“Feisty Upstart Broker to go up 30% in 30 Days”

This ad came in for Navellier’s Quantum Growth newsletter, which also mentioned what Navellier was calling his “lobster tip,” which essentially was that the shortage of lobsters in th Hamptons meant good things for the investment banks.

And, in part of what he called his “private communique” with his readers, he noted that he thought Goldman Sachs would still be undervalued if it hit $300 or more by labor day, because the company is essentially at the heart of the private equity hurricane. (it’s around $230 right now)

But, and this is the good part, he said that he was saving his faster grower for Quantum Growth subscribers — because they can be trusted not to blab.

Seriously — this is what he wrote: “And I said, if you want to know more, that’s fine but you’ve got to subscribe to Quantum Growth because NO ONE who gets that buy-list ever blabs. Them’s the rules, like my mom used to say.”

Well, if they’re not going to blab, I guess the Gumshoe will have to sniff it out for us.

And actually, just to warn you, a blind hound dog with one nostril could have sniffed this one out … but still, when the newsletter ads say that you have to “keep a secret” I almost can’t resist. So I’m sharing it with you anyway.

So what is the other company, the one that — like GS — should be having a spectacular summer?

“Well, over the weekend a very significant piece of information about this small brokerage house became available. Today I can tell you with CERTAINTY that this wealth trigger is about to be pulled on this stock. We have almost no time.”

That “wealth trigger” is the spinoff of the company’s distant-fourth-place credit card operation.

So now, you guessed it too, eh? Give me a moment.

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Here’s the final word from Navellier: “Not only is this broker cashing in on the new environment for credit card growth, it is ALSO grabbing a bigger role in this incredible private equity bonanza. Not as big as Goldman—but big enough to make the stock EASILY worth 30% more by July 4.”

So … what is this small and feisty broker that’s about to spin off its credit card division … a division that might double because of antitrust worries about Visa and Mastercard?

Of course, it’s Morgan Stanley (MS)

And there have been other fans recently, too — they were just upgraded today, I believe, so if Navellier’s right we’re going to see this go well over $110 in the next month (it’s around $85 now). If he’s right, of course, we should all be selling our houses and buying call options on MS.

If anyone ran and did that before reading this sentence, I absolutely refuse to take responsibility for your being homeless on the Fourth of July.

I actually think Morgan Stanley and Goldman Sachs are probably decent buys here — I own near the money call options in both, for what that’s worth, because I believe both are undervalued. But I sure would be surprised if Labor Day comes around and Goldman is over $300 and Morgan at $120 or so. Happy, but surprised.

Still … it could happen. But neither one of these is really an unknown stock, or a big surprise to any of the Gumshoe’s readers, I’m sure. I know Morgan Stanley finally filed to ditch Discover at the end of last week, but people have been widely expecting them to pull the trigger on that for well over a year, so I don’t know how much it’s going to move the stock. I also would be surprised if Discover Card gains any ground on the big guys, but I do like being surprised.

But really, I had to write this one up just because Louis Navellier called Morgan Stanley a “feisty upstart broker” — seriously, can you see the Morgan family collectively spinning in their graves? OK, sure, it’s not J.P. Morgan, but it’s still the family — Morgan Stanley was maybe the first “spinoff” as Henry Morgan and his bud [insert name that I forgot here] Stanley left J.P. Morgan to found their firm, and did $1 billion in deals back in 1936. It is only in comparison to the Goldman Sachs behemoth that you could even consider calling Morgan Stanley — a $90 billion behemoth in its own right — a “feisty upstart.” (MS is only about 3% smaller than GS by market cap, FYI, though they’re both tiny compared to Citigroup or JP Morgan)

I love it.



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June 6, 2007 2:00 am

Found you through searching for next Hathway. Love your ‘exposures’ notes.

Can you get the Fool best for 2007 list for me, that they have been offering after signup? You look the best in this business.

July 25, 2008 4:35 pm

Also very much enjoy yer feisty sleuthing GS.
LN used to partner with another quant man professor. Moved to Tahoe then Reno to tout and run money for billionaires with so many recos as to defy practical implementation. If Hulbert adjusted for fair time and commission slippage, LN track record might be far less. BTW MS went from 74 to 30, another LN reco that did not work out so well.

September 6, 2009 6:16 am

Wow , it is Labor Day! I’m happy with my extra day off, and I am planning to make something fun that’ll probably involve a moto trip and seeing something new in Muskegon I haven’t seen yet.
You write something new on this Monday at the labor day? … haPpY bLoGgiNG!

September 7, 2009 8:55 am

Interesting. From the time Gumshoe posted this (June 2007) to November 2008 MS lost about 90% of its “value”. Since then it has been a 4+ bagger. Timing is everything….

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