“A Good Idea Before Obama … now a Slam Dunk!”

By Travis Johnson, Stock Gumshoe, November 26, 2008

The ad we’re looking at today is from Street Authority, and I’ve already had one reader send it in with some suggested solutions (she was largely right, of course — one of the many benefits of having the wisest readers in cyberspace!)

Today’s selling story is all about wind — which means we have to sneak in all the cliched jokes and puns we can find. I’ll get you started, and you can throw in as many others as you like:

These newsletter ads are usually full of hot air, and they “blow.”

I can already hear my wife working up a snide comment about my own personal wind capacity, so I’ll leave it there. Your turn!

On to the point, you say? This ad is from Street Authority, yet another of the investment newsletter publishers that’s “just down the road” from Gumshoe Headquarters here in Washington, DC. The particular newsletter they’re selling today is StreetAuthority Market Advisor from Paul Tracy — their special deal today is three months for $40, but I think we can all do the math and determine that the annual subscription price is $160. Not outrageous compared to many, but more than you’re likely to find under the couch cushions.

Hulbert doesn’t track Paul Tracy’s newsletter, and I think I’ve only written about it once before, so I can’t tell you anything about his performance, even anecdotally (if there are any of his subscribers among the great Gumshoe faithful, feel free to pipe up and share your experience). His last pick that I wrote about was when he was riding Warren Buffett’s coattails to tout CarMax (which has done poorly since April … but then, what hasn’t?)

Here’s how the ad begins:

“The Government Made Millionaires of Thousands of Dell, Oracle and Amgen Investors — Guess Who’s Next?

“(This investment was a good bet even before Obama was elected … now it’s a slam dunk!)”

The argument, in not so many words, is that the government can push companies into massive spasms of profit — Dell and Oracle because the government spent a lot of money upgrading its own systems in the early 1990s (and, of course, funding the continuing development of the internet), and Amgen because of the big government research funding push in biotech in the 1980s.

And Tracy thinks the next big push will be in wind power …

“A small group of 20 to 30 stocks is going to be flooded with so much new cash that several are likely to be up more than 10-to-1 in the next three or four years. As I’ll explain in a minute, there’s a very real possibility that a few of the stocks could shoot up 100-to-1. What we’re going to do today is narrow those 20 to 30 down to today’s two or three best buys while they’re still dirt cheap.

“The Next Way Congress Will Make Investors Rich

“Here’s a four letter word I want you to repeat to yourself when you’re wondering where to invest your next dollar: ‘wind.'”

That’s definitely not the four-letter word I’ve been using in recent weeks as I make portfolio decisions — frankly, it’s probably not even in the top ten. But I’d have to use lots of asterisks and ampersands and pound signs to share my words with you here in this family publication, so #*&@, I’ll move right along.

Tracy goes on to talk about the huge promise of wind power in general, and about the big investments made in this sector by some smart people — including T. Boone Pickens:

“The billionaire oil man is wagering $12 billion on what will be the world’s largest wind farm, spanning the Texas panhandle. He has already ordered 667 turbines from General Electric.”

Of course, no mention is made of the fact that the collapse of natural gas prices, and the surfeit of available credit for capital projects, has slowed this and many other big alternative energy projects — Pickens announced a couple weeks ago that he has pushed back much of his massive wind farm project, though he still says it will move forward eventually (he thinks natural gas needs to be around $9 for wind power to be competitive for electricity generation, it’s not far above $6 at the moment).

And Tracy also fails to mention that some other wind projects have been slowed or scrapped — FPL, the Florida utility and one of the major wind investors in the US, has also scaled back its future wind generation plans a bit of late.

But there are many, many people who are bullish on wind power in the long term, and who think that the Obama presidency will lead, as promised, to massive investment in alternative energy research and infrastructure — so a bit of a delay in Boone’s project isn’t necessarily any reason to ignore wind power in general.

So what are the specific investments being touted by the StreetAuthority folks?

Here are the clues we get:

“Is business actually too good for this company? This Spanish outfit is the poster child for the global backlog of wind turbines. It has already sold its entire production run for the next two years. Its stock is up +401% in the past five years and it is making so much money in the wind business that it sold off its solar power division to focus completely on wind. Completely vertically integrated, it designs and makes its own blades, root joints, gearboxes, generators, converters and towers. And it develops wind farms itself, something most of its competitors can’t do. The company has 32 factories in Spain, Italy, North America, Germany and Norway, nine of which were built in just the past 18 months.”

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That’s Gamesa, which trades here on the pink sheets at GCTAF. This is one of the major firms in the sector, to be certain, and it does have a pretty big footprint — like the largest f