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“This Stock is Going Up, Big Time” — Porter Stansberry

“A Market Insider and Lifelong Friend Hands Me the Best Opportunity of 2009

“‘I can’t imagine a better stock to buy.'”

That’s how the newest ad launches for Porter Stansberry’s Inside Strategist, a newsletter that has churned through at least two editors in the last few years, but which is now apparently run by Porter and a newer guy named Braden Copeland. And this time, Porter’s actually signing the ad letter himself and making a pretty bold claim …

“This is the best play I’ve seen in the last 3 years. I told my readers to put 25% of their portfolio in this stock. That’s how sure I am.”

Well, if he’s that certain of this one … shouldn’t we at least figure out who it is?

The ad is all about a stock that he has targeted because an old friend of his is an executive at the company, and he says that his friend told him this:

“I don’t know why our stock is trading for less than $10… it’s crazy. I know what our sales will be. I know how well our products are doing. We’re doing great. I don’t know everything about investing. But, I can’t imagine a better stock to buy than ours.”

Now, if we take off the rose-colored glasses for a moment and think back to every conference call we’ve listened to, and every CEO interview on CNBC, we might note that yes, CEOs are often shocked at the low prices of their shares. But we’ll give him the benefit of the doubt here and see what we can learn …

Porter tells us that he has turned these kinds of tips and comments into profitable trades for his investors for years, and he reiterates the claims that he was an early predictor of the failures of Fannie and Freddie and GM (claims that seem accurate, as far as I can tell).

And he tells us that he’s “confident [his friend’s] stock will be my best play of 2009. I’m talking about a potential 200-300% … in just a few short months.”

All I can say is, thank God it’s not a few of those long months — who’s got that kind of time to wait?

Let me dig through the ad and pull out some clues for us …

“His company commands 50% of the $4 billion worldwide market for heart stents.

“And now, they’re introducing a new, one-of-a-kind stent technology that needs very little drugs to protect the stent, therefore making it safer and far more effective when implanted in patients.

“The final tests are being done on the stent before it’s ready to hit the market.”

OK, so stents are a pretty oligopolistic business — this might not be too difficult.

Other clues? There are some past charts he shares, with these basic claims:

The company purchased “an angioplasty technology where catheters reopen clogged arteries in lieu of surgery. Shares shot up 220% in just over a year.”

OK, and “the last time they released a proprietary stent technology to the market …. Shares soared 411% in three years.”

They “booked $5.6 billion in profits last year.”

John Paulson, the legendary investor who made gazillions from the credit collapse, owns “about $800 million worth” of this company.

So — that’s about it for the clues on this one (though he also talks up a second special report, “A quick double thanks to the ultimate gold insider” which is all about a John Doody gold pick and its mining permits in Greece… I wrote about this for a Doody teaser back in May, so you can read up on it here if you like).

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But back to the point — what is this medical stock?

Boston Scientific (BSX)

John Paulson’s investment firm does own just under $800 million in BSX shares. They are one of the major stent companies.

And be careful about that assessment that they booked $5.6 billion in profit — they did, but it was gross profit, meaning just the revenues minus the cost of goods sold … operating expenses and one-time charges have eaten up all that “profit” and more over the last three years, and it’s only now that the company is again looking like it will record real profits going forward. This is a turnaround story, to be sure, with recovery in the stent business and integration of their big, messy and expensive acquisition of Guidant.

So is it a turnaround story that you want to bet on? Well, they have been able to keep sales growing thanks to solid recent performance from their drug-eluting stents and their implantable defibrillators — these are not optional items, and these kinds of life-saving surgeries and procedures can’t easily be postponed just because you’re afraid of losing your job or paying the coinsurance, so while these markets have had problems of their own they’re not necessarily economy-related problems.

The stent business has been a scary one for several years, with lawsuits and patents and all kinds of foofaraw that I haven’t looked into in detail, but it’s worth noting that it is, at least, a very competitive business. Of course, it’s a competitive oligopoly, so they’re probably not going to kill themselves trying to cut costs, but there is always a threat that the next innovation will come from one of their competitors or that side effects or technical problems will suddenly emerge for one of their products and drive sales to competitors. Boston Scientific has been hassled by the FDA for the way it handled product quality issues, and has been battered by the market — for the first half of this decade they could do no wrong, for the second half their stock has inexorably fallen further and further each year (to go along with those several years without profits, and with the big problems that hit both Guidant’s implantable products and the stent business more broadly). That said, plenty of analysts agree with Porter that the shares are cheap here — Morningstar thinks it’s trading at about 60% of fair value and that you should consider buying around $12 (it’s at about $11 now). The forward PE is about 15, which would be exciting for those who owned this E-less stock for years, and, thanks probably to some goodwill from the Guidant acquisition, it trades at a very cheap (for the sector) price/book ratio of only 1.3. As one might expect from a company that hasn’t shown a profit for a few years, they do not currently pay a dividend.

BSX also has a whole suite of options available, so if you really think Porter’s right about big moves coming in the next six months you could look at the February call options — you can buy in-the-money $10 strike options at about 1.85, which means you have some slight downside protection (the options are worth almost a dollar if you exercise them today), or, if you want a more leveraged bet for a smaller outlay and you really think the shares will double or triple in short order, you can buy way-out-of-the-money calls pretty cheap — the February $15 strikes (which require a move of about 40% in the stock to be profitable at expiration) would probably cost you about 25 cents … of course, you might lose it all if Porter or his friend are wrong, or if the huge stock performance takes longer than a “few short months.” There are all kinds of variations and possibilities, of course, both riskier and safer, those are just some options if you want to bet on Porter’s short-term prescience and on Boston Scientific’s quick resurgence as a growth stock.

As for Boston Scientific’s new stent that’s supposed to help drive the stock higher? I haven’t combed through their pipeline very carefully, and I probably wouldn’t recognize it if I saw it — they did just get FDA approval for a new version of their TAXUS stent, and I assume that they’ve probably gone through their development pipeline in recent conference calls, you can listen to the last one (just a week old now) by clicking here and registering. There are a lot of versions of these little stents, including those from BSX’s homegrown portfolio and the different stents they acquired from Guidant, so it would take a (much) stronger expert than I to understand the stent market and new products very thoroughly and tell you whether or not there’s a breakthrough in the wings — if there are some medical tech investors or cardiologists out there who want to share, feel free to illuminate us.

Insider buying? There hasn’t been much of late — John Paulson does own a big slug of shares and was buying more as of earlier this year (his funds own about 6% of the shares), and people certainly follow his portfolio closely, but actual company insiders have done a lot more selling than buying in the last several months … though to be fair, that’s swayed dramatically by a consistent selling program by co-founder John Abele, who has been selling shares for months but still owns 22 million shares of the company. A couple other executives and board members have bought small chunks of shares in the recent past, and many have exercised options.

And if there are any investors out there in Gumshoeland who’ve got opinions on Boston Scientific, or on other stent makers like Johnson & Johnson, or other medical device companies we should look at, well, by all means, share your thoughts with a comment below.

Finally, if any of you dear people have tried a subscription to the Inside Strategist newsletter from S&A, please click here to share your thoughts — worth it? Not worth it? The people want to know!

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Maureen Collins
Guest
Maureen Collins
July 30, 2009 12:23 pm

I just want to say I love your column and that you have a great sense of humor which is always appealing. Thanks for the great work.

Louis Aarons
Louis Aarons
July 30, 2009 12:41 pm

About a month ago a lifelong (over 60years) friend of mine had to have a stent implant and asked me about it. I checked the most recent information and a Wall St. J. article reported that for the drug-eluitng stents ( that I found in other reports to be more favored than the non-drug eluting ones)the Abbot lab’s Xience had a significantly better result than that of BSX’s, i.e. less blockages in the following months after the implant. My friend had the Abbot stent implanted. I don’t know if BSX now has a new stent coming out.

SageNot
Member
SageNot
July 30, 2009 12:50 pm

http://finance.yahoo.com/q/ta?s=BSX&t=5y&l=on&z=m&q=l&p=m50,m200&a=&c=

This must be a first for Porter, he’s using the same stock in his own PSIA investment letter as he’s doing here in Inside Strategist, which he’s been co-editing for months now.

Could this be classified as inside front running or just some old fashioned piggybacking I wonder?

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G Brown
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G Brown
July 30, 2009 1:09 pm

I really have to laugh re Porter’s
promo. Some years ago a dear friend advised me that his friend had an insider and boy load up on such & such stock…it’s really gonna fly. We did as did many others. We lost big $. It seems the insider scammed even his son. We were ready to do bodily harm to all of ’em. So now it’s funny. It wasn’t then. Caveat emptor people!

charles zeller
Guest
charles zeller
July 30, 2009 3:40 pm

Stansbury is a schmuck. Stents have been discredited in such strong terms by the coronary care specialists that even the dummies who still use them are having second thoughts. Short BS

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cleversocks
Guest
cleversocks
July 30, 2009 4:21 pm

I bought BSX a few weeks back after reading the PS article and it is up around 20% since pushed. The recent biotech revival has obviously helped so the timing of PS was good. Other stocks to look at are IVAX, IMMU and AVII, which are currently advised and all are penny stocks. I trade these stocks and am not in for the long run. Many financial advisors are pushing biotech as the only area to be in; time will tell.

J Wood
J Wood
July 30, 2009 8:37 pm

I have followed Porter’s recommendations about 10 times. Won 2, lost 8. Not what I hoped for. It’s always hard to tell with Porter whether he’s doing real economic and market analysis, or whether he’s letting his political and ideological views sway him. I stopped listening to him a couple years ago when he “graded” everybody in his organization. Others he graded in totality. For himself, he graded only his safest picks. I don’t know anything about BSX, but I don’t listen to Porter on general principles.

Richard DeLong
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Richard DeLong
July 31, 2009 1:32 pm

The Oxford Club in a report that I received today that has “proprietary Research”, headlines How to claim your First “gas rebate” check on September 15. $600.00 a month starting with the next payout….
Any information on this?

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Paul V
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Paul V
July 31, 2009 1:59 pm

Ive been following Porter for the last 8 years among a few other analysts, and Porter has surrounded himself with a very intelligent group of coworkers including Clark and Sjuggerud, nobody can argue Porter knows how to read financial statement like GM better than GM could, he makes great calls, if you used a little more technical analysis combined with his financial analysis than he might avoid some of the timing issues the complainers here keep bringing up, you have to know your charts, Porter Stansberry is one of the few services I will keep paying for, I always use my own chart skills combined with his analysis to get in his picks at the right time. No one should be trading blindly just following an analyst, recipe for failure

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Jay
Guest
August 3, 2009 9:43 am

If the stock is truly undervalued then management should simply begin a buy back program.

Once the stock price rises they can issue the stock again at a higher price.

IMHO this is your typical pump and dump scheme.

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Rony
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Rony
August 10, 2009 1:15 am

India Top Stock Picks
http://www.fourstocks.com/
FourStocks.com allows users to compare their BSE/NSE equity picks with other members and street analysts. Its unique stock rating system provides a goldmine of investment ideas. The site also provides extensive financial information and gives a 3-dimensional view of companies and markets.

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Robert Spears
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Robert Spears
August 10, 2009 4:25 pm

What are “BSE/NSE equity picks”?

Rony
Guest
Rony
August 11, 2009 12:24 am

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Carole Gerbovaz
Member
Carole Gerbovaz
August 24, 2009 10:50 am

What info do you have on “Bank Error in your Favor Collect $8,333 per month and Never have to pay it Back”? Thank you in advance

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SnoopyJC
Guest
October 9, 2009 11:57 pm

Here is the latest instance of this one from Porter. Do you think it’s the same stock??
–joe

If you haven’t bought this
stock yet, buy it now.

(You’d be a fool not to… and
there’s only a few days left)

Dear Reader,

My name is Porter Stansberry, founder of Stansberry & Associates.

As the head of a major financial publishing company, I’ve got a lot of friends.

One of these friends happens to be a top-level insider at one of the companies I recommended a few months ago. And recently, he and I had a conversation…

I can’t go into the details of that discussion here. My lawyers say I’ll surely be sued by the SEC if it even appears that I’m passing along insider information.

But let me tell you this…

I have every reason to believe, based on this chat (along with my own research into his company) that this stock is going to explode — starting in about a week.

In addition, this firm is about to make an announcement that could ultimately be the biggest news in their history.

In fact, I fully expect this stock to double by next year, for all the reasons I’m about to reveal.

Now, I’ve written about this story a few times already…

And anyone who’s taken my recommendation to buy has had the chance to make over 20% already… as this stock has quietly ticked upwards.

But that’s peanuts compared to what I predict is coming.

So if you haven’t heard this story yet.. if you haven’t considered buying this stock yet… do it NOW…

Here’s what you need to know…

Why a Double is Probably Conservative

I was on vacation a few weeks ago when my phone rang…

It was my oldest friend in the world. A guy I trust implicitly.

I had called him earlier to ask a question about his company, which had recently come onto my radar because of how cheap it was trading.

I thought maybe I’d get some clarification from someone who knew the business better than anyone. And I thought I’d have a good story — and recommendation — for my readers.

Little did I know what was coming…

You see, this company is a leader in their field of medical technology, claiming 50% of a $4 billion market in heart stents.

Their stock had been hammered just like everyone else’s because of the recession. But the company kept rolling, unfazed.

In fact, just recently, the company received FDA approval on two brand-new, patented stents.

The marketing of both just began last quarter.

And in a matter of weeks, I soon learned, they’ll be holding a conference call that will reveal the initial earnings results from these new technologies.

Again, I can’t quote my source here — not directly. But I can tell you the gist of what I took away from our little talk…

Basically, you’d be a fool not to buy this stock before this news goes public. Because if all goes like I think it will, the stock’s going to soar.

How can I be so sure?

Just look at what happened the last couple of times something like this happened…

Back in 1994, the company acquired an angioplasty technology that made heart surgery obsolete. Shares shot up 220% in just over a year.

And more recently, back in 2001, they released a new stent technology — just like they’re doing now — and the stock did even better…

I predict this is the exact same situation we have developing today.

I knew instinctively that this could be a great stock to buy. And after our talk, I was sure of it.

I didn’t think it could get any better…

But I was wrong…

It Gets Even Better

After I hung up the phone, I logged onto Bloomberg.

Yes, the company’s numbers looked good. Even better, actually, now that I knew what was coming.

The stock was cheap. And not only that, it booked $5.6 BILLION in profits last year — during the worst recession in decades.

I can’t ever recall seeing such a high-quality, non-cyclical business trading at such a cheap price.
The CEO of this company just increased his stake by over 500%

But here’s what really blew me away…

You might know of a man named John Paulson.

Paulson is one of the most successful private investors in the world.

It’s widely believed on the Street that his hedge fund made something in the neighborhood of $20 BILLION over the past two years – even as the market tanked in ’08.

That’s more money than anyone else – including legends like Warren Buffett and Bill Gross.

What’s Paulson doing with his money now?

He’s putting about $800 MILLION into my friend’s company.

He knows that when companies develop breakthrough medical technologies, they can rise fast.

Look at some examples:

* Celgene developed a breakthrough cancer drug called Revlimid that eliminated symptoms in a previously incurable bone marrow condition. Shares have risen 665% since it was released.

* Immucor’s ABS2000 technology was the first FDA-approved device for full automation of blood typing. It completely revolutionized the way blood banks work… and early shareholders have seen gains of nearly 3,000%.

* Questcor’s Achthar was one of the first FDA-approved drugs for the treatment of multiple sclerosis… Shares of Questcor went up 2,557% after Achthar was released.

The list goes on and on.

And he’s not the only one that’s loaded up…

A guy named Dr. Ernest Mario is loading up as well.

If you’ve never heard of him, Dr. Mario is perhaps the single greatest innovator the drug business has ever known.

He didn’t invent a new pill. He didn’t lobby Congress for prescription drug coverage. He put drug ads on TV.

In the mid-1980s, Glaxo Holdings — of which Mario was CEO — ran one of the first-ever televised drug campaigns.

The drug? Zantac.

Mario’s innovation made it one of the largest-selling pills in the world… and made himself very rich.

He’s a visionary. He knows healthcare.

And just recently, Dr. Mario spent over $400,000 on this company’s stock — more than doubling his stake in the company.

Why would he do such a thing?

I can’t know for sure, of course. But I do know this:

You don’t throw down that kind of money unless you’re pretty sure you’ve got a winner.

Over the next few days, I expect this stock to slowly keep rising — like it has been — in anticipation of the big announcement day.

That day, October 20th, I expect this stock to spike — hard. I’m guessing somewhere in the neighborhood of 30%-50%.

And after the 20th?

If history is any guide, 200%-400% is what you’re looking at. I wouldn’t be surprised if we see that within a year.

The Last Time I Got a Phone Call… My Readers Saw HUGE Gains

In December 2002, I got a call from the “Rock.”

This is a very experienced pharmaceutical executive. He was a Wall Street analyst for decades, then he moved into private money management and ended up on the board of several pharmaceutical companies as the CEO of his own start-up company.

I call him the “Rock” because his offices are in the Rockefeller Center, or “The Rock”” as it’s known in New York.

I’d followed the Rock’s small start-up in my newsletter for years and we’d become friends.

I was working late one night when the Rock called, out of the blue. He wasn’t calling me to talk about his small start up. He was calling to talk about a much larger pharmaceutical business where he served on the board of directors.

This larger company was in trouble. Its stock had fallen to below $2. The rumor was it might go bankrupt. But the Rock told me otherwise.

Well, sort of.

“If I were you, I’d spend some time looking at this situation.”

That’s all he had to tell me. He knew I could figure out the rest on my own.

So… what happened with the Rock’s company…?

The stock went from $2 to $20. A 900% gain.

Many of my readers made a killing.

Like Bob Groening of Indianapolis, IN, who wrote in to say that he remarkably made “more than $1,000,000” with this recommendation.

The same thing is happening with my friend’s medical company right now…

If this sounds like something you’d like to get in on, the full details are in my special report: A 300% Insight From My Good Friend

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JPL
Guest
JPL
October 10, 2009 2:26 pm

To joe or SnoopyJC,
Hi,
Yes, it’s the same stock.

JPL
10/10/2006

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Dave H
Guest
Dave H
October 12, 2009 3:56 pm

I believe that Porter has integrity and have come to trust his judgment. He is very vehement about this BSX prediction. From the PSIA newsletter:

– this is the best overall investment I’ve found since I originally recommended the shares of Anheuser-Busch in 2006.

And like I recommended with the shares of BUD, I believe you can safely invest up to 25% of your assets into this one common stock. That’s an extraordinarily large position size – more than six times bigger than normal – and something I almost never recommend doing.

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Medical researcher
Member
October 12, 2009 5:21 pm

It’s true as one commentator noted that the stents are better than opening you up entirely, and drugs, supplements, and a very good chelation strategy better than the stents [with nattokinase, etc.] … but that is not the way of the world… and also not the exact issue with this new product. All that said, my cardiologist colleagues for example love stents and would stick them in every orifice they could if given a free hand. So does this mean Boston Sci. (BS) will actually make lots of money? No, it’s a hard slog to move the merchandise, BS is a big firm so the initial revenue will only be a blimp in the big picture, and there are competitors close on their heels in this very area (although he who is first is the King of the Mountain in the business). This stent procedure is also very sophisticated and will take time to be mastered. I think the real play by John Paulson is in the overall expertise of BS, not this single product. That said, my assessment is that three months from now one will be able to buy BS at or less than the current price. Three years out or more from now, it may be a very good investment at curent prices.

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JT
Guest
JT
October 12, 2009 9:47 pm

Just to clarify, the stock closed at $10 today, not $11.

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Jeff
Guest
Jeff
October 14, 2009 11:44 am

I took the following from an RTT News story about Johnson and Johnson that was posted on-line on October 13, 2009: “Among the latest events is the settlement reached on Tuesday resolving patent suits between Johnson & Johnson and Boston Scientific Corp. (BSX). According to the settlement terms, Boston Scientific will pay Johnson & Johnson$716.3 million to settle 14 patent infringement lawsuits involving coronary stents, balloon catheters and other heart devices. The settlement resolves Johnson & Johnson’sCordis Corp. unit’s Palmaz infringement suit relating to Boston Scientific’s NIR stent as well as several other cardiology-related cases relating to patents in the Ding, Kastenhofer, Palmaz, and Fontirroche patent families.”

I don’t know about any of you, but $716 million seems like an awful LOT of money to me. I can’t imagine that Boston Scientific has that kind of cash just sitting around idle. Anyone care to comment on where that money will come from? I wonder if Porter knew about these lawsuits before he started touting BSX.

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