| The Tout Sheets: Part 2 |
Dateline: 03/30/98
As mentioned in the intro to part 1, a Tout Sheet is generally thought of as a tabloid you can pick up at the race track telling which horse is likely to run the fastest. In this case, I am referring to websites that actively analyze and recommend certain stocks. Many of them promote penny stocks, the market equivalent of horse racing, so the term seems apt. This week I look at another Canadian site and at an American site that takes an avowedly Warren Buffett value approach to picking stocks.
The full name of GMT is Global Minerals and Technology. The website features detailed analyses of their stock picks, a table of their track record so far, a discussion forum called CyberWhispers, a cautionary note reprinted from the North American Securities Administrators Association (NASAA), and a disclaimer.
They say they "specialize in locating emerging, turnaround and undervalued companies with potential for rapid growth." More specifically they say their method consists of looking for stocks trading at or near their 52 week lows that have "the right technicals and fundamentals".
The cautionary note is worth checking out so follow the link and take a look. The disclaimer says that GMT is not a registered investment advisory and shouldn't be construed as such. The information on the website "is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Investors should review a complete information package on any company mentioned, which should include, but not be limited to, the company's annual report, quarterly report, press releases, as well as all regulatory filings."
This is a solid disclaimer and should be heeded carefully by investors using their site for information, or indeed, any of the sites covered in this article.
The CyberWhispers Bulletin Board is rather chatty and not particularly informative. Most postings are anonymous. The rhetorical question Jim Carroll and Rick Broadhead raise in their book Mutual Funds and RRSPs Online about such postings is apropo here as well. "What could possibly possess you to make an investment decision based upon the posting of someone who has given themselves the name of 'Goldbug Guru'?"
Or how about whisperer, whaler, Goldfinger, Psychopop, boob, Incognito Man, Momentum Man, Lucky43 or some guy who progressively changed his handle with each message from simple george to serious george to successfull (sic) george? Just some of the imaginative pseudonyms on CyberWhispers this week. In fact, only a couple of people actually used their real names. Shyness and anonymity seem to be rife on Bulletin Boards!
Of more interest to investors is GMT's claim to be "one of the internet's top performing stock tip newsletters" and their track record. Based on their posted track record, one could certainly believe their claim. However, it lists only the peak price since they recommended each stock. It does not give the current price. I believe current price is a better indicator of track record, especially if you are looking for long term investments.
Below is their track record reproduced as posted with an added column of the current price (as of March 27, 1998).
GMT Track Record
| Stock Symbol |
Highest Gain Since featured |
Date of feature |
Featured at | High | Current |
| USBL | +37% | Jan 98 | $2.00 | $2.75 | $2.25 |
| NTAH | +20% | Nov 97 | $0.50 | $0.68 | $0.32 |
| CSMA | +1225% | Oct 97 | $0.20 | $2.65 | $0.80 |
| CKNG | +78% | Oct 97 | $2.88 | $5.13 | $0.25 |
| MISM | +141% | Oct 97 | $0.31 | $0.75 | $0.32 |
| ODM:TSE* | +100% | Sept 97 | $8.00 | $16.00 | $8.75 |
| ICS:VSE | +361% | Sept 97 | $0.65 | $3.00 | $2.65 |
| FGI:ASE | +90% | Aug 97 | $0.40 | $0.76 | $0.22 |
| UTX.a:ASE | +100% | July 97 | $0.50 | $1.00 | $0.28 |
| MAD:VSE | +43% | July 97 | $0.72 | $1.03 | $0.40 |
| TRGC* | +233% | June 97 | $1.50 | $5.00 | $0.187 |
| RAP:ASE | +100% | June 97 | $0.25 | $0.50 | $0.095 |
| GPRX | +567% | June 97 | $0.30 | $2.00 | $0.33 |
| APM:NYSE | +90% | May 97 | $20 | $38 | $11.875 |
| BEV:ME | +300% | April 97 | $1.50 | $6.00 | $4.55 |
| GLO:VSE | +46% | April 97 | $2.50 | $3.65 | $0.78 |
* stock tips from CyberWhispers
As you can see from the current prices, their track record is not all it's cracked up to be. Seven of sixteen stocks listed are up from the recommended price, the rest are down. Coconimo SMA, touted as GMT's first ten-bagger with an increase of 1225% is still up 400% from the recommended price, but down over 70% from its high. Some of the stocks are big losers, although they all had a point at which they were up from the recommended price. It should be noted that the asterisked stocks were not specifically recommended by the site hosts, but were promoted by yakkers on the CyberWhispers page. The linked symbols take you to GMT's analysis of those stocks.
A sound word of advice here comes from Laurel de Yturralde of Bidding on Bay Street (featured in Part 1 of this article). She says "With small cap stocks it is always prudent to take at least partial early profits on a substantial run-up as 'insurance' to protect initial capital. It is almost inevitable that some of the small companies featured will disappoint or fail for one reason or another. Therefore diversification (into 4-10 different stocks) is always essential."
This advice seems particularly prudent with respect to GMT's picks, as many of them have had good runups and then rather drastic drops.
Please note that GMT is paid for "dissemination of news over the internet" by the U.S. Basketball League (USBL), carries banner ads for MIS International (MISM) and Nevtah (NTAH) and serves as the host site for the webpages of MIS International and United Tex-Sol Mines (UTX.a).
Active Investment Research is managed by Green Mountain Asset Management in Burlington, Vermont. The firm is registered with the SEC as a Registered Investment Advisor.
They claim to use a Warren Buffett style of stock picking. As such, they are not interested in short term fluctuations or penny stocks. As they put it, "once we establish a position, our holding period tends to be long term. We are not traders, but when we are proved wrong on the fundamentals, we will exit a position."
And they have been remarkably successful as can be seen in the chart below (reproduced from their site.) They are the only one of the four sites reviewed here that lists the current price and compares performance to some benchmark. They use the S&P 500.
I've eliminated information on the S&P performance from the chart but retained the column that tells how their picks have done by comparison. Thus the first pick shown, BHE, has returned 91% since recommended and outperformed the S&P 500 by 24.7%
| Symbol | Date | Price | Current Price | Percent Change | Over / Under % |
| BHE(4) | 2/23/96 | $12.500 | $23.875 | 91.00% | +24.79% |
| AUD | 3/01/96 | $39.250 | $68.000 | 73.25% | +3.25% |
| IEX (3) | 3/05/96 | $24.917 | $35.125 | 40.97% | -26.07% |
| FNM | 3/11/96 | $30.875 | $63.500 | 105.67% | +34.51% |
| LBY | 3/15/96 | $20.125 | $37.500 | 86.34% | +15.56% |
| MFN(2) | 4/11/96 | $12.500 | $.688 | -94.50% | -168.05% |
| G (1) | 5/24/96 | $50.210 | $120.625 | 140.24% | +78.79% |
| HWP | 7/12/96 | $39.063 | $63.000 | 61.28% | -8.24% |
| FHCC | 7/31/96 | $38.625 | $55.125 | 42.72% | -28.46% |
| HELE(5) | 10/8/96 | $7.875 | $18.000 | 128.57% | +72.22% |
| FDC | 12/3/96 | $37.750 | $32.375 | -14.24% | -60.63% |
| MCD | 3/14/97 | $44.125 | $57.625 | 30.60% | -7.51% |
| GNCI | 5/13/97 | $22.875 | $38.000 | 66.12% | +34.63% |
| SBA | 7/16/97 | $27.813 | $29.250 | 5.17% | -11.79% |
| SAI | 1/23/98 | $38.750 | $48.750 | 25.81% | +11.41% |
The footnotes tell that the prices of stocks so noted have been adjusted for stock splits, except in the case of Mercury Finance (MFN) for which they explain the stock's terrible performance. (Accounting fraud by the company misled investment analysts.)
To see what the symbols in the chart stand for and an executive summary of their picks check out their Current Buy Recommendations. They list all their picks in reverse chronological order of the date first recommended and indicate if the stock is no longer a buy.
At the time of writing my March 9th feature, I was not on BBS's mailing list. I had tried to subscribe but got my email back saying the address was invalid. I tried again the day I wrote Part 1 of The Tout Sheets and again got the email back. But I noticed why. There was a problem with the automatic form on the BBS website. So I manually typed in the email address and this time successfully subscribed.
I was most impressed by the response from Miss de Yturralde. Not only did she send a welcoming letter, but a whole raft of back issues of the Bay $treet Byte$ newsletter as well. She is a regular columnist for Canadian Investor's Digest and has a background in small business and teaching commerce at the university level. She avers that "BBS was born of my own frustration in finding comprehensive, credible information on Canadian small-cap stocks."
Recently she sent out her newsletter with information on a company called Alternative Fuel Systems. Since she recommended it on Jan. 5 at $0.70, it has soared as high as $3.15. It's what has been called a "baby Ballard", a company in the same general field as Ballard Power Systems but yet undiscovered by the market.
In Saturday's Vancouver Sun, reporter David Baines wrote a critical article on AFS implying that Miss de Yturralde was misinformed. That same day she sent an emailed response to Bay $treet Byte$ subscribers. The information on AFS is now posted on her website, so readers may want to check it out, read Baine's column, do some independent research and maybe consider the investment. Especially if the negative publicity of Baine's article causes the stock to slump and the fundamentals withstand scrutiny.
Main Pages:
GMT Newsletter
Active Investment Research
The Stockpage
Bidding
on Bay Street
Disclaimer: As with all my columns here, I should re-iterate a precaution. I am not a professional financial advisor. I am a financial journalist and editorialist. The views in these columns are my personal opinions.
American Readers: Looking for a broker who can sell you Canadian stocks? One of my brokers is licensed to sell securities to Americans in 26 states. She works for Canaccord Capital which is an excellent company with a superb research department. They are particularly knowledgeable on resource issues. Send me a note if you want to get in touch with her.
Investing (Canada) Notes
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