VentureCap Strategist

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Kyle
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Kyle
April 23, 2017 5:59 am

I subscribe to VentureCap Strategist which is now run by Louis Basenese, with Greg Miller as one of his analysts. Here are my thoughts.

The main strength of VentureCapStrategist is that Louis is good at picking tech stocks and trends. Some of his highlights include buying USAT on Oct. 6, 2014, buying ZYNE at $8 / share on March 7, 2016, buying AAOI on Aug 16, 2016 for 14.79. These were all triple digit winners.

The main weakness in my opinion is that the newsletter does not do a good job of telling when to sell stocks. The sell strategy for stocks that go up are very predictable: sell half your position when the stock doubles in value and set a roughly 25 percent or otherwise arbitrary sell stop after that. Examples of this include:

The target price on AAOI was $60. The target price was reached on March 27th. Instead of telling subscribers, “We have reached our target price, everyone sell”, a $45 trailing stop was introduced, and that is what the stock ends up being sold for several weeks later, resulting in a 200 % gain instead of a 300 % gain. Why bother introducing a price target if you are just going to ignore it?

OCLR was a July 10, 2015 buy recommendation for $2.25. The sell recommendation kicked in after hitting a sell stop at $4.10 on March 9, 2016. An 80 percent gain is not bad, but a little more than a year later, the stock currently trades for $8.85. That is the difference between a 80 percent gain and a 300 percent gain.

This criticism goes for stocks that tend to go down as well, I count 4 closed positions and one active position that are 70 percent below their original value. EYES is one example of this. The original buy recommendation was at $9.16; last year, when the stock was trading at more than $3 / share, Louis’s team found out that the family members of one of the original owners of the company were recklessly selling the stock, afraid that the stock would be worthless and just trying to sell their entire position so that they would have something for it.

Instead of telling subscribers to sell their positions and wait until the dumping stopped, the instructions were to hold the stock, and only after the stock fell below $2 / share did Louis tell subscribers to sell the stock and the main reason was that the family members were dumping the shares, which was exactly what subscribers were told when the stock was greater than $3 / share.

I realize that predicting the future in Wall Street is near impossible, so I don’t fault Louis too much for this. For me, I would say that Louis’s service is good on fundamental analysis of stocks, and I trust his expertise on this, but I would prefer to do my own technical analysis on optimum opportunities to buy and sell.

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