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Does Barack Obama Care if You Know This Company’s Name?

Scoping out the Oxford Club's Latest Lighting Teaser

By Travis Johnson, Stock Gumshoe, September 30, 2013

Um, no.

That’s just stupid.

But it is the subject line of the latest teaser pitch from the Oxford Club for their membership and their Communique newsletter — the subject reads, “The One Stock Obama Doesn’t Want You to Know About.”

Why? Well, it’s not even really implied in the ad message that follows — which is about the banning of incandescent light bulbs as a national energy-saving plan.

But they’re teasing a company that they say has the manufacturing chops to manufacture the new, more efficient light bulbs that will be needed more inexpensively. Is that what’s supposed to make President Obama want you to be “in the dark” about the name of the company? I don’t get it.

OK, fine, I do get it: The folks at the Oxford Club are no dummies, and if you say something inflammatory about President Obama in your subject line it means there’s a better chance that your email will be opened — particularly by the grouchy, older, relatively well-off white men who tend to be Republican, and who are the core readership for all investment newsletters.

It’s not just Obama, of course — they did the same thing with George Bush before him, and Bill Clinton before that. Apparently polarizing political figures make people want to open their email.

Does the President want the maker of efficient light bulbs to be secret? Don’t be stupid. If he thinks about them at all (I’m guessing he’s a bit too busy, frankly), he’s wanting the free market to do what the free market does: Allow room for innovation within a regulatory framework, and use regulations to spur demand for more energy efficient products (like tax breaks for Energy Star appliances, or auto fuel efficiency standards), which tends to help increase efficiency and lower prices as volumes climb.

But that’s beside the point — I just can’t resist a little blather. And yes, I know, you have strong feelings about Obama, or Bush, or light bulbs. If you insist on sharing those feelings, you can do so in the comment box below. Those feelings are irrelevant to the current teaser that I will get to starting … now:

“You may have heard that the government is banning the 100-watt light bulb… And very soon the 75-, 60- and 40-watt bulbs as well.

“Now, some people think that a light bulb is trivial, but we believe Americans can decide how to light our homes just fine on our own.

“And now the government is trying to take away our choices.

“But one small company is saving Americans from the dreaded ‘light bulb law’

“While competitors are lobbying to force Americans to buy their bulbs, this company has instead created a better bulb that consumers will want anyway.

“It’s competing its way to bigger profits, instead of lobbying for them.”

So who is this light bulb innovator? Apparently they’ve developed a product that is …

“… 78% more efficient than an ordinary bulb and lasts 25 times longer… Saving the average homeowner about $6,975.”

And it’s making the bulbs cheaper, we’re told:

“this company is changing the game…

“It’s developed a way to mass-produce the product and sell it much cheaper than anything on the market.

“Yet most American’s have never heard of the company… It’s a small manufacturer that’s seemingly coming out of nowhere.

“Though this company is less than 3% of the size of General Electric, its sales are growing seven times faster.”

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Not a lot of clues, right? I can guess at the name just from the gist of the ad … but since they also include a chart showing how spectacularly this stock has done already, we can use that as a clue as well — here’s a clip of the chart:

creechart

Which means, sez the Thinkolator, this “secret” stock is … Cree (CREE).

Which, if you’ll notice that recent dip in the chart, scared the heck out of its investors on August 13 — not because the earnings were bad, they weren’t, but because it’s a pricey stock that’s been driven by the hot story of LED lighting, and the CEO gave what most are interpreting as lowball guidance.

And … well, that’s about all I know about CREE — this is the kind of company that often does well, with a huge market opportunity as lighting becomes more efficient and their LED bulbs achieve greater economics of scale and get more cost-competitive with fluorescent or halogen bulbs even before energy savings, but I don’t know much about the specifics of the market right now, the speed of the changeover, or the business itself.

They are trading at about 25X next year’s expected earnings, and analysts think their earnings will climb by 15-20% this year and next, so that’s reasonable — I guess the reason to buy this one is if you think the analysts are underestimating the growth potential and believe that their earnings growth will stay on the same torrid pace of the last year, if that’s how it works out then CREE is cheap. If the earnings growth slows down as is expected, it’s probably a little expensive.

I clearly don’t know enough about this one to buy or sell it, so I’ll toss it out to the great Gumshoe Faithful — what do you think? Did we get a buying opportunity when the stock fell 20% in August, or is it still too expensive? Let us know with a comment below.

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mrmurph
mrmurph
September 30, 2013 2:30 pm

I’m not THAT grouchy !

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LostOkie
LostOkie
October 1, 2013 1:32 am
Reply to  mrmurph

I am!! hahaha

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johnsmither
johnsmither
September 30, 2013 2:49 pm

I was just out shopping for LED bulbs at a local big box. I didn’t see any price difference between Cree and the other large well known manufucturer. Not sure what is so ground breaking about them.

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Hank
Member
Hank
September 30, 2013 3:07 pm

I thought it might be Cree when I saw the teaser.

Cree is a decent trading vehicle.
It goes up on Momnetum, and it goes down.
But as for a long term investment? I don’t know what the rewards might be, but the risks would be too high for me as a buy it and hope I can forget it stock. .

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John
Member
John
September 30, 2013 3:09 pm

Thanks for covering this! I received the email and was going to do a little research, but the weekend got away from me.

Perry
Perry
September 30, 2013 3:09 pm

Thanks Travis, another mystery solved. I am with you, why would B. Obama care one whit about whether or not you know about this. The whole lightbulb thing predates him by at least 4 years anyway. These guy who write all this stuff are really making me tired. Their line of stuff gets longer and longer all the while saying less and less. There is one daily that I am about to cancel simply because they spend an incredible amount of time telling me how great their picks were a month or so ago. Thank you for digesting all this crap and giving us the meat of the matter.

philkalasz
Irregular
philkalasz
September 30, 2013 3:09 pm

I buy led’s as much as possible, but I’m just weird that way. Also, fluorescent bulbs are a hazard if they break. Outside of my pro led stand, don’t know if the amount of time you would have to hold onto the stock to make it worth it is worth it like a tsla….

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Allan
Irregular
Allan
September 30, 2013 3:30 pm

Thank you Gumshoe, third time you have saved me from another “Sure thing”.

john
Member
john
September 30, 2013 3:34 pm

CREE has been touted for the past two years.. Nothing new,, I do think it has promise and upside,,, I might wait for a correction..

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dennis
Member
dennis
September 30, 2013 3:39 pm

CREE just recalled tens of thousands of Faulty de-humidifiers……and promised to re-imburse ALL the owners of there faulty units {fire}…….This could be a big problem for them.

dennis
Member
dennis
September 30, 2013 3:42 pm

MY bad….the company is GREE…not CREE.

LostOkie
LostOkie
October 1, 2013 1:36 am
Reply to  dennis

Ahh Gree, , A Chinese Company
Surprised?

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Brison
Guest
Brison
September 30, 2013 3:46 pm

Typo correction….. “recent” !
Obama campaigned at the North Carolina CREE home plant several times.
BTW, wasn’t CREE largely bought out by China after one of our recent presidents basically gifted America’s lightbulb industry to China?

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Joan in Houston
Joan in Houston
September 30, 2013 3:59 pm

I am disinterested in the stock but I did buy some of their lightbulbs a couple weekends ago. They cost less than the stock.

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baygreen
September 30, 2013 4:34 pm

Travis this is good makes me think the White House will be on candle power after the shutdown, and like another irregular I think it is not on top of Obama’s things to do. Maybe they will put GE out of business. Just kidding good article now I just have to wait to see how many people it will take to screw one in. Take care of the thinkolater!

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Ventureshadow
Guest
Ventureshadow
September 30, 2013 5:00 pm

Its sexy story has made Cree gist for newsletter writers for about 15 years. Yahoo doesn’t show more than 2 years of stock prices but Google finance shows prices since 1993. It was under a dollar in 1994. It spiked to 97 in 2000, fell to about 20, spiked again in 2010 to 79, fell to 20 again, spiked to 75 this year, fell to 56 and is now about 60. I expect that Tobin Smith, BI Research, and other newsletters are somewhat responsible for these bubbles. Its bubbly history is not attractive.

Moreover, I bought LED bulbs directly from sellers in China through Ebay at prices lower than Cree products sell locally, that is for 1/3 to 1/2 the price. You can too. They are commodities. There’s no moat around this business. This is another reason I don’t care for Cree.

Then there’s the CFL competition. Why buy LED bulbs when you can buy CFL bulbs for one-tenth the cost? The mercury argument isn’t actually important, as the amount of mercury in a CFL is tiny. Unless you break them you will have no exposure to mercury, and unless you break a huge number of them and and immediately and deeply breathe in their contents the exposure is negligible.

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Gary W
Guest
Gary W
September 30, 2013 8:12 pm
Reply to  Ventureshadow

I agree with everything you say! Thumbs down on CREE except probably a hair-raising trading vehicle if you can’t find anything better 🙂

johnkinfw
johnkinfw
January 22, 2014 10:19 am
Reply to  Ventureshadow

The problem with CFLs is not the tiny amount of mercury in an individual bulb. The problem is the huge number of them being produced to fill the void created by the ban on incandescent bulbs. Think: billions of these in landfills, eventually mercury-poisoning the ground and ground water. It is like so many liberal-backed plans to save the environment – short-sighted and at least a little stupid (and sometimes a whole lot). They hate CO2, so they promote nuclear, leaving us with huge dumping of long-term radioactive wastes, many of which are now leaking. As to either LED or CFL providing a healthy alternative to incandescents, do a google on Dr. Ott and his ground-breaking research on the effects of different kinds of light on living organisms. He was responsible for changing an entire industry – CRTs for TVs and computers, and of solving the problem of the “winter blues”. CFLs and LEDs do not produce balanced spectral light, which we need for physical, mental, and emotional health.

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John Harris
Member
John Harris
September 30, 2013 6:40 pm

Well I believe in LED lighting as eventually possibly taking over most fluorescent and incandescant lighting (but not all – what no bubble lights on the Christmas tree? they are incandescent to make the heat to bubble). And I have owned a small position of CREE since 2000 and seen it go in the toilet twice. But it is back above what I paid for it so I will hold it. The issue is not if but when. Eventually all these 4 and 8 foot fluorescent lamps in offices and factories will be replaced by more efficient lighting and LED’s are good options if cheep enough – but they are not yet which is the issue. On the horizon of course are newer methods yet of making light (OLED) that could relegate the LED to more mundane applications (car taillights and flashlights for instance). Organic light emiting diodes (OLED) can be made into a thin flexible sheet or a TV screen. You could in theory cover the ceiling with a film of OLED’s and the whole ceiling would light up the office. But cost again is the issue and it will be a long time for that cost to drop enough to make office owners get rid of their fluorescent lights.

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Sue
Member
Sue
September 30, 2013 8:18 pm

Thank You. Was wondering if it was CREE, but did not open that email. I have a personal policy of not opening emails that mention presidents, maybe because I’m a grouchy, middle-aged, white, female, who is politically independent. Cree does tend to bounce a lot over time; scares me a bit.

frankw17
September 30, 2013 8:32 pm

I didn’t see any mention about CREE providing LED street lights. There is a fairly substantial
movement going on currently to convert street lights to LED’s to save on electrical expenses by municipalities. Does anyone know if CREE is delivering product for this market?

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Dean s
Member
Dean s
September 30, 2013 8:55 pm

A fourth option is esl. Electon stimulated luminescent. A new bulb which is essentially an old tv. An electron beam is directed to a phosphor coating. Cost is less than led but more than flouresent. life and energy efficiency are in between as well.

The company is vue1. Long shot to survive, deep in debt and just starting to produce bulbs. But if they survive it could payoff big.

Disclosure I have a small position.

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Uncle Bill
Member
Uncle Bill
September 30, 2013 9:30 pm

I really like LEDs. The technology is really cooking and, as always, when technology moves quickly, prices get better for us consumers. But that’s it. Every electric co. in the world makes LEDs. What makes these guys so special? Nothing. Yet another line of BS from yet another BS newsletter salesman….

Slick Rick
Member
Slick Rick
September 30, 2013 9:31 pm

Keep the LED lights and those lousy curly lights…….bring back the old G.E. Soft 100 watt bulb. Nice soft light and excellent for reading .

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