Stansberry Venture is a high-end ($5,000/yr) newsletter that focuses on small “breakthrough” type companies, so far mostly in biotech and technology as far as I’ve seen. It’s the heir, roughly speaking, of Stansberry’s old Phase 1 newsletter that used to often pitch biotech, tech and junior mining stocks. It’s helmed by Dave Lashmet, who was with Stansberry on an earlier newsletter called Diligence maybe ten or 15 years ago and came back, it appears, to run Stansberry Venture.
And since we’re writing about this letter, I bet you can guess what’s happening… that’s right, they’re hinting about another “best idea” stock that Lashmet thinks could soar. His first teaser pick that we covered is now doing reasonably well (that was Innate Pharma, back in late 2014, it’s up about 20% now, he also hints at it in this ad without naming the stock, so maybe they still own it), and his most recent teased pick that we covered, Ion Beam Applications, has also done decently well (though it certainly didn’t, as Lashmet’s ad claimed at the time, release the “most disruptive biotech discovery of 2015” last Fall).
So what’s up next from Mr. Lashmet?
Well, he gets us primed a bit by taking credit for recommending a stock back on October 12 that doubled a few days later (that was Five Prime Therapeutics, though he doesn’t name it — so maybe that one’s still in the portfolio at Stansberry Venture), and he says that four of his 12 stocks recommended last year had similar results. I don’t have any way to verify that, but it’s probably true — though he doesn’t say anything about the performance of the other eight stocks, and these kinds of services tend to rely on some huge winners to compensate for what are almost guaranteed to be a significant number of losers (if it was easy to pick winners early stage biotech and tech stocks, everyone would do it… and it wouldn’t be particularly profitable).
And, of course, there’s the “disclaimer” bit in the ad:
“My approach focuses entirely on small, experimental start-ups… which are some of the most volatile companies in the world. Investing early in these companies’ life cycles is speculative and even the ones mentioned above can have wild swings up and down.
“That’s why we never bet the rent money on these opportunities. Instead, we spread a small portion of our portfolios across a handful of promising start ups, with the potential to return many times our money.
“Of course, past performance doesn’t guarantee future results. Discipline is key with this approach… you have to be extremely patient to take advantage of these types of situations.”
Obviously sensible, and it jibes pretty well with my basic strategy about little speculative investments: Your best risk management comes from position sizing… only buy as large a position as you’re comfortable losing 100% of (if you insist that you only risk 25% losses because you use a 25% stop loss strategy, keep in mind that some of these companies can easily drop 60-80% on bad news. With little, illiquid companies that can change completely overnight I think that to control losses you need to simply invest 25% as much as usual and assume that you have a “100% stop loss.”)
But then, after running through his past winning stock picks in superbugs, robotic surgery, etc. over the past decade, and giving a bit of his biography (he’s a former academic), we do get into his teaser pitch about today’s “Best Idea Right Now.”
Want to put up $5,000 to get the word direct from Dave Lashmet? Last Chance!
No? OK then, I’ll see if the clues are specific enough for the Thinkolator to get us an answer.
Here are our clues…
“Not long ago, the head of the World Health Organization announced that a variation of the common cold was killing people with a 50% fatality rate… and called it: ‘a threat to the entire world,’ and a problem that no ‘single affected country keep to itself or manage by itself.’
“Since then, this illness has spread across at least three continents, and killed hundreds of people… as many as 10 people a day just between September and August.
“And that brings me to the opportunity I’ve found…
“I recently came across trial results for a tiny company with an experimental vaccine to combat this deadly illness.
“Furthermore, the early results are astounding…
“In the control group — the animals that received no vaccine — the infection rate was 100%… the animals had no chance.
“But in the other group — the animals that received the vaccine — they were 100% disease free. None of them got this fatal infection, thanks to the vaccine.”
That’s a reference to Middle East Respiratory Virus (MERS), which is a corona virus (the “common cold” is often caused by other coronaviruses, though I don’t know whether it’s fair to say that MERS is a “variation of the common cold.” SARS is also a coronavirus, FYI).
MERS did generate headlines several times over the last couple years since it was “discovered” in 2012, largely because of that high fatality rate, but the number of people impacted has so far been very small compared to other “panic” stories (Ebola, SARS, Bird Flu, etc.), perhaps partly because it doesn’t have the kind of transmission profile that creates fears of an imminent pandemic. So far more than 500 of the 1,600+ cases have been fatal, and it has spread to dozens of countries (including the US). The CDC page about MERS is here if you’d like more background, similar info from the WHO is here.
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