Catch the “V” Stocks that Disappear After 10 Days?

By Travis Johnson, Stock Gumshoe, September 23, 2009


I was getting ready to write about Lee Lowell’s put-selling strategy, but then this ad crossed my screen a bunch of times in a matter of moments … and I do love when we “learn” about secret share classes, disappearing stocks, and wacky ticker symbols, so I thought I should check it out for you.

The ad is for the S&A FDA Report by George Huang, a fairly expensive letter ($1,200 “on sale”) — and it’s all about what they’re calling “The ‘V’ Stock Phenomenon.”

Sounds cool, right? Well, I’ll tell you up front that there is something real here — let’s get into exactly what it is.

Here’s the first part of the pitch:

“Catch This ‘V’ Stock Before it Disappears in 10 Days… and See Up to 200% Gains”

“Every year, 2 or 3 stocks with a special V ticker appear on the market for less than 2 weeks… are removed… and produce double-to triple-digit returns.”

They then list a bunch of stocks that had “V” versions for a couple weeks, and that sported huge returns — among them IMA, EYE, VARI, AGN, EW, VSE, BSL, and CRA, and claim that since 1998 these s0-called “V” stocks “have produced an average gain of 692%.”

And a bit more hype for the mill:

“And let me be clear: ‘V’ stocks are not junk bonds… options…or any other super risky investment. Quite simply: They emerge on standard stock exchanges… and are just as easy to buy and sell as any other security.

“But the difference is: We’ve found that these extremely rare stocks have produced double and triple-digit gains every single time they’ve been made available to the public.

“(The last ‘V’ stock we spotted in July has since returned 114%. Ticker: FACT”V”)

“In fact, as you’re about to see –every single ‘V’ stock that we’ve come across over the last decade has made money.”

And then we get into the tease for their current “V” stock …

“In short: The newest ‘V’ stock has just appeared on the market…

“It emerged onto the New York Stock Exchange recently at about 9:30 a.m. – and is being offered by a small technology firm in California.

“Bear in mind: Only a few announcements about this stock were made available to the public. But this was NOT an IPO. In fact: About 90% of the investing world has no idea this stock even exists…

“But if you follow our instruction, this single event could create the biggest gain you see this year – a quick 50% over the next few months and a 200% return in the long run – even though this ‘V’ stock has already disappeared.”

And we get a bit more on the background about these “V” stocks, including some quotes from mainstream media sources to reinforce the fact that, well, they’re not just making it up …

“But as you’re about to see: The ‘V’ stock phenomenon we’ve descovered has nothing to do with that process… and is NOT an ‘initial public offering.’

“As a rare article on this topic in Kiplinger’s says: “In direct contrast to IPO’s, there are no investment bankers to profit from [these stocks]. Analysts… ignore [them].’

“Or consider BusinessWeek – who wrote one of the few studies we’ve seen about this phenomenon in the mainstream media: ‘Wall Street isn’t paid to tout these stocks, so they initially tend to fall through the cracks.’

“As a result, most people (like you and me) never hear about these stocks – for the simple reason that they appear almost completely unannounced with none of the fanfare that surrounds IPO’s… “

But this is a healthcare investing advisory service, right? So let’s get to some specifics … as you can imagine, we’re looking at a healthcare stock of some kind:

“Every year, around 40 ‘V’ stocks appear on the market… in every sector available…

“But it just so happens that in one particular sector – only 2 to 3 appear in a single year. And the track record, including all the stocks we’ve found over the past 11 years in this sector, is flawless: 23 for 23. Not a single loss among them.

That sector is healthcare.

“You see, in healthcare… there are a variety of different firms, from tiny biotech’s and startup medical suppliers to Blue Chip drug makers. And we’ve learned that in the past 11 years, every single healthcare ‘V’ stock we found has been a success.

“In fact, if you’d put $5,000 into each of these 23 healthcare ‘V’ stocks, you’d have potentially made over $795,750 in PURE PROFIT on these 23 stocks alone… ”

OK, so that’s how they narrow this down to those 23 “V” stocks that they say have been so spectacular … what’s the one they’re touting today? Yes, we will get there … patience!

“In short: Earlier this month, on Tuesday, September 1, a new ‘V’ stock appeared in the healthcare sector…

“A medical firm that makes hospital equipment issued it. They sell tens of dozens of healthcare products in 120 countries… from surgical instruments to respiratory machines… and are expected to make $4 billion next year.

“But the reality is, we couldn’t care less how much the firm will make. To you and me, there’s just one thing that truly matters about this situation…

“In a nutshell: It’s 1 of just 3 healthcare ‘V’ stocks to appear so far in 2009.

“And if the past decade is any indication… its shares could easily rise by at least 200% in the coming months, potentially even more.

“This ‘V’ stock just joined the S&P 500… which means the potential return could be enormous.”

“Of course, there’s no sure thing in the investment world, but if this stock follows the same pattern as the other healthcare ‘V’ stocks that have been offered, this could turn out to be the biggest gain we see all year. “

So there you have it — who is this company, and what the heck is a “V” stock?

The company is CareFusion (CFN)

And a “V” stock is a spin-off — actually, the company is a spin-off, what they’re referring to when they say “V” stock must be the “WI” stock that exists just before many spin-offs are officially separated from their parent companies.

Perhaps this requires a little bit of explanation:

Cardinal Health, a big healthcare equipment, supplies and distribution company, decided last year to spin off their division that develops high tech healthcare equipment for hospitals, largely equipment that monitors and controls drug delivery (like those little beeping IV machines that drive all patients crazy). After many months of preparation for this spinoff, they finally went through with it a few weeks ago.

The new company was called CareFusion, and it was given a ticker symbol of CFN