I’ve been puttering around and thinking about several different teaser ads recently, but this one percolated to the top of the pile when I read Alexander Green’s characterization of it as the “Easiest Grand-Slam Stock of the New Year” … so what is it?
Well, the ad is for the basic membership in the Oxford Club, which mostly means you get their Communique newsletter and updates on the various stocks and portfolios they like — it’s not terribly expensive compared to some ($49, the same as an annual membership in the Stock Gumshoe Irregulars), but, of course, we don’t recommend subscribing to a newsletter just to learn about a “secret” stock.
Do I explain my perspective on this too often? Hard to tell, since we have new readers every time. Here’s the short version, feel free to skip ahead if you’re sick of it: Teaser pitches, in addition to being sneaky or over-hyped sometimes, inflame some of the worst behavioral biases most investors suffer from. The most prominent might be “anchoring” and “post-purchase rationalization” — anchoring refers to our tendency to rely too heavily on the first piece of information or “analysis” we hear about a company, so if the first thing is “this will definitely make you as rich as Donald Trump” you’re fighting an uphill battle to consider it rationally; “post-purchase rationalization” is sometimes also understood as “buyer’s Stockholm Syndrome” — once you’ve bought something, your brain goes into overdrive looking for justifications that you’ve made a smart purchase, including, I think, giving great weight to the newsletter report you just bought… “if I paid for it, it must be brilliant, so I should definitely buy the stock they’re talking about.” There are others, of course — most of us have to go no further than the nearest mirror to look at the most negative influence on our portfolios. My thoughts often come across as negative or cynical, which some folks get sick of, but that’s at least partly because I probably go overboard in the other direction a bit to counter those biases a little and get closer to a balanced view… but I’ll get back to the business at hand now.
This Oxford Club pitch is for their regular membership, but it also is advertising their “Forecast issue,” which probably picks out the 10-20 or so favorite ideas they have and guesses at what will happen in the year to come … but there’s one idea that they call the “Grand-Slam Stock” and drop hints about as they sell the idea, so that’s where we’re looking for our answer.
Here’s the intro:
“2016’s Scientific ‘Breakthrough of the Year'”
‘I have seen the future and it is now.’
“That was the reaction of a scientific American writer who witnessed the power of what we believe will be the scientific breakthrough of the year.
“In fact, I’d venture to say it’s bigger than that.
“Really, this may be the biggest scientific breakthrough in at least a decade… and quite possibly a century.”
See where that anchoring comes in? If someone offers you that, you almost turn off the receptors in your brain that are urging you to ask, “but how much does it cost?” “How much uncertainty is behind that ‘may be?'”
The ad letter, which comes from publisher Julia Guth, goes on to say that the breakthrough is about food — more specifically food waste that makes us use land and water far less efficiently. The “breakthrough” they’re talking about is in synthetic biology, which is, at least in part, designing new foods that don’t spoil, or that grow more efficiently, at least partly as a way to reduce waste. Here’s some more from the ad:
“Synthetic biology is essentially a way to turn our regular foods into “superfoods” impervious to disease, bacteria, spoilage and more.
“For example, in February the Department of Agriculture approved the ‘Article Apple’ – a new type of fruit that does not brown or bruise like other apples. It can last months longer than a traditional golden delicious….
“In November, the FDA approved a new enhanced salmon that grows faster and with less feed by introducing genes from a Chinook salmon to an Atlantic salmon.
“The result is cheaper, healthier fish.
“This new technology… making food safer, more nutritious, and less susceptible to spoilage and disease… is going to save billions of dollars across the globe.”
All I can think is, “how will it taste?” But that is, admittedly, a first world complaint of the first order.
And then we get the quotes from Alexander Green at the Oxford Club that will help us make sure we’ve identified the right stock:
“And one particular stock has his eye, ‘one that bears an uncanny resemblance to taking an early stake in Amazon,’ as Alex put it.
‘Imagine a company that engineers living cells, turning them into microscopic factories that create new products, safer and cheaper foods, and novel therapies to treat deadly diseases,’ he says.
‘Imagine the company is majority-owned by one of the country’s richest individuals, a man with decades of experience turning biotech startups into multibillion-dollar paydays.Are you getting our free Daily Update
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‘Imagine further that one of the nation’s top equity managers calls the company ‘the stock of the decade’ and likens it to investing in Apple in the ‘90s.
‘This opportunity does exist. And this month we’re adding it to the Oxford Trading Portfolio.'”
So who is it?
Thinkolator sez that Oxford’s “breakthrough of the year” stock is almost certainly Intrexon (XON)
Who, you ask? This is a decent-sized midcap startup, with a market cap now of about $2 billion, but the stock has not been a headline generator unless you happen to be a biotech-focused investor or a follower of genetically modified food developments.
It is indeed a “synthetic biology” company that’s probably best understood as an outsourced R&D firm for pharmaceutical, agricultural, energy and other businesses. They try to create new stuff, have it commercialized an