Issue #10, Volume #1
Three Things You Need To Know Now:
1. A weaker OPEC could mean lower oil prices. Wednesday’s OPEC meeting could be a watershed moment for oil prices. Oil prices have been sagging because global supply is growing, thanks mostly to added output in the U.S.’s Permian Basin, the huge oil fields in west Texas and New Mexico that we wrote about extensively in last week’s Big Secret on Wall Street. Saudi Arabia says it will increase production starting on December 1, and that it is abandoning its previous goal of managing production to reach $100-per-barrel oil (it’s now just under $70 per barrel). Most Americans still don’t realize how incredibly valuable the shale revolution has been: because of new drilling techniques, U.S. production has grown from 5 million barrels a day in 2005 to over 13 million barrels a day currently. The U.S. has led the world in oil production for the last six years and will likely continue to lead the world in oil production for the next decade, or longer. The result? OPEC’s ability to control the market is a relic of the past. Look for the Saudis to begin aggressively competing for global market share, which could mean much lower oil prices.
2. Carmakers’ woes in line with overall consumer weakness. Shares of Stellantis (STLA), the maker of Jeep, Dodge, Fiat, Peugeot, and other vehicles, fell more than 10% this morning as the carmaker says it must address its bloated U.S. inventory, slashing profit-margin estimates from double digits to as low at 5.5%. Volkswagen (VWAGY), Mercedes-Benz (MBG), BMW (BMW), and Aston Martin (AML) have all recently cut forecasts amid a sustained economic slowdown in China. Add the carmakers’ woes to the list of the real-world signs of economic weakness, despite massive government spending and deficits meant to stimulate the economy. And, I wonder, given my long history of criticizing the business, how long it will be before General Motors (GM) goes bankrupt… again. Total debt at GM has doubled since 2015, going from $60 billion to $120 billion. Interest coverage is currently at relatively safe levels, so GM isn’t in jeopardy… yet.
3. As predicted, China stocks show strength. The Shanghai Composite rallied 8% overnight, notching its best single-day gain in 16 years. Big Secret on Wall Street analyst Ross Hendricks and I made the case for Chinese stocks as one of today’s top contrarian ideas at the Porter & Co. Conference last Wednesday. Three names we specifically mentioned as compelling opportunities include Alibaba (BABA), PDD Holdings (PDD), and Baidu (BIDU). Another conference recommendation we called “The World’s Best Mining Stock” is also benefiting from the recently announced stimulus measures out of China. Here’s the performance since those original recommendations made on September 25:
The Biggest, Best Opportunity of the Conference
I’m not sure the audience fully realized the value of the presentation.
But, as my wife and I watched along with the rest of the audience, Erez Kalir – who has worked alongside and on behalf of some of the greatest investors of all time, such as Julian H. Robertson – described a simple series of events that will create more than $1 billion in wealth. Most likely, far, far more than $1 billion in wealth.
Erez is extraordinarily intelligent. He’s very precise with his words and is soft-spoken, much like Marty Fridson, the lead analyst on Porter & Co.’s Distressed Investing. He doesn’t have the showmanship or the voice of a “carnival barker” (like I do, lol)… and so I worry that most people, even most people who were listening intently, will not understand the incredible impact of his presentation.
I hope you won’t make that mistake.
The Porter & Co. conference was an incredible experience.
In a quiet, bucolic setting – my own small farm outside Baltimore – a group of about 200 high-net-worth investors met and mingled with each other and a collection of world-class thinkers, including economist and futurist George Gilder, Dave Lashmet from Stansberry Research, wealth manager Austin Root (who like Erez is another Tiger Management alum), and Marty and Erez.
Collectively these friends of mine have successfully managed tens of billions for decades.
Our guests also got to meet a handful of emerging investment geniuses, like Compounding Quality founder Pieter Slegers and the enormously popular (and secretive) energy expert Doomberg.
We will send the presentations and videos to our Partner Pass members and paid-up Big Secret on Wall Street subscribers in the coming days (and, next year, we’ll offer free livestreaming of our conference to all Partner Pass members).
But, out of all of the presentations, there’s one I would beg you to review as many times as it takes for the message to sink in.
Erez, in his deliberate, plain-spoken way, talked about a legitimate way to make 5x to 10x on a portion of your portfolio over the next 12 to 36 months. The catalysts he described in these stocks are now in place to create a once-in-a-lifetime opportunity that investors should not ignore.
Erez and I sat down for a short and informative discussion earlier this month. We talked about the state of biotech, the chasm between tech and biotech stocks, and the role of artificial intelligence in pharmaceutical drug trials, and more.
It was good to have his insights again just a few weeks later, and in my mind, Erez’s presentation was, by far, the best of the conference. So, I’m going to tell you all about it. And I’ll even give you the catalysts. But, first, an admission.
If you’ll read carefully, you’ll learn how to make a handful of 3x to 5x investments over the next year. You’ll also learn how you can get an “all-access” VIP ticket to our conference next year.
Why does that matter?
Well, this year our conference sold out in three hours! This is a problem because we have promised our Partner Pass members that (space permitting) they are invited to attend as part of their membership. And we honored that commitment this year, for as long as we could – three hours. But, because my farm can accommodate only about 200 people, we’re going to start livestreaming the conference so that Partner Pass members can attend virtually, in real time.
For people who want to lock-in a ticket to come in person, we’re going to offer a VIP experience that will include:
- an all-access ticket to the conference
- a trip with our staff (and me) to a Baltimore Orioles baseball game (with plenty of other perks)
- a private cocktail reception with the keynote speakers
- a private dinner prepared by my personal chef at my house
VIP tickets cost $5,000.
Plus, all VIP ticket buyers are entitled to a 50% discount on any of the subscriptions offered by our keynote speakers at next year’s conference. That offer will be limited to purchases made during the event. You can call Lance James, our Director of Customer Care, at 888-610-8895 or 443-815-4447 to sign up.
Ok, that’s the pitch.
Now let me explain why Erez’s presentation was the showstopper.
Erez explained why now is the best opportunity in almost 15 years to make huge, life-changing, returns as a biotech investor..
As my friend and mentor, Dr. Steve Sjuggerud, taught me at the beginning of my career in the 1990s and as he famously taught True Wealth subscribers over two decades, “investors only need one biotech bull market to achieve generational wealth.”
There have been three of these massive biotech bull markets since October 14, 1980, when Genentech became the first biotech company to do an IPO.
And, I want you to notice something about all – every single one – of these massive biotech rallies. They all happen exactly the same way…
Following the market crash in 1987, tech stocks rallied for an entire year. But, biotech didn’t budge. Then, in November 1988, just about a year after the rally began in the rest of the market, biotech began one of the biggest market moves in stock market history. Powered mostly by Amgen (AMGN), biotech stocks rose almost 1,000% (958%) over the next four years.
Do you remember the Netscape IPO on August 9, 1995? At the last minute, the underwriters doubled the offering price from $14 to $28. It didn’t matter to investors, who bid the stock up to $58 on its first day, creating $3 billion in wealth. Tech stocks of all kinds – software, hardware, peripherals – went on to boom for the next five years. But biotech? It was flat for the entire first year of this incredible run. Biotech didn’t begin to move until a year after the Netscape IPO. But from July 1996 until March 2000, it led the markets with an 800% return, far outpacing the Nasdaq.
Can you see this pattern…?
It happened again, in the summer of 2010. That was a little more than one year after the broader market bottomed following the Great Financial Crisis. Tech stocks bottomed in March 2009. And they rallied strongly for just over a year before, once again, biotech began to rally, gaining more than 400% by the summer of 2015.
Keep in mind, these are index results measured by Datastream’s U.S. Biotech Index. That’s a broad, market-cap weighted index. It mainly tracks the gains of the largest biotech companies. Inside these rallies, smaller companies produced vastly larger results, with many companies producing 5x, 10x, and even 20x returns.
As one (of many) examples, shares of Illumina (ILMN), a biotech equipment maker that Stansberry Research’s Dave Lashmet had been recommending since its IPO in 2001, went from $30 to $190 in the 2010 to 2015 rally, more than a 500% return. And, of course, biotech companies with valuable drug candidates can produce even bigger gains. Regeneron Pharmaceuticals (REGN), which many longtime subscribers will remember we recommended in the early 2000s, traded up from $22 in the summer of 2010 to over $500 by the summer of 2015. That’s an increase of 22x – that’s a life-changing investment.
These enormous moves in biotech follow big gains in other tech sectors. That makes spotting these trends much easier to recognize.
And, right now, a new major biotech bull market is forming.
For a variety of economic reasons (the COVID bubble, the huge inflation that followed, the increase in interest rates to fight it, etc.) biotech has not participated in the current tech rally. And, as a result, I cannot recall a wider gap, ever, between the performance of technology stocks and biotech stocks. The chart below tells the story.
QQQ, representing the top 100 companies in the Nasdaq Composite Index, is up 160% over the past five years. But ALPS Medical Breakthroughs ETF (SBIO), a collection of small-cap biotech innovators, is only up 18% over that period.
This huge gap in performance will not last.
We believe, especially because of a slowing economy, softening levels of inflation, and the potential for lower interest rates, that biotech stocks are poised to soar. The catalysts for each company will be unique, and there are dozens of well-financed, small-cap biotech companies that should take off in the next few months.
That’s why, in January of this year, Porter & Co. launched our own proprietary biotech research service called Biotech Frontiers. And, just like we did when we partnered with the best distressed-debt investor in the entire history of those markets, Marty Fridson, we recruited a world-class biotech investor to join our team, Erez Kalir.
Erez has spent a lifetime studying and working in biotech and related fields, first at Stanford University, then, as a Rhodes Scholar at Oxford University, then at famed hedge fund Tiger Management, and most recently, for the last six years, as a biotech angel investor in Silicon Valley. Erez has known many of the best entrepreneurs and scientists in biotech since college and graduate school and has invested in the sector for more than two decades.
I have tremendous confidence in Erez’s work. In fact, I was so convinced that biotech would be an outstanding sector this year that in February I asked Brett Aitken, who runs Stansberry Research, to distribute – for free – 10 of Erez’s best ideas to Stansberry Research subscribers. I wasn’t looking to garner subscriptions. I just didn’t want my long-time readers to miss out on these incredible opportunities. And I’m glad that I shared the information with them, as the biotech bull market that we believed would soon take off, began.
After some big early gains, like 87% on Kodiak Sciences (KOD), Erez decided to close nine of his first dozen recommendations, earning average returns of more than 20% in only about three months.
His seven current open positions continue to perform well, with average returns of around 20%, and one big winner that’s up 61%. The portfolio currently has only one stock that’s down.
But as Erez explained at the conference, stocks in his portfolio are poised to produce massive gains because of a series of catalysts over the next few months, including:
- A company with a best-in-class drug candidate to treat rosacea, a skin condition causing severe redness and rashes, which has crushed the current standard-of-care drug in two head-to-head Phase III clinical Food and Drug Administration (“FDA”) trials, with an FDA approval decision coming on November 4.
- A tiny company with a new, promising drug to treat MASH, a progressive liver condition that can lead to cirrhosis, whose closest competitor is valued in the billions of dollars, which has indicated it will be entering a game-changing partnership with a strategic Big Pharma partner in the next six to nine months.
- A company with patent litigation pending against Big Pharma giants Pfizer (PFE) and Moderna (MRNA) for their COVID-19 vaccine-delivery technology, which has won important early rulings in its favor, and may benefit from a multibillion-dollar settlement over the next year.
- A company trading for less than one half of its net cash that will be submitting a New Drug Application to the FDA later this year for a potential blockbuster, with an approval potential six to nine months later.
- A company that has the first disease-altering gene therapy for Huntington’s disease, a terrible neurodegenerative illness, that will release additional market-moving clinical-trial data in mid 2025.
And what is to me the most interesting opportunity: a chance to invest alongside the Elon Musk of biotech. One company in Erez’s portfolio has a legendary genius CEO, who is also the largest shareholder. He has a compensation structure that could earn him a $25 million bonus – but only if he increases the company’s market capitalization to $10 billion by 2026, which would represent a tripling in value from where it is today.
I understand that investing in biotech isn’t for everyone. But here’s the thing, over the next year or two, you’re going to be reading in these pages that these exact catalysts mentioned above have sent these stocks soaring 2x, 3x, 5x… or even 10x their current values.
And there’s no reason that you can’t participate. It’s easy: one of the best biotech investors in the world, Erez Kalir will show you exactly what to do. But, please understand. Erez isn’t going to shout anything from the rooftops. He will, undoubtedly, complain about me sharing his accomplishment and his credentials with you in this way. He believes producing great results is enough. But I know, it’s easy to miss these opportunities unless someone says “you absolutely must recognize what’s happening here, right now.”
So, I’m trying my best to get you to see what I see in this opportunity. And I want to give you every possible reason to join Erez in making what we both believe will be life-changing investments. My advice is simple. Even if you only invest $1,000 in each of these companies, allocate some of your equity exposure into the early stages of this biotech bull market. You simply won’t believe what is going to happen over the next one to three years.
Try not to cherry pick, and it makes sense to put the same amount of capital in each idea, because you can never know which will be the biggest winners.
But what I believe you can count on is that some of these stocks will be among the very best investments you will ever make, in your entire life.
Like it or not, I’ll keep track of the results here. So, if you’re not in these deals, you’re going to absolutely kick yourself.
Porter Stansberry
Stevenson, MD
P.S. Up 50% in three weeks: On September 10, my friend Tom Dyson of Bonner Private Research recommended – in the Porter & Co. Spotlight – that Porter & Co. subscribers buy shares of Zim Integrated Shipping Services (ZIM). Three weeks later, ZIM shares were up 50%.
I’ve known Tom for decades. We used to be colleagues at Stansberry Research. He’s a close personal friend. So when I say that Tom is a brilliant analyst and investor, I make that claim based on long and up-close personal experience. Tom has a clear vision of how markets work, and he’s relentlessly right. Only the best analysts make my cut to be featured in our Spotlight, and Tom is one of a small handful of them who I had in mind when we started the service.
Over the past few weeks – in case you’ve missed them – we’ve given you some examples of Tom’s research (see here and here). And now Tom is providing a special rate for Porter & Co. subscribers to get access to his insights. I urge you to take advantage of it.
Mailbag
Lots of kind messages and thanks from members who were at the farm last week for the Porter & Co. annual conference. As always, we’d love to hear from you if you came to the conference: [email protected]
Porter, my wife, Lucy, and I are on our way home (Wichita, Kansas) and have already signed up for next year’s conference. (I attended last year too.) My wife loved this year’s meeting. We thoroughly enjoyed the hospitality, the great speakers, and the generous quality of the food and service… I hope you have Pieter Slegers from Compounding Quality back next year. Excellent.
– Best wishes, Mike L
I wanted to send a quick note and tell you how much I appreciate the effort you put into your second annual conference. I have been a Stansberry Research Alliance member for more than a decade and am now a Partner Pass member. These memberships have allowed me several times during my life to take on things I was not sure I could pull off successfully… such as after a divorce, sending my son to Purdue University for aerospace engineering without any financial support from his father. When the next NASA rocket goes to the moon, you had a part in making it happen! That son is now at Blue Origin testing new engines for that NASA flight.
Your farm is a beautiful place! It was the perfect location for everyone to learn but also relax and exchange great information. I am a petroleum engineer who has worked in many capacities in my 40-year oil and gas career. Most recently, I agreed to head up the New York State Oil and Gas Association. Although I passionately believe in this industry, the constant attacks on this group took a toll on my confidence level. I am a capitalist, so if there was a better replacement fuel, I would support that transition but I don’t see one. This conference ended up not only being full of great investment advice but also full of people who reminded me why oil and gas was so important to the world today. My strength to continue the fight has been renewed. Look out, New York – you have not won yet! And yes, Porter, you are helping me do this also. Thank you for all you do. Please don’t stop anytime soon.
– Mary G
I met you back when you were still at the Oxford Club at a meeting in Richmond, Virginia in 1999 when Steve Sjuggerud had to miss the meeting because he was closing on a house purchase. I even introduced you to my daughter, hoping a spark might happen. I joined you as a subscriber the first month you started Stansberry & Associates, and upgraded to Alliance a couple months after you created that. I have also joined the Porter Co. Just wanted to let you know how much I am enjoying the return of you with The Daily Journal. I am looking forward to hearing from you three times a week. Please don’t give it up or delegate it to someone else.
– Sam W.
Porter’s comment: Sam, I’m old enough now to know what I both enjoy and am good enough at doing to make a living with. I’m going to stick with it this time.
There is a lot of information… I am interested in the Micro Nuclear Reactors technology. – Patrick M.
Do not advertise that you answer questions, and then you do not!!!! – Patrick M.
Porter’s comment: Patrick, we’re happy to answer questions. Just ask one. We can’t read your mind.