Author/Editor
Tom Gardner
Publisher
Motley Fool
Description
Monthly newsletter picks small cap stocks with a value focus. Newsletter has been closed.
Overall Rating
Rating: 3.4/5. From 17 votes.
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3.3
Rating from 78 votes
If you’ve subscribed to Motley Fool Hidden Gems (defunct), please click the stars below to indicate your rating for this newsletter, and please share any other feedback about your experience using the comment box below.
Investment Performance
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Rating: 3.2/5. From 28 votes.
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Rating: 3.8/5. From 16 votes.
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Rating: 2.6/5. From 17 votes.
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I subscribe to PRO, Stock Advisor, Million Dollar Portfolio, Global Gains, Hidden Gems and Rule Breakers and will post this review on all the sites. In general I found the letters useful for ideas in an up market, but not terribly helpful in our current down market. I found some excellent companies like DWSN, EDU & CTRP that I would not otherwise have looked at. Sell recommendations usually come too late and analysts tend to fall in love with stocks and catch “falling knives”. For example the repeated recommendations of Select Comfort, Irwin Financial, First Marblehead all the way down and then the final sell recommendation at much lower prices that had been recommended a few months earlier. There seems to be a reluctance to say do nothing and wait. Recent recommendation after recommendation is substantially under water.
In general Fool is an excellent source of information on a wide variety of financial subjects and the authors seem to be competent and professional. “The Boards” can be a useful source of information and opinion, however slogging through them is tedious because there are a lot of junk postings wherein people tell the reader what they are buying (not why) and criticizing other posters, a situation that breaks into a brushfire that overwhelms a posting site for a day or two.
Unfortunately the web sites for each of the portfolios, while consistent on a stand alone basis, are a total mess when one subscribes to several newsletters. Each letter ranks performance differently. No letter as far as I can ascertain includes dividends in calculation returns, a substantial flaw in assessing the performance of a stock.
The “cafertia” approach of the newsletters is also annoying – the same stock may be recommended in two different newsletters and checking the boards requires going to three different boards to get updates. The non-subscriber board and then each of the two different subscriber boards.
All in all I do not believe that the price of any individual newsletter, each of which is a niche letter, is worth it unless one is a substantial investor, as am I, although far less substantial than a year ago. I am not going to renew any of my newsletters, except PRO which I like because it discusses options.
All in all Fool is pretty good, but it presents a conundrum. The service is intended to educate unsophisticated investors, at which it does a good job, but it is so expensive as a percentage of assets that unless a subscriber has several hundred thousand of dollars to invest they would do better in a basket of index funds. I would recommend that a new investor without a substantial portfolio subscribe to one of the services for a year or two to get some education and then go on to one of the many free sites that provide all sorts of ideas and their own boards.
I subscribed to Hidden Gems in September and canceled my subscription after two months in November 2008. It was clearly encouraging to receive a pro-rated refund of my annual $199 subscription fee without delay. On the one hand, the subscription fee appears relatively low-cost even for investors with smaller portfolios, on the other, I quickly realized that it did not bring me value as a useful source of investment information. The reason I canceled the service was because although some of the content was interesting to read and was to some extent educational, the analysis of individual stocks that was made available to subscribers was for my taste shallow and grossly incomplete. Compelling arguments were generally not made to explain individual recommendations. Broad brush optimistic statements by the analysts about future prospects for individual companies are totally insufficient. Even if the Hidden Gems service is intended for unsophisticated investors, that doesn’t mean that a more complete analysis should not be presented to such investors. My view is that unsophisticated investors need the same information as sophisticated investors to make decisions, most certainly as pertains to fundamental analysis, but they need the information presented differently, in a more digestible manner (for ex., avoid using technical or specialized market terminology and stay light on technical analysis). Perhaps the answer is to provide subscribers not only the buy/sell recommendation along with the main rationale (as was generally true during the time I subscribed), but separately also provide the deeper analysis. Conversely, although it has been a confusing investing environment over the past year for both professionals and non-professional investors, I find it surprising that recommendations to sell previously recommended stocks were not made earlier in time and that consequently the Fool portfolio realized only relatively modestly lower loses than market averages.
I subscribed to Hidden Gems because the name implied they were finding very cheap stocks which were flying under the radar as they put it. I was a subscriber for several months and every month they seemed to be pushing what I beleived were expensive rather than cheap stocks. Luckily I am a value guy and I did not buy many of their recommendations and subsequently did not get very badly burned. I did however buy a couple of their recommendations e.g. Select comfort which they recommended four times in all and it just went completely down the drain. This was even before the big turndown in stocks. LOOP was another one I took a hit on. All in all their educational side was good but then you don’t need to subscribe to any newsletters to get the benefit of that. I was poorly disappointed overall.
Den
I’ve been a subscriber to Motley Fools’ Hidden Gems for 5 years or so. It started out at $99, then doubled, to $199 per year. I love reading the newsletter every month, but also the weekly updates, special reports, CEO interviews and the CAPS member recommendations and discussion boards; all included for subscribers to any of their newsletters. I don’t have much money to invest, but the choices I’ve made have paid pretty good, (up until 6 months ago.) The best, I think, is MIDD, but there are many good picks, as well as many losers.
I was a subscriber for several years and bought quite a few recommendations with mixed results, Got totally burned on FMD and select comfort, The small gains on others have evaporated, All in all not a good experience.
The inconsistency is the worst part – would be nice if they admitted to blowing it once in a while and explain (if they could) where they went wrong
I subscribed to Hidden Gems in 2006 for a year. I did well as the market was going up. I found that the price of the stocks spiked after their recommendation and I could never buy at the price they gave but if you waited for a couple of weeks until they stabelized it was better. I did well with Midd, Nuance, Ctrip and a couple of others. They are all down now.
My best stocks came from just reading the articles on the web site where they mentioned that they were part of the Stock advisor. Most of them are still in positive territory.
All stocks down. They recomended stocks all the way down..SCSS is now about to be delisted. Started reading them in 1999 and learned a LOT. Now I think they are just churning out one investment newsletter after another and coming up with “new” newsletter subscriptions. Latest one is Million Dollar Portfolio. Expensive at 499 last year..now 599. Then they’re coming up with a new thing to lure us ..something called Duke street. Getting tired of them.
BTW…DWSN was recomended in Hidden Gems? Hah..funny cause they said to sell it in the Million Dollar Portfolio.
I am fairly new to investing in the market. Unfortunately, I started investing about 2 years ago-with the bulk put in the market about 1 year ago. Needless to say my portfolio hasn’t done well.
I bought the “Hidden Gems” subscription a little over a year ago, because I thought that I could learn to invest in up-and-coming companies that would be a little riskier, but would do all kinds of wonderful things to my portfolio. I did not renew it. I wasn’t happy to have the 2nd year price double to $199.00. It was easy to get excited about a stock they recommended and buy into it; only to have them tell you a few months later that they didn’t research it enough and that they are now recommending to sell your position because there are so many good prospects out there to take advantage of now. Also, Even though I enjoyed getting the email letter, going to the site to read the CAPS reports, and receiving the monthly hard copy in the mail, overall I failed to make any money with their recommendations. Perhaps the thing that bothered me the most was that they would re recommend a stock as one of their 2 monthly recommendations. I felt burned by that. If they are going to to re recommend a stock, it should be as a side dish not as one of the two monthly main courses. It is as if they didn’t have enough research done so they just reused what they had. As mentioned above, I also found that their recommend buy price were not good. I started to wait and watch stock prices and quite often their recommendations would drop significantly. Also, on the sell recommendations, I have not followed their advice. I bought FMD at about 3.75 (considerably below their entrance price). I am still holding it, because I feel that it will eventually come out on top. I think that there is some good advice on some stocks to purchase, but not on the buy and sell timing. My best advice is to watch and wait before jumping on their recommendations,and do your own research. If you like what you come up with, buy and keep it.
Several months after purchasing “Hidden Gems” I bought a subscription to “Stock Adviser”. All in all, I liked reading their articles and using their resources. However, I am not sure if I will keep this subscription either. Again, as mentioned above their weekly emails and articles are all designed to get you to buy more subscriptions without providing much actionable information.
I was a subscriber to Hidden Gems for 2 years Mid 2006 to Mid 2007. While the market was up their picks did pretty well. The problem was they never believed in protecting the down side. Also, when they liked a stock they would recommend it all the way to the bottm and then issue a sell. They often would personally visit the companies offices and if they liked the people they would re-recommend the stock for averaging down without any skepticism. They cost me a lot of money in sleepcomfort and first marblehead. Luckily I sold the stocks when they were only 1/2 way to the bottom. They are cheerleaders not analysts of performance.
SALT
PS I do like the CAPS pages and wanted to note that you do NOT need to have a paid subsacription to be a member of CAPS.
You get a good general idea of how 1000s of people “feel” about particular companies by checking it out regularly. Sometimes “the best things in life are free”.
Subscribed to Hidden Gems for 2 years but recently canceled when all of my stocks from their recommendations were down 70% – Loopnet, Heartland Payment Systems, among others. Their write-ups make the companies sound amazing. The only time I made money was when I bought a stock right at 12 noon on the 4th Thursday when the newsletter is distributed by e-mail and sold it at 2 PM that day as the 2 stocks tend to rise in response to subscribers buying. The interesting thing to me is that the stock starts to rise in the AM so I’m wondering if someone is hacking their system or insiders are buying first and making money off the subscribers acting like lemmings.
No..they wouldn’t buy ahead… that would be immoral
Because of Hidden Gems, I took a 401K rollover that was making 5% to a set of stocks that made 40% gains. I can understand that people were frustrated during a down market, and some stocks tanked (SCSS and LOOP come to mind). However, CTRIP, BBBB, BWLD were huge gains. It has been worth the money to me just on those stocks alone. The price is hefty, but worth it to those who put in at least a little bit of money every week. Worth at least a trial.
I was a Hidden Gems subscriber for one year (May 08 to May 09) and found overall it to be very helpful. I ended up buying four stocks from those presented. My own feeling is that much of the unhappiness stems from the size of the downturn and time frame that MF operates (3-5 years or never as they put it). I do agree with other comments; some lack of depth in the research and their damage control on less desirable picks. I have done okay with 3 of the four now in positive territory and will continue to hold these until the economy really comes back and have the chance to assess if they are appropriately valued compared to their price. I dropped the newsletter as I had no more money to invest and just read on the side. I was charged for a second year after I dropped but they very quickly refunded the money without any hassle, so they are certainly straight up that way.
I subscribed to Hidden Gems for one year. I made quite a return, and continue to do so, on their recommendations of Innophous, Atheros and Chipotle. There were other nice gains I missed. Staring in early 2009, when the market was deep in the hole, I started to invest quite a bit in their picks and rode them all the way up. Some, such as Ottertail Power (OTTR) have not faired as well but will need to be longer term holds. My only hesitation with Hidden Gems, at the time, was that they were recommending picks ALL THE WAY DOWN and were giving one pick per month. It was a sure fire way to lose money – taking their pick each month.
I think they’ve adjusted that approach some now, and put stocks on some sort of watch list so that you don’t necessarily buy when they review the stock. However, this was disenchanting to me and I’ve wandered elsewhere. I peaked back at some returns a while back but they seemed close to the S&P returns so I didn’t renew. The Stock Advisor, when I tried it for a month, did recommend Ford and I’ve made money on that pick. My sense is that Hidden Gems, and the likelihood of good returns, depends less on their picks than it does on the state of the market at the time you’re buying.
I like the Motley Fool folks but I don’t subscribe to Hidden Gems currently, having wandered over to Cramer now that the market seems to have leveled off a bit around 10,000 or so.
I have been following The Motley Fool since the early days on AOL. I subscribed to Hidden Gems in 1999. I have not followed all their advice or bought all of their pics. Overall market performance has an awful lot to do with the results you will get from this service. These are long term investors. They do not claim to have any skill at timing the market. I agree with so many of the other reviewers that they do seem to be unable to recognize a loser and are reluctant to sell. I was burned on SCSS and others but overall I have made a lot of money. The Motley Fool has a lot of services and you need to compare the different ones and find something that fits your investment profile. Each service has a different approach and a different record. I am very fond of Stock Advisor which relys on picks by the original dynamic duo and has produced fantastic returns.
I’ve been a subscriber for a couple or three years, until my credit card expired earlier this year and I decided to move to Fool Stock Advisor.
They are generally good analysts, but not really good investors. They do not have a focused investment strategy and serve up a couple of stocks that are generally OK (good company, good price.) They focus too much on the company and not enough on the price or the market in which they are in.
They delivered a number of good stocks that I have made money on. They have also delivered a number of bummers that I sold at my 12% stop loss limit (they don’t seem to have a clue about selling strategy.)
No newsletter will make you a successful investors. The best they can do is serve you some good ideas to add to the ones you come up with yourself. Hidden Gems does this OK.
I think they were much better though when Tom Garner was the editor, his focus was more on growth stocks that have the leaway to grow a lot more (if you get into one of these early then you don’t have to be smart about selling to make outsized returns.) But if you go into companies that are not so attractive, then you have to be much smarter.
I let it lapse because my investing style has evolved into extreme value (i.e. really cheap, but which I believe can recover from their problems) and extreme growth (i.e. +30% EPS growth, with associated nose bleed valuations, but much opportunity to sustain that growth.)And they just don’t deliver these types of companies anymore.
I subscribed to Hidden Gems from 2006 to 2010, just over four years. I recently let the subscription lapse when my credit card on the account expired (and they could not autorenew.)
The newsletter was much stronger when Tom Gardner and Bill Mann edited, bringing me such winners as CTRP way back in 2006. However, as new editors have taken over the strategic focus seems to have moved or gotten lost. Many of the current recommendations are good companies at good prices, but don’t meet my investment strategies, which have now gravitated to extreme growth (+30%) and future growth prospect (capability to quadruple revenues over a few years.) and extreme value (great companies – in terms of competitive advantage and profitability – that have stumbled hard, but will in my opinion recover soon. )
Hidden Gems does not serve up these stocks any more. Overall, neither this nor any other newsletter will enable you to beat the S&P. For that you need your own unique strategy, which reflects your investing edge (my other which includes your strategies for selling as well as buying, and for portfolio management/position sizing.
I have had some great companies from Hidden Gems, and of course some bummers. But every investor no matter your search strategy ends up with her or her share of bummers. They come with the territory and expecting any editor not to have their fair is unrealistic.
Overall if you use them as a source of potential investments then they are OK (i.e. Let them stick to the analysis) as far as timing, selling rules, etc. Are concerned they are clueless (as are 80% of all professional analysts and investors.) They will and have followed a good company down to Hell.
To be fair their investment philosophy comes from the Gardner’s who’s claim to fame was to discover excellent growth companies very, very early in their cycle. With this strategy (picking one 20 bagger in every 10 picks) then learning to sell is not so important. The Gardner’s have this gift, the new editors don’t.
I think Robert Kiyosaki (author of Rich Dad) uttered the most important words in investing. Getting a financial and investment education is more important than money.
I started off with Motley Fool in 2009 subscribing to Stock Adviser which I found to be interesting. I use the approach of only investing in companies involved in activities I’m interested in. Rather than investing my ‘hard earned’ I tracked the recommendations, sadly with mediocre results. I gave up on Stock Adviser and moved to Hidden Gems hoping to find some ‘ground floor’ (or preferable ‘bargain basement’) opportunities. In addition to their recommendations I also did my own research, despite this, in ‘difficult’ markets I’ve taken a beating (like – 48%)on two of my four selections. The other two were companies I’d already been looking at and they’ve raised about 70%. As with other reviewers, I don’t think their selling strategy is effective, possibly they may be ‘in love’ with companies and holding too long. Maybe the other CAPS people know more than me but they seem to support stocks to the bitter end – misplaced loyalty, maybe? As with other reviewers I found a lot of the free information useful, also the CAPS ratings and forum were of use in research.
I’m bombarded with marketing emails from ‘Fool’on a daily basis, it infuriates me that they still use their ‘carrot dangling’ strategy to gain support for other ‘Premium Services’. I won’t be renewing my subscription for another year. Unfortunately it’s easy to miss the ‘renewal’ email among the hoards of others, thankfully I don’t use the original subscription credit card and more!
I think Hidden Gems does require a lot of luck in picking the right recommendations at the right time. If you look at the overall performance of all their stocks it actually lags the S&P, and there are some utter dogs in there that I divested from on the way down to near zero (SCSS, CRYP) and others that have paid for my subscription many many times over (CMG, ATHR, BWLD, CTRP). They recommend that you hold positions in at least 10 of their stocks, and that is what I now plan to do after selling half my CMG at the start of this year. If I was starting again I would dollar cost average into the same 10 picks each month with something like Sharebuilder and review at the end of the calendar year. Asset allocation and rebalancing, and a bit of luck is all any of us can all hope for, but I think Hidden Gems is a great guide as to how to gradually immerse and educate yourself in Mr. Small Cap Market.
I’m thinking of subscribing but I don’t need any great amount of education. One observation I’ve made among the shorting crowd is: they love to find a hidden gem all pumped up with uneducated owners and then short it for profit. Truthfully I’ve found some hidden gems in this forum.