on line before too long, the institutional investors will be jumping on board now to get it on their books before the end of the quarter.
I suppose that’s feasible, but it seems a little thin as a rationale for a stock doubling. I’m more convinced by the momentum in the share price, which clearly shows a rising level of awareness of this stock, and, more importantly, by the rapid growth in earnings and revenues that we’re expecting. Of course, “expecting” is a loaded word, but it does seem like Gran Tierra is perhaps at an inflection point with the potential to grow into a fairly impressive oil producer, especially if oil prices remain so ridiculously high. What do you think?
Global Growth, by the way, is one of Navellier’s newer newsletters and is not covered by Hulbert, so I don’t know what the long term performance has been — Navellier has for years produced one very good momentum-growth newsletter called Blue Chip Growth, but his Emerging Growth newsletter, for one, has performed much less well. I would guess that Global Growth has performed well lately (last two or three years), given the market climate, but I don’t know.
Canadian B.N.N. has been sending smoke signals on this one…It’s starting to make noise….But among many others, so…
This is a potential winner here……Downgraded from outperform ..to perform a couple days ago by sombody…..can’t think of their name……BUT with oil heading NORTH and good Fundamentals….I just BOUGHT some at $ 6.75………Let’s GO !!!
http://finance.yahoo.com/q/ta?s=GTE
There isn’t a dept. store that sells hats that would fit Louie’s dome, he’s that egotistical. I’ve known him as a past subscriber since the ’80’s, just after he split with Jim Collins.
Back then Louie was a Wall St. whiz kid, but none of my old Wall st. buddies subscribe to his letters anymore. Just look at how LATE he is with this GTE pick. Too late for my tastes, any decent momentum advisor gets you into their gems much sooner, Louie has t/b despearate for subs.
GLTA!
So, since Louis gives all these talks around the country; doesn’t he get criticized for his overhyped letters at these events? How does he respond to those?
In person Navellier is actually extremely reserved compared to most of the newsletter guys. If you see him at a conference next to, for example, Tobin Smith, Navellier will fade into the background until you can barely see him. And I think probably every single one of these guys gets pestered about their over-the-top ads now and again, and they pretty much always say, “that’s just the marketing to get you in the door so you can see how fabulous I am for yourself.”
He’s very much got the persona of a numbers geek, though of course his services get marketed to the sky and back and he does brag quite a bit in print. He’s certainly a “confirmed growth” investor who buys on signals that something is already growing fast — that often works, as it has in the past couple years when he has shown good returns, but it certainly doesn’t always work.
If you’re curious about Navellier’s methodology, he gives away some of his screening data on his website (though I’m sure you’ll see plenty of his marketing spam as soon as you sign up with the required email address … if you do, send it my way!)
http://www.navellier.com/tools_research/log_in.aspx
Will be watching this one with some curiousity — it’s fairly rare for his marketing folks to put out such a short-term tout, though as I said the short term nature of it may be nothing more than marketing. We’ll see.
I bought GTE a few weeks ago when they announced their discovery in Columbia, paid about $4. The well test was >6000 bbl/day. This is pretty good stuff even if oil were not north of $100/bbl. Their propoerties in Argentina are producing small quanities but they are planning on doing some more drilling. The property in Peru is not going to be developed for quite some time depending of the success of the exportation. I don’t know about Navellier’s prediction of $12 by next week but They could definately be there in the next year. In my opinion, this is a great long term investment, not a company that you need to speculate on what is going to happen next week.
I certainly hope it goes to $12 even if it takes several Fridays. Bought it some time ago.
Hi. Since I found this site I have a question that I have not found a good answer. If this is so great why do they need my money. Why not just invest in the stock and make a bundle. That is the question I always ask when I see these 100% increase in value stocks.
It’s a good question — but it’s so much more profitable to let other people invest with their own money, and keep their subscription fees either way.
I imagine some of these guys do think about the idea of going off on their own to invest their own money, or start a hedge fund, instead of running an investment advisory or newsletter … but that’s also a route to higher blood pressure and a more severe make-or-break existence for many. It takes all kinds, and it’s certainly (on average) a less risky and steadier business to be an advisor than an investor, especially if you personally don’t start out with many millions to invest.
And hey, maybe some of these guys just like to write and research, not unlike your friendly neighborhood Gumshoe … follow your bliss, eh?
The only problem that I can see with Gumshoe is that there is no way to get a quick response if you need one to know where t put your money in the short term. For instance, this one that I’ve been asking for ages about. If ANYONE out there can give me a clue as to this company, I’d be very grateful.
http://www.isecureonline.com/Reports/MSS/EMSSJ402/?o=1468078&u=18378631&l=846393
Thanks,
Bob Coffey
Hi Bob — that “Blue Gold” teaser ad has been around for a year or so, the stocks are Hyflux, Lindsay, Gordon-Rupp, Kurita, and Nalco. Most are up quite a bit from where he first touted them, but might still be interesting if you like the long-term water story. I’ve written about Hyflux a few times, but don’t think I’ve covered the others in any detail. I imagine this also got batted around at the Forum quite a bit, but I don’t recall specificall and haven’t checked.
Hey Bob, if you search for “Fortune magazine calls it “the oil of the 21st century.””, you find WATER. If you search Stock Gumshoe for WATER, you find Hyflux and the rest.
I have asked about the company touting a battery that lasts forever without charging and can be used in almost any mechanism which uses a battery. What is the name of this company?
XDSL is the “forever batter” teaser stock — enter that in the search box and the article should come up.
Tobin Smith Gumshoe? I’d think that Louie w/b in a huffy fit t/b compared to Tobin smith.
I really didn’t want to spill a little soot on Louie, but it’s no secret that he had a managed acct. deal with AG Edwards, & in the early part of this century. Well a widowed neighbor of ours lost over 60% of her acct. when the manager used Louie’s conservative system & wouldn’t settle with her. She asked me if I could help & I went into AG edwards with her & simply asked why she wasn’t given the “arbitration’ forms.
She won an award in arbitration & I’m certain that it’s on AG Edwards record, as well as Louie’s record. Louie never even sent an apology of his manager’s mis-use of this widow’s conservative acct..
This was over 5yrs ago, & I think AG Edwards has cut back on managed accts. completely. Arbitration runs rampant in Fla in case you think this was an isolated case.
Thanks Sage. Tobin and Louis work for the same publisher, they’re often at conference together … at the booth you can sometimes see Louis in the corner chatting with one or two subscribers, while Toby is in the Hotel lobby telling a tall tale at the top of his lungs with a crowd of dozens surrounding him. Some colorful folks in this business.
I’ve heard anecdotally about some poor performance in Louis’ managed accounts-type products, too, though I don’t know if my anecdotes mean anything, and certainly his mutual funds have not exactly set the world afire — his newsletter performance seems, on the whole, to be stronger than the “real money” performance. Not sure why, or if that’s even true if you look at all the data, that’s just my impression.
Well management fees avg. 4% + what the brokerage firm charges per trade. My personal time with Louie ended with a trip to Lake Tahoe & his Incline village offices. Let’s just say that Louie has his moments, while I’m a more consistant personality. It was many years ago & maybe Louie has mellowed out some since.
Didn’t mean to get so personal about the matter.
I have subscribed to Global Growth twice – for just short 3 month periods. Both times, I had some great results. I have had more quick-rising stock picks from his service than any other; and I have tried over 25 services. I understand that Navellier’s Quantum Growth service has performed the best and Global Growth has performed second best. Both performed substantially better than Blue Chip Growth, which I subscribe to now. The Global Growth only has about 25 to 30 stocks in the portfolio at any one time; versus Blue Chip having many, many more.
Based on what you and other have said about GTE and Navellier giving it a big thumbs up, I’m going to have to seriously consider it.
Gran Tierra Energy Successfully Drills Costayaco-4 in Colombia, Completion and Testing Operations Initiated
http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=6937891
Well, it’s not as if he makes it a secret: http://navelliergrowth.investorplace.com/stock-of-the-week/archive/Gran-Tierra-Energy-6-9-08/GTE.html
So you can pick up at least one of his stocks each week and start following it yourself!