Matt McCall is pitching a “$200 into $1 million” stock idea as he tries to drum up subsribers for his NexGen Investor… and that sounds fun, right, owning a stock that goes to a million dollars per share?
It probably won’t happen, of course, and I don’t know how many times it might have actually happened in history — even the stocks that you’d think could be close to that level don’t generally have returns that remarkable, and most have split their shares a bunch of times in the interim to make them more palatable for new investors to consider (Amazon, for example, would be at roughly $15,000 per share right now if it weren’t for stock splits — a nice gain from the $18 IPO price, but even that’s not in the “$200 into $1 million” category… Amazon IPO investors who held on for 20+ years to today would have turned $200 into about $165,000).
But anyway, McCall’s “passion,” he says is to bring you the next great early-stage disruptor that could make investors rich… he uses the examples that make us all feel greedy, like Netflix, Amazon, Tesla, Apple and Facebook, and then leads into his spiel about this new stock:
“It features another early-stage profit opportunity that could be bigger than ALL of these past moneymakers….
“I realize this sounds hard to believe.
“But not when you realize this company possesses a game-changing DNA technology that’s about to turn the $3.3 trillion health care industry upside down.
“That’s not just me saying this.
“Bloomberg says this technology ‘will change the world.’
“Forbes calls it ‘the next step in human evolution.’
“Nobel Prize-winning scientist David Baltimore agrees that this DNA breakthrough will usher in ‘a new era in human history.'”
Those are references to the CRISPR-Cas9 gene editing discoveries and advancements that we’ve seen over the past few years, though there’s seemingly been as much action in the patent courts as in the clinic. The Bloomberg reference is from this article about the patent fight between Feng Zhang and the other early CRISPR researchers Jennifer Doudna and Emmanuelle Charpentier, the Forbes quote is likely from this article, and the quote from David Baltimore has been widely circulated in stories about gene editing, it’s from his opening remarks to the International Summit on Human Gene Editing in December 2015.
And there’s plenty more of this general boosterism for genetic editing:
“… this DNA technology allows researchers, on the cellular level, to ‘cut out’ the bad strands of DNA that are the root cause of hundreds of chronic diseases.
“I call it Genesis because it has the power to virtually rebuild every DNA from the beginning.”
As well as some references to specific “cures” or treatments that have caught peoples’ attention — like the story of Christian Guardino, who regained his sight thanks to gene therapy (using what is now called Luxturna, from Spark Therapeutics — which is certainly a gene therapy, and it was huge news when they got approval in December, though it’s not a therapy that relies on CRISPR-Cas9 editing technology).
So all of that, and most of the big picture stuff he cites in the ad, is about the promise of gene editing and genetic therapies in general… and mostly about the rapid speed of advancement in that field thanks to the precise tool that CRISPR-Cas9 editing gives researchers. We can agree on that basic “genetic editing is a big deal” premise, though I have no idea when it will become something that we can rationally analyze when it comes to economics… partly because much of this is still lab science that has barely begun human testing, and partly because the economics are completely untested and will shake up the pharmaceutical business — how much is a “one shot cure” worth? Who pays? There was an interesting Wired article on this following the JP Morgan Healthcare Conference a couple months ago, should you want to dig deeper.
But anyway, let’s move on to see what other specifics we get — OK? See if we can name this “secret” company that McCall says will be the “world’s first $1 million stock” for you?
First, we’ll sift through and see if there are any more clues… he continues to use these terms and seems to mix the ideas and technologies pretty interchangeably, referring to the whole broad spectrum of CRISPR and gene editing and gene therapies as “Genesis DNA editing” … and then we get some more specific hints:
“… this is no longer experimental technology. It’s proven and far beyond the discovery phase. Our top pick in this sector already has two gene-editing products on the market, two more nearing commercialization, and four more programs in clinics—giving it one of the greatest pipelines of DNA cures in the industry.”
OK, so it’s definitely not one of the “big three” CRISPR stocks — Editas (EDIT), Crispr Technologies (CRSP) and Intellia Therapeutics (NTLA) are the leading names in the public CRISPR space (and the CRISPR patent fights), but none of them have “products on the market” or near commercialization, nor do they have clinical programs. These are R&D companies that are just barely beginning to consider human testing.
So who is it? More clues:
“We’ve already seen the stock’s price jump 342% since March 2016. With two more life-saving DNA products near commercialization, we expect the company’s stock to jump another 342% over the next two years.
“That’s just the beginning…
“The big money will be made as their treatments become as common as Band-Aids over the next 30 years….
…add just one share of this $200-a-share company to your holdings now”
And thankfully, we get a little chart of the company’s progress since early 2016 — when it has gained 342.35% versus the S&P 500’s 45.03%, so that level of specificity makes the Thinkolator happier, and lets us confirm that yes, this “world’s first $1 million stock” teaser is all about bluebird bio (BLUE).
Which is indeed pretty close to $200 a share, it’s at about $225 right now after a 10% jump in the past couple weeks. They reported their fourth quarter earnings about three weeks ago, you can see some summary notes on that from the Motley Fool here. The company is using combinations of gene therapy, gene editing and immunotherapy to develop treatments for cancers and rare diseases, including ALD and sickle cell disease, but probably their most-followed drug is bb2121, which is partnered with Celgene for multiple myeloma.
Will bluebird be a huge winner from here? You’d have to be a damn site smarter than me to prognosticate what their financials might look like in ten years, if and when they have a portfolio of revenue-generating therapies generating lots of cash, so right now it’s all about what value is placed on innovation and how much big pharma partners might want to pay for access to bluebird’s technology or pipeline — it’s already an $11 billion company, so if they’re going to turn $200 into $1 million over the next 30 years, assuming no share buybacks or share sales, then bluebird would be a $55 trillion company in 2048. I suppose that’s possible, but it’s definitely not in the “probable” category in my book — I wouldn’t plan my retirement savings around that expectation.
Which doesn’t mean it’s a bad stock, of course, or that it might not work out fine — it’s just a reminder that you have to ignore the ridiculous promises of teaser ads before you can step back and consider the stocks they recommend with some level of rational thought. I won’t go further into looking at bluebird here, plenty of you have invested in it or commented on the stock in the past and we’ve covered it pretty recently, when Charles Mizrahi was pitching it for his Park Avenue Investment Club back in January as the “biggest breakthrough since chemo.”
And what about McCall and that “NexGen Investor” service? That’s fairly new and we don’t know much about it — his claimed returns are pretty remarkable, per the ad:
“Since he launched NexGen Investor in May of 2017, his picks have handed his readers average annualized gains of 1,011%.”
Which indicates to me that he has probably included a bunch of short-term windfall gains, like successful options trades, or perhaps some cryptocurrency trades that had remarkable jumps (he did tease some crypto-related stocks for one of his other NexGen newsletters back in December). If you post a 20% gain in a particular week for a short-term position, for example, that’s an “annualized gain” of 1,040%, even though, of course, you’re not likely to get that kind of trading gain each week unless you have an extraordinary run of luck.
(My most successful short-term trade over the past year, for example, was a lucky speculation on Nasdaq ETF (QQQ) call options that posted a four month return of 2,250% or so, which would be an annualized return of 6,750%. That’s obviously nice, and I suppose I could claim an annualized gain of 1,000% even if I posted 100% losses on a handful of similar speculations, but be careful about the term “annualized” when people use it to talk about huge recent gains — it’s more useful when you’re talking about long-term performance, and, of course, actual gains are much more important than ‘annualized’ gains.)
So if you have tried out McCall’s products in the past, or subscribed to his NexGen Investor, we don’t yet have any subscriber feedback on that publication, so please do click here and let your fellow readers know what you thought.
And, as always, we learn from each other… if you’ve a thought or opinion to share on bluebird bio, or on the financial dreams inspired by any of the gene editing or gene therapy stocks, CRISPR or otherwise, feel free to share them with a comment below.
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