Ep 159: Tracking Holiday Sales With Retail Insiders

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Announcer: S&A Investor Radio looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on Main Street.

 

Frank Curzio: How’s is going out there? It’s Wednesday, November 28th, and I’m Frank Curzio, host of the S&A Investor Podcast where I breakdown the headlines and tell you what’s really moving these markets.

 

Have to tell ya, a lot of people emailing me interested in purchasing my Small Stock Specialist Newsletter. I said last week, it’s not a sales pitch, and it wasn’t, it really wasn’t. All I said is I’m seeing the best evaluation in small caps in my 20-year career. I mean that. I’m going to provide a lot of evidence throughout this podcast.

 

Those of you who have been listening to my podcast, for what, six-seven years, who have followed me in my newsletter for over a decade – you know, I never really say things like this, especially when it comes to small caps because they humble you, they really do. That’s what I like about my job. You can’t really have an ego, because you know, once you have a lot of winners, the next week you could have three losers out of nowhere.

 

It’s very difficult sometimes small caps, so it really keeps you humble. I mean sure I get excited over ideas, like every other newsletter writer, but just right now, there’s so many major disconnects between stocks and the stock prices. And I have to tell you, looking at the research, doing a lot of homework, there’s a lot of big hedge funds that agree with me.

 

I mean you see George Soros with a $25 billion under-management. Tiger Global Management, $8 billion in assets. Just took a big stake in Groupon. Are you kidding me – Groupon, the online services Diggs Counter. And I know you’re thinking, “Groupon – terrible company, a ton of competition, horrible.” People have been saying that. Been saying that since the stock was what – 25.

 

I mean it fell to level where we was trading their cash 81 percent since its IPO from just 12 months ago. Today, the stock is up 45 percent in three weeks – in three weeks. If you’re counting at home, that’s 780 percent gains on an annual basis. These are the deals that I’m seeing. Don’t look at the Russell 2000 and say, “Wow, let me buy the Russell. Frank this all small caps.”

 

It’s not all small caps, it’s just is a major disconnect between some small cap stocks and where they should be trading. I mean people hate these companies so much, they sell them no matter what. And we made 40 percent JC Penney in 2 months, 60 percent in two weeks on Human Genome Sciences. These are all my picks – 300 percent in gold standard ventures in 3 months. In 3 months the stock rose 300 percent. I mean amazing, I’ve told that story before.

 

If you can, go back another podcast, I don’t want to tell it again. I’m not talking about the gain, I’m talking about how it’s set up and how punished that stock was. It went from 95 cents – one of the biggest hedge fund managers in the world in Canada took a position. Took 20 percent stake in the company. Went from 95 cents to like $2.00, and then they came out with bad news – which, you know, basically, we didn’t find gold yet – which is normal for a junior miner – and it fell to 70 cents – 70 cents. It’s amazing. It fell from $2.00 to 70 cents.

 

But these are just some of the gains that we’ve made this year; and that’s what – three or four winners out of a lot over the past 6 to 9 months. And following the recent selloff I’m still seeing a ton of ideas, again, major disconnections because people are outright scared to own stocks. I’ve never seen it like this crazy.

 

You know, it’s earning season. If a company comes out with bad news they just barely missed, the stock’s down 7 percent in a premarket. By the end of the day, it’s down 35 percent on a slight miss, because, “Hey, you know what? My clients just want to wait until the fiscal cliff gets resolved.”

 

I mean talking about good companies too, I’m not talking about crazy risky small caps. I’m talking about small caps that have maybe a $500 million market cap. You know, it depends on what your definition of a small cap is. For me, it’s like $2.5-3 billion. Some people say, “Well, if it’s over $1 billion, 1 to 5 should be mid.”

 

It depends. Man, that section – like stocks under $3.5 billion are good companies that – you know, $1-3.5 billion. It’s just amazing, amazing deals. So if you ever thought of purchasing my newsletter, guys, do it now. And if you’re not, it’s okay – and you go to FCurzioStansberryResearch.com, promised everybody who emailed.

 

I got a ton of emails, that’s why I’m starting this podcast out again – I’ll give you a great deal, I promise it’ll be the great deal. You’re not going to get that deal again. But I’m hoping that if you come in now, that you’ll be a subscriber for the next ten years – that’s what I’m hoping – and you’ll pay full price every year because of the gains that you’ll see today.

 

And, again, last podcast I just happened to get a ton of emails and I said, “Guys, if you’re looking to buy a newsletter,” I couldn’t believe how many emails I got, and it was great, it was fantastic, I’m happy. You don’t see me this excited pitching my newsletter.

 

You know, it actually surprised me, but it surprised me so much – we was setting up a link at InvestorRadio.com. It’s going to be available Thursday this way, because I know a lot of people don’t like emailing me. They’re like, “Oh, Frank, I’m not going to send you anything, you have CurzioStansberryResearch.com.”

 

And if you want to go to a link, if that makes it easy, and see the price – it is going to be an amazing price. I guarantee you’re going to look at it, you’re not going to be like, “That’s crazy.” It is going to be an unbelievable price. But we’re setting that up tomorrow InvestorRadio.com.

 

And for all of you that have emailed me in the past week, I forward your emails directly to the person, his name is Dan Ostrowski, he works in sales, he’s going to take care of you, it goes directly to him because he’s the guy that I work with and always handles it. So if you send me an email at FCurzioStansberryResearch.com, I send it to him and immediately you have a subscription within like an hour if you send an email.

 

So if you’re not interested, no worries. You can subscribe to another small cap newsletter or begin doing your homework on small caps. Just make sure you start right now, because right now is where I’m seeing a lot of great deals. Just type in, “Hedge fund managers buying small caps,” in Google. You’re going see these guys loading up on a lot of different stocks.

 

I’m looking at these big conferences. I think it was at Arizona – it’s a conference here in America that’s very big. Dan Ferris attends it ever year. They also have one in Europe where Chaino spoke. A lot of those guys, those big fund managers, they’re in small caps right now. They’re going into small caps. It’s just a great market.

 

For me, it’s fun. That’s why I’m excited about it as you can see. I like opening up, telling them the story. Right now, if you’re just going to subscribe to a newsletter, any small cap newsletter, a guy that has experience – do it now, because it’s a chance to make a lot of money. Major, major, major disconnects and, yeah, that’s what I want you guys. I really want you guys to make money. And, again, fun market for me – it’s not always the case. Right now, it’s really cool.

 

Anyway, I have a great podcast for you today with two interviews. Usually we do one, as you know, and today’s going to be two. And the first is with Britt Beemer – a Chairman, Founder, President, CEO of America’s Research Group. Britt is recognized nationally as a premier marketing strategist. He’s gained wide acclaim for his work on how, when, and why consumers select their products and services.

 

His client list includes just about any company in the world who wants to know more about consumers. And you’re going to see his interview is absolutely fantastic. From home furnishings, appliances, electronics, financial services, mass retailing, healthcare providers – I mean everybody uses this guy, this guy’s firm.

 

We’re going to talk about consumer spending this holiday season, how the fiscal cliff is going to impact consumer spending next year. I’m going to tell you something guys, Britt is really, really smart, also in high demand. Not even just off of retails, but he used to run political campaigns because he just takes a tons and tons of surveys from consumers and basically takes all that data and tells people exactly what they want. I mean unbelievable tool. It’s almost a first step before stocks.

 

Like you want to see, “What are consumers buying right now?” You go to him and then you go and analyze companies and, you know, you look at what I do. But for me, I love this interview, because it’s almost like the initiation step before I go into a sector to _____ a company I’m going to buy. A very, very important part of the research. I promise, you’re going to love that interview.

 

My next interview is going to be with Kristen Bentz. She was on a couple months back, good friend of mine. The Executive Director of PMG Venture Group and my favorite retail analyst. Founder of The Talented Blonde. She’ll talk about, “Who are the biggest winners on Black Friday, and also Cyber Monday.”

 

If you remember a couple of months ago with my interview with Kristen, she’s awesome. She goes into these stores. She talks to a lot of the managers, a lot of the CEOs of these companies, major companies. What do they do and what lines are coming out when they’re getting into fall into fall season? What are they doing? And it’s fantastic.

 

Again, these two interviews are fantastic from a research perspective. These are the people I talk to before I start my stock selection. I was going to read a whole section on retailers, how they got hit from Hurricane Sandy. I said, “Guys, the malls are crazy,” went out to the podcast, got a ton of emails in – a ton of them all over the world saying, “Frank, it’s busy here, it’s crazy here.” “It’s not so busy,” a couple people emailed me in certain areas.

 

That’s my initiation. That’s where I first start my research process in retails – then I’ll talk to Britt, then I’ll talk to Kristen. What are some of the trends? Then I’ll get into different stocks. Then I’ll go over the fundamentals – the technicals that go into everything. It’s a tough research process, it takes a long time, and it’s my job. Just like everybody who’s listening to this is a professional at something at whatever you do, whatever it is.

 

I mean I don’t know. Whether you’re a principal of a school, whether you’re a mechanic, you’re great at your job – everything. You do everything great, you’re a professional, you’ve been doing it for decades. That’s just what I do here, but this is the research process. So I’m going to try and explain to you to educate you, help you become better investors and avoid mistakes. But these two interviews are going to be fantastic.

 

Later on, I’m going to break down the markets and talk more about fiscal cliff concerns, then talk more about the huge opportunity I’m seeing in small caps. In fact, I’m going to interview one of my past recommendations. I’m going to give you a great example here that looks really, really attractive right now. And I’m going to give you a hint – it’s “the” most, not one of the most, “the” most controversial stock in the world hands down.

 

I don’t know if you know what stock I’m talking about, but you should, because whenever I write about this or whenever anyone writes about this, you’ll immediately get thousands of emails of hate mail or people that love you. It’s a crazy stock. I’m going to break it down and show you how cheap it actually is. But before I get into that interesting segment and the markets, let’s get to my interview with Britt Beemer, and here it is.

 

[Britt Beemer Interview Begins at 0:10:45]

 

Frank Curzio: I want to welcome first-time guest Britt Beemer to the S&A Investor Podcast. Britt is the Chairman, Founder, President, and CEO of America’s Research Group. It’s a full service consumer behavioral research and strategic marketing firm. Britt, I want to say thank you for being on the show.

 

Britt Beemer: Well thank you for inviting me.

 

Frank Curzio: So let’s start out with something simple. Talk a little bit about your company, what you do, and actually what is a consumer behavioral research firm.

 

Britt Beemer: Well, we’re unique in the industry because of that one position. We’re 34 years old. We’ve interviewed over 10 million consumers. Primarily almost all of our research is for businesses, we do very little public policy research. We do no political campaigns.

 

What we do is we study what, how, and why consumers buy everything. And what makes us different than most companies is that most research firms when they design a questionnaire will say, “Which of the following is most important to you?” and read you a list. We say, “What’s most important to you?” and we shut up and listen.

 

And what happens is, is when we design a questionnaire, I would like to be asking you questions 20 percent of the time and you talking to me 80 percent of the time. The industry is exactly the opposite, they’re 70/30.

 

So I love our format much better, because when you ask open-ended questions, it gives the consumer a chance to talk and talk and talk, and many times, they’ll tell you things you would never have found out if you had tried to program them into a three or four or five-choice answer.

 

Frank Curzio: That’s interesting. So I’m sure you have companies lined up outside your doors just based on what’s going on with your surveys, what are you seeing. Like what are some of the consumer trends you’re seeing today? And even if you want to more particular like maybe in the retail industry – you know, and we’ll use a real life example here.

 

Right now, a lot of people are surprised that we had record sales from Black Friday and this whole Thanksgiving weekend. Most of the people said, “Well, we have the fiscal cliff, we’re going to be trouble.” I mean what did some of the research that you took – what did it say heading into the holiday spending season?

 

Britt Beemer: Well you’ve asked a great question, because one of the things that I’ve been watching over the last ten years are the number of consumers who think that a holiday weekend sale event is a really big deal. And if you look over the last ten years, I mean ten years ago 62 percent of consumers on a holiday weekend was a really big deal. And over the last ten years, we’ve watched that go from 62 to 69 – jumped all the way up to 82, and that was two years ago.

 

And now 91 percent of consumers say a holiday weekend sale is a big deal, and Thanksgiving Day, Friday – every Thanksgiving is the mother of all holiday weekend sales. So the reason why we had just over 60 percent of American families shops between Thursday evening and before noon on Friday is because nine-out-of-ten Americans think that when you shop during those events, you’re going to get the biggest deals during the Christmas season of any time in the year.

 

And consumers are desperate to save money. We’ve trained Americans that when you buy things on sale, and big sale events are even bigger and better – the bigger the weekend, the bigger the sale event, and the more you’re going to save.

 

Frank Curzio: Yeah, it’s so interesting that I hear that nine-out-of-ten people, because I like to put what you’re saying into like a real life example – and I see Macy’s. At Macy’s, a lot of sales is the first year where it started like at 6:00 PM on Thursday instead of starting at maybe 10:00 PM or 12:00 AM going into Black Friday, and Macy’s says, “Listen, we’re not going to do anything on Thursday because there’s absolutely no way. We do the Macy’s Day Parade and we have our families and everything.”

 

But you’re telling me nine-out-of-ten people really love those deals. It seems like Macy’s has no choice next year but to really get onboard and do this maybe 6:00 Thursday thing. Right?

 

Britt Beemer: Well, they may not have to. Not everybody necessarily is going to follow that strategy. But keep in mind, ten years ago Macy’s said that they weren’t going to open up early on Black Friday either. They stuck to their 10:00 AM schedule for many, many years saying that their customer was different, then one day, they realized they were missing a lot of business, and so 10:00 AM went to 8:00 AM, and 8:00 AM went to 6:00 AM, and they haven’t quite gone off the midnight cliff in many cases, but I’m sure that’s going to be another strategy ultimately. And they may have done that in a few markets this year as a test case.

 

I’m not involved in it exactly. But what’s interesting is is that when you think about his holiday weekend – and it’s a good example of consumer behavior. When we surveyed 1,000 consumer in early November and we surveyed them again a week later, 29.9 percent of consumers said they would shop on Thursday evening if the deals were big enough. And another 43 percent of consumers said they were going to shop on Thursday. So right in the get-go you’ve got almost 60 percent as many people wanting to shop on Thursday as Black Friday.

 

So you can see why the crowds were so big on Thursday night, because almost one-in-three families wanted to shop on Thursday night and get those big deals.

 

Frank Curzio: Yeah, that sounds incredible – especially you have all this information. People tell you exactly, based on your surveys what they want. It’s amazing – an amazing tool.

 

Britt Beemer: It is amazing, because consumers will tell you everything if you listen and you ask the right questions. The trouble that I find today is that so much research out there is just bad. And I don’t want to get on my soap box, but so much of the internet research is just horrible, because it isn’t the number of surveys, it’s the accuracy in the sample that’s the issue. And there’s a lot of internet firms that do these big studies, but you have 10,000 people who weren’t the right people – it’s still garbage. So that’s one of the things that still worries me about the industry.

 

You know, it’s like last week, we did a survey of 2,000 consumers for a client. I mean 9.1 percent of our calls were made to peoples cell phones, because in that particular universe, 9.1 percent of families have no landline and they use their cell phones for landlines. So we have to keep modifying our sampling techniques to match where America is on an ongoing basis.

 

Frank Curzio: Once again, we’re talking to Britt Beemer. He is the Chairman, Founder, President, and CEO of America’s Research Group. I want to ask you, what were some of the things that you learned from Hurricane Sandy? I used to live on the East Coast. Basically almost all my life I lived in Florida. Amazing – a lot of my family and friends got hit pretty hard. What were some of things that you noticed – or maybe consumer trends around that, because it just impacted so many people on the East Coast, which is the biggest spending area. What were some of the things you learned from that?

 

Britt Beemer: Well three things. One is is we know that when those type of phenomena hit, everything else goes out the window. The consumer moves into a necessities mindset immediately.

 

So, for example, there’ll be an awful lot of people giving fewer apparel Christmas gifts, because apparel becomes an item that’s not needed to be given and you’ll move into home necessity Christmas gifts. And a lot of people, for example, will quit giving – adults to each other – because they’ll giving each other a mattress, or new bedroom furniture, or a new sofa based on what got ruined; and then you find that consumers moved to much more practical items.

 

But it’s interesting, even with Hurricane Sandy – I live in Florida and we were hit by three hurricanes over a six-week period years ago where I live in Orlando – it takes a long time; because what happens is, is that those family buying habits change so radically that you shift out of thinking about things that you would like to have to things you want to have and need, and then you move into this pure necessity thing.

 

So this Christmas season could very well have a 4 or 5 percent overall negative sale impact based upon the fact that you’re talking about 4.5 million families were impacted to some degree of either serious, very serious, or devastating from Hurricane Sandy. I mean it’s a big issue that people ignore.

 

Frank Curzio: No, absolutely. And one thing I wanted to go – and kind of on the same topic here with retailers – and I don’t want you talk about the stock with this. I’m not sure if you really do that. I’m sure you just consult with the CEOs of these companies. But based on what you’re telling me right now and I look at, say, a strategy from JCPenney – and JCPenney is basically, you know, Ron Johnson’s come in and said, “We’re not doing discounts.”

 

But based on what you’re telling me, especially where people are looking at when it comes to Thanksgiving – I mean do you ever look at a company strategy like JCPenney and just shake your head and say, “Wait a minute. Guys, it just seems like you’re going the wrong direction here.”

 

Britt Beemer: I look at JCPenney every day and shake my head in saying, “JCPenney is not Apple.” You know, the JCPenney customer is almost identical to the Kohl’s customer and, you know, 90 percent of them believe getting something on a big sale discount or 40-50-60 or 70 percent off is a great idea. I mean I don’t know how he could reasonably maintain this strategy.

 

But, of course, when you look at some of these top store sale figures being down at a 17-18-19 percent level each month – I guess if the shareholders are willing to put up with it, maybe they can take over four or five years, retrain the customer that that’s going to be the strategy. The problem is 99.9 percent of all other retailers are going to tell you, “Well you go right ahead JCPenney, do that, because we’re going to steal your customer base.”

 

And when I look at my numbers at times, I mean 23 percent of JCPenney customers have left the store for other retailers that have great deals. I mean how can you give away almost one-in-four of your customers, which is what they’re doing right now.

 

Frank Curzio: Yeah, that is incredible. And it’s so funny how you say consumer patters, because even my wife, she’s looking to get – I’ll be even specific here – it’s like one of those kitchen sets for my four-year-old, five-year-old and, you know, she even says – you know she’s like, “It’s only $100.00. It was originally $239.00. Three weeks ago, it was on sale for $139.00, now we can get it for $99.00.”

 

Even though I don’t think they ever sold that for $230, just the fact that you could see that and say that seems like it impacts so many decisions to buy things.

 

Britt Beemer: Well, you know, 83 percent of consumers will look at retailer, and if they believe that retailer, they’re going to believe that that suggested retail price is a legitimate price. They may rationalize and say, “Well, maybe no one bought it at that price, but that’s what the retailer would liked to have sold it for in the beginning,” so that’s why they believe in sales. I mean we’ve trained Americans almost for the last 50 years.

 

I remember years ago growing up, I lived in a small town in Iowa, we didn’t have sales. I mean every week in the paper you’d see an ad saying, “New fall merchandise just arrived, come in and get it.” And, of course, that began to evolve into, “This is an Easter sale, or a Christmas sale, or a Thanksgiving sale.”

 

And then, of course, that evolved into when the work months with sales, we had the end of the month sale. That was how it all started. And then you started seeing these discounts – 10 percent off; or end of the month; or 10-15 percent off for Christmas, or Easter, or Thanksgiving, or July 4th. And then you started seeing 10-15 move to 20, and 20 move to 25, and 25 move to 33, and 33 move to 40, and then 40 to 50, 50 to 60-70 – so you moved up the ladder.

 

And what happened is, all of a sudden, you had sales going on every weekend somewhere, because consumers were saying, “Look, I want to save more money.” So the consumer out there has been trained by retailers for the last 50 years for bigger and bigger discounts – and they hunger for them, they search them, and they find them.

 

Frank Curzio: Now I’ve read in your bio from America’s Research Group that you conduct annual client conferences and they’re basically designed to update its customers on emerging customer trends. Who actually attends these? Is it just retailers that we’ll be talking about?

 

Because I would also think maybe, you know, you could do surveys on anything – alternative energy. Do people want natural gas cars? I mean you could really expand it to everywhere. Who is some of your customers? And even elaborate on maybe some of the emerging consumer trends, which we just touched on just a little bit before.

 

Britt Beemer: Well I mean most of my clients that go to these conferences are typically major retailers or suppliers to retailers of a particular industry. You know, they love it when I do a day-and-a-half conference and maybe cover 25 or 30 topics affecting their industry, showing them where the consumer is going, and at the time, taking out some new studies.

 

I just did a conference a couple of years ago where we actually interviewed 100 consumers who had shopped each one of these clients’ stores; and then additionally, I’d also surveyed 25 of their salespeople at each one of their stores for them to see how their salespeople were answering questions versus the consumer. And I got a lot of raised eyebrows from employers from these salespeople. Employers saying, “Gosh, I didn’t know they had that opinion of me.” So I mean it was quite a revealing thing.

 

But, you know, we do research for all kinds of industries. And, of course, it’s like with this whole green energy. I mean we did a survey a couple of years ago for a company saying, “Britt, does anybody care?” And it’s like organic.

 

It’s amazing. A third of Americans say that organic is really important to them, but only about half of them say they would pay anything more for organic. And of that group, only about half of them are really dedicated organic people. So when you go from 33 to 16 to 8 – there’s 8 percent of consumers that love organic and will pay a lot for it. Well, that may be enough to support Whole Foods with 8 percent Americans, but it certainly doesn’t give you a chain-wide company within a marketplace to make it work.

 

Frank Curzio: Wow, that’s really interesting. Also one thing I wanted to touch on – and if you don’t want to talk about it you don’t have to. But I read that you had been a manager and consult to 16 congressional and senatorial campaigns. Can you elaborate a little more? Because it seems like you would be in high demand for something like that.

 

Britt Beemer: Well, that was my previous career. I ran many congressional senate races, I only lost two; and when I ran them, I ran them primarily for conservatives – which are mostly republicans. I ran a couple of democratic races, but most of them were all conservatives – they were all conservatives – and it was fun time in my life.

 

It gave me a great deal of preparation and mindset for what I do today, because I always used to tell a client when I would be involved in a senate race, I would say, “Think in mind as a retailer. Your store is only open one day every six years and you’ve got to get all your customers in that front door on that one day or the stores never reopens.”

 

So I said, you’ve got to think about it like it’s life and death. So I have always taken that mentality to the do the same work when I go to work for retailers saying, “Look, you may have a sale every week, but it’s this weekend that’s the most important. You can’t worry about next weekend, you’ve got to win this weekend.”

 

And I think that sense of urgency and deadline management would probably help me better, then most people would understand why I want my clients to succeed every weekend, not just in one weekend every-other two or three weeks.

 

Frank Curzio: Last question here and this is going to be really important. Where do you actually shop? [Laughter] And then when you go shopping, I would think it would have to be difficult for you, because you probably know exactly where to go, what deals there are. You’re talking to the consumer, you’re talking to different clients. [Laughter]

 

Britt Beemer: I’m probably a pretty normal shopper. I mean I take my daughters who are 13 and 17 to the stores that almost all their friends go to and I watch them buy things. You can’t force people to adapt what you may know. But you’ll see me in with my older daughter at Forever 21 and places like that, and my younger daughter is all over the place. So, you know, I’m just a dad trying to help them understand what they want they want to buy and try to get the best value.

 

But I mean I think the one thing I guess I would tell people is that the key to retail is still having a relationship with a person. And I always try to tell my friends when they say, “Britt, what do I do to save money?” And I say, “Well you go to some store, you find a store you like, you find a salesperson you can trust, and then you say, ‘Look, when you get some deals, you call me and I’ll come back.’” And when you do that kind of relationship-building with somebody in the store and they call you, then you really save more money.

 

And it’s like I had a lady call me last week and she said, “Britt, you know, once a year we do this friends and family event,” and she said, “you know, that’s when the discounts are the best of the year.” Well, I took my wife there to do all of her Christmas shopping in one evening, because the salesperson called and we got 40 percent off regularly, plus an extra 20 percent off that night.

 

So I mean, yeah, we saved a lot of money. So even though I’m like everybody else, they probably never sold many of those items at regular price. I still feel like I saved 40 percent, plus another 20 percent, so I ended up getting 50-60 percent off. So I mean it was a pretty good deal.

 

Frank Curzio: That is a good deal. And, yeah, 13 and 17-year-old girls. I have a 2-year-old and the 4-year-old who’s going to be 5. So I hope they stay at 2 and 4, because I’m sure the teenage years have to be a little tough.

 

Britt Beemer: Well they’re a little more challenging, but my daughters both were adopted from China, and to me, they’re still gifts from God, so I love every day to be with them.

 

Frank Curzio: So cool. Well, Britt, thank you very much for stopping by. I know you’re a busy man, especially these days. And I learned a ton. I know my audience learned a ton, so hopefully you join us again soon.

 

Britt Beemer: Well, thank you so much.

 

[Britt Beemer interview ends at 0:28:28]

 

Frank Curzio: Great stuff from Britt; and I loved that interview. Again, it’s not specifically stock picks – which we have all the time. We’ve got guys coming on here giving us their favorite stock picks. But I just want to show you how talking to a guy like this in the early stages of the research process, how that could help you so much. And it’s interesting what he said about different surveys.

 

And even if you’re a retailer out there – which I know a lot of you do work in a retail industry and have your own companies – just interesting. I mean it seems so obvious to have relationships with people. I mean it’s so important.

 

You know, I tell that everyone who’s doing their research in certain stores. And when you go into these places, you know, talk to them. Ask them, “Is it busy now?” even if it’s a cab driver, you know. Ask him, “Hey, is it busy? Is this a busy time of the year? What’s going on? What are you seeing? How are the conferences? Are they packed? What’s going on?”

 

I mean it’s important. Try to build those relationships. Just, you know, great example. Get to know someone at a store and just call them when the best discounts are.

 

I mean it’s just some really good advice there that I like. I liked it particularly because it really helped my research process – and I’m going to have Britt on soon. I’m going to be contacting him a lot too, especially if I get into retailers. An interesting thought when he said, “JCPenney is not Apple.”

 

And not only is JCPenney losing clients, it sounds like – the way he put it – they’re permanently losing them, because 25 percent of their client base is going someplace else and getting the deals of their lives right now. And you have Kohl’s and Macy’s that know this. So another interesting perspective on JCPenney.

 

Now, getting into the markets a little bit – not going to spend too much time. I will say that we did have a nice rally last week, but be careful here. And we could we maybe a 5 percent pullback as, you know, fiscal cliff concerns come in.

 

You know, CNBC’s going to be pumping the crap out of it. “We haven’t come up with a decision yet, it’s December 7th.” If we don’t come up with something on paper by December 15th, you’re going to see it being mentioned everyplace – front page of the Wall Street Journal. That kind of sentiment is going to be negative, it’s going to push stocks down, and you’re going to find even greater deals.

 

Just be careful over the next couple weeks I think if you’re looking to buy. You could pick away at extremely cheap companies, but don’t pay up for anything right now. I think stocks could get a little cheaper, because you know how our politicians are. Instead of coming out with a resolution on December 1st, you know that it’ll probably be December 28th – which is terrible for the markets and people will get really pissed off with that.

 

So just be aware of that, because there’s not going to be a ton of news right now. There’s not a lot going on. Earning season is over. You’re not going to see a ton of deals, I think, just in this part before the holidays. So it’s going to be a slow period and it’s all about the fiscal cliff if we get something – some kind of resolution that’s going to be great for stocks. If not, if it drags on, we could see stocks pull back maybe 3-5 percent here, providing a lot of great deals.

 

Now, let’s get to my next interview, and that’s with my buddy Kristin Bentz, who is, what I call, my retail analyst – and I like her a lot. Great friend. You guys probably know here from thestreet.com days. And, again, we’re going to go over all kinds of crazy trends for the holiday season – which I know she spent a lot of time in many stores. So I start by asking her, “How could we possibly have record holiday sales with so many risks in the marketplace?”

 

[Kristin Bentz interview begins at 0:31:40]

 

Kristin Bentz: Well, you know, it’s a spoiler alert. People did shop on Black Friday and Cyber Monday, so it doesn’t take a lot of analysis to figure that out. But the real question is, “Where are they shopping and where are they spending their money?”

 

Frank Curzio: Now where are some of those places? I mean we look at Walmart, we look at Amazon. Why don’t you talk about those two companies, some of the things that you saw.

 

Kristin Bentz: Well, you know, obviously, it’s become more of mCommerce or mobile commerce, this season and like retailers to finally figure that out. It really takes a lot of the power and it gives it back to the consumer. And when you think about how shopping used to be back in the days of the JCPenney catalog, the Sears catalog – people would gather around the table, flip through what they wanted, and talk about it, and then they would go to the stores and buy it.

 

Well, there’s kind of a grassroots type of situational shopping developing within mobile commerce. So wherever you are – if you’re at the train station, or if you’re at a restaurant, or you’re at the doctor’s office, you whip out your iPhone or your Droid, whatever, and you can start shopping, and someone next to you sees what you’re shopping, you know, and what you’re buying too. So that’s really this phenomena that we’re seeing develop that more people are obviously shopping on handhelds than they are in the store.

 

Well that said, look at Amazon and look at Apple. So I mean, obviously, the clear winners to me are, you know, everyone that went out and took a look at what they wanted. For instance, this is happening to Best Buy. Right? Best Buy used to be the gold standard when it came to electronics retail. But under their noses, they’ve become a showroom, in essence, for Amazon.

 

You know, people will go into the store, see that 57-inch TV or whatever they’re looking for on their Christmas list, scope it out, comparison shop, and then they’ll buy it for a lesser price via Amazon. And they’ll probably even do it using their iPhone. So, to me, just with what I watched and how people are shopping, those are the two clear winners to me. May not be traditional, but that’s what I see.

 

Frank Curzio: Yeah. Well that’s interesting, because my wife was out till like 5:00 in the morning and she started at Walmart and the deals were incredible, including one for the Apple iPad 2, which was $399.00 and you got a $100.00 gift card.

 

And, yeah, I didn’t see anybody come close to matching that. But where else are you looking? I know you talk about the Gap, you talk about Banana Republic, and you’re looking at all these stores. What are these guys doing? Because I remember last year – last year, you know, you see Black Friday and all these crazy deals; and I remember towards the end of the season when Christmas was approaching, you saw all these same prices come back into play.

 

They immediately raised them, and then kind of with like two weeks to go, they came right back down. I’m like, “Wow, these are the same prices we could have got Black Friday.” And we were talking about it saying you didn’t even have to wait online. Are we going to see that trend again this year you think?

 

Kristin Bentz: You know, that’s a great question. Retailers are incredibly desperate if you’re talking with Gap and Banana Republic. Banana Republic had amazing deals and, of course, are lying around the entire store – which was surprising for me to see. Something that you always have to worry about with the excessive amount of discounting at this time of the year are returns. I mean last year, retailers had $3.9 billion they lost in retail fraud and return fraud.

 

What happens is it’s kind of like a fever. People get caught up in shopping and deals. And, remember, just because it’s on sale doesn’t mean it’s free. [Laughter] It’s like my accounting professor used to tell me, “Subsidized does not mean free.”

 

So as the season ticks on and we get closer to this fiscal cliff and people realize what they’re going to have to pay in taxes and healthcare and all of that, it’s always a danger to see people returning what they bought over the Black Friday period before Christmas even hits. And that’s always a fear for retailers. And if they’re not getting the numbers that they want, they’re going to have to severely bring those discounts back right before the holiday. And I think you will see that.

 

Frank Curzio: Now let’s talk about Cyber Monday. That’s a day – you know, it’s usually the Amazon Day. You know, that’s the Monday with online – it’s equivalent to Black Friday for brick and mortars, except this is the online version; however, this year we saw something a little different. I mean it used to be, you know, you’d have a day to shop online to get the best deals.

 

But it seems every brick and mortar company jumped the gun providing insane online deals on Friday, Saturday, and Sunday, to the point where, you know, all the way through the weekend – is this going to hurt Amazon? Because I remember last year was first real big difference where I said, “Cyber Monday is really not that good.” I didn’t see like amazing deals.

 

Last year I saw unbelievable deals from Amazon that easily beat a lot of the guys out there like the Best Buys and the Walmarts. But this year, it just seems like all these guys were like, “Okay, let’s destroy Amazon.” [Laughter]

 

And I’ve seen so many – I mean seriously, I’ve never seen so many deals like that. And a lot of people mentioned and said, you know, all these cyber deals are coming out throughout the weekend. You think that might hurt Amazon?

 

Kristin Bentz: You know what? Here’s the deal – for every dollar you spend at a brick and mortar sale, it’s so much cheaper for retailers to have you buy it online. So, in essence, because they’re an online retailer, I already think it’s cheaper for them to do business, in my opinion. It’s interesting, because all these retailers that have really slashed prices and had all of these online discounts, you know, they’re really hurting the general consumer retail population; and what they’re doing is, they’re training us to only buy when we see significant deals.

 

And so they’re almost like completely cutting into their own profit margins by doing this. So it’s like winning the battle but losing the war. And let’s wait till all of the numbers come in and shake out to see if that really hurt them or not. But it is interesting.

 

One question I’ve been thinking about today just prepping for this interview was, “What happens when we start getting deal fatigue?” Because I mean, you know, you have kids, I have kids, I’m looking for everything for Christmas for them, and if I get one more email about holiday discount I’m going to kill myself. [Laughter]

 

Frank Curzio: No, you’re right. That’s a good point. It’s not even now it’s a holiday discount. What about after holidays? I mean you’re running so many deals, and you know, better deals that you’ve ever seen before, and you’re seeing these crazy numbers come out early on.

 

And maybe that’s because people maybe do a little bit more of their shopping the weeks ahead of Black Friday and you had the hurricane. So maybe a lot of that spending fell into here, which is getting those record numbers. But it’s going to be really interesting to see the first quarter and the second quarter, because like you said, I think there’s going to be like just not even spending – like buying fatigue. People are like, “All right, you know, we’ve bought so much stuff. How many TVs could you possibly own?” you know.

 

Kristin Bentz: Well, exactly, and Best Buy’s already seeing that softness and their numbers were just ridiculous horrific. And I found it funny that the stock was down 14 percent, yet no analyst [Laughter] had the guts to downgrade it, you know. But definitely this is why you look at the entire season – November, December, and January – because you have gift card redemption and all of that.

 

And it’s funny that you mention Hurricane Sandy. New Yorkers think the world revolves around them; and actually when it comes to a retail perspective, it sort of does. So if you look at the entire retail sales for the country, New York and New Jersey are responsible for 16 percent of all retail sales; and New York City is responsible for 20 percent of luxury sales. So any softness in that group is really going to affect holiday sales.

 

And if you think about what people might have had to spend on – maybe it went to Home Depot, maybe those dollars got pulled out of decorations and apparel into getting your lights turned back on, getting your kids out of Staten Island and back on the train home. So I do worry that there is some discretionary softness that might be liable to pop up due to Sandy.

 

And then the other thing that we’re going to watch when you talk about first quarter is retailers that blame the hurricane. [Laughter] Sandy flu is what I call it – and, you know, Saks Fifth Avenue already came out and said that they’re going to be impacted – which I thought was really funny. You know, it’s just kind of like the Easter ship you and I used to talk about back at thestreet.com. I think you’re going to see a lot of retailers that don’t do well blaming it on the hurricane.

 

Frank Curzio: Yeah, and thank god for weather. I mean if weather was always good, then every retailer would be great all the time; because whenever anything goes wrong, it’s always the weather – it’s the weather. “It’s too hot right now.”

 

Kristin Bentz: Out here in Arizona, like you can never blame it. You can’t say it’s too hot because all the malls are air-conditioned. You can’t say it’s too cold because it’s never too cold. [Laughter]

 

Frank Curzio: Yeah, it’s just amazing when I hear weather as – I mean people aren’t go, “It’s going to be nice like a couple of days later,” whatever it is – unless it’s like something drastic like the hurricane. You know, it’s just funny when you have like a week where it’s hotter than it is now. We used to make fun at thestreet.com when companies – look, you just missed it, you got it wrong. Just say it. [Laughter]

 

Kristin Bentz: Yes, exactly.

 

Frank Curzio: You know what I mean? It’s so much pressure.

 

Kristin Bentz: Yeah.

 

Frank Curzio: But we’re talking to Kristin Bentz, Executive Director of PMG Venture Group, Founder of The Talented Blonde. If someone wants to get in touch with you, how could they do it?

 

Kristin Bentz: You can find me on Twitter@talentedblonde, and you can also go to my blog talentedblog.com, and I think that’s probably the two best ways to find me.

 

Frank Curzio: That’s great. And I wanted to get into a couple more questions before I let you go here, and I wanted to stick on luxuries. It was funny that you mentioned that Hurricane Sandy in New York City captured 20 percent of all luxury sales, because I saw that in a Bloomberg article that you were quoted in – which was fantastic by the way – and it was just interesting, because you know, maybe they’ll spend that money later, but you know, again, they’re definitely – I know people that live there. They’re not focusing on buying anything other than getting everything in order – and some of their houses are still damaged.

 

But I want to stick with the luxury theme here. They usually hold up well no matter what retail environment usually, as long as I’ve been following them. But talk about the holiday season with these companies – because not that Coach is luxury, it really isn’t compared to the other companies. But even like I’m providing Coach as ammo because I know a lot of people are familiar with it.

 

When a company like that provides discounts, the line out the door at the outlets or anyplace is unbelievable. It’s like three-times longer than anyplace else. I mean a luxury company is actually doing that to the point where they don’t really need to discount, but when they do, man, it seems like demand is off the charts.

 

Kristin Bentz: Well, it’s so funny you mention Coach. Like any of those outlets, you know, you have like buses of tourists pulling up, it’s unbelievable. But also remember that a lot of those retailers that you see in like a Woodbury Commons per se, they make products specifically for that outlet. So it’s not necessarily apples-to-apples the luxury goods that you would find if you were looking for a Coach bag in, you know, a Saks or Nordstrom or whatever.

 

So not to shock folks that like to shop at Woodbury – because I do. But a lot of the time the merchandise may not be – I’m not saying that it’s not authentic, it absolutely is authentic – but it might be just a little bit different, so it’s something that you could only find at the outlet versus the retail store. And a lot of retailers use outlet shopping as a way to clear through slow-selling merchandise or what we call in retail seconds, something that didn’t come out exactly right.

 

There might be something very minor that a consumer to the naked eye couldn’t tell, but of course, you know, the retailer would and it wouldn’t be up to snuff. Yeah, when retailers discount like that – and on the luxury end, it’s insane, it rarely happens. So true retailers, luxury retailers like Aramis, like Reshma, like PPR – you know, all of those companies with big conglomerates – LVNH – they don’t discount because they don’t have to.

 

And this is a great example into this holiday season. The stores that were open on Thanksgiving are retailers that really need that dollar and had to do that to compete. But, you know, one of the reasons I’m so bullish on luxury is very rarely do they have to do that. And, true, a luxury name like Arimez, they don’t go on sale because they don’t have to, and that preserves the integrity of the brand. And Michael Kors, same thing.

 

Frank Curzio: Yeah, that makes a lot of sense. And you know what? I want to get into one last question here before I let you go because we’re running out of time. Have you seen any companies that really bombed? Without looking at stocks and looking at evaluations here. Maybe some of the retailers that you’d be worried about in the holiday season where you said, “Wow, I can’t believe they’re doing that,” or you know, this may not look too good this year. Anything that made you a little nervous in terms of some of the stores that you look at?

 

Kristin Bentz: You know, I still maintain that JCPenney is just a train wreck. I mean they’re doing so many innovative things to get people in the stores, but it’s going to take a lot longer for that stock to turn. So I’m not a big fan of them right now. And, also, there’s a lot of team retail that just blows right now. [Laughter] I mean it’s really not special.

 

There’s really not a lot of special stuff out there. Wet Seal is having a rough time. And then when you’re talking about apparel also, Ann Taylor, you know, they can’t get their act together. It’s one of my favorite shorts. It’s been one of my favorite shorts for a long time. They’re having a rough time. It’s funny that Chico’s is starting to turn, which is surprising.

 

Frank Curzio: Yeah, I saw that.

 

Kristin Bentz: Yeah, it’s surprising to me. But whatever they’re doing, it’s obviously working for them.

 

Frank Curzio: Yeah, that’s interesting, definitely. No, those are definitely some good names because, again, we’re not talking about stocks. Like from my perspective, I like to see some of the trends that you’re looking at. And JCPenney, in all respect, got absolutely crushed and you can tell they’re doing a terrible job right now, and the stock’s at 15. So it doesn’t mean, “Oh, go out and sell this stock.”

 

I’m just saying I’m agreeing with you where a company that doesn’t want to provide discounts, and during the holiday season, losing 25 percent of their business, you know, I just can’t believe the enormous sales declines keep continuing. I thought by this time, you’d see it slow a little bit, and same as stores, sales would be down 10 percent, not 25 percent. So clearly –

 

Kristin Bentz: Well, you know, everyone’s drinking the Kool-Aid over there – and I understand they have a great merchant and, you know, it’s the Apple phenomena, the Apple discount, I totally get that, and they are trying to do innovative things; but once you lose that customer, it’s really hard to get them back within the environment that we’re in.

 

And, you know, the products that they’re bringing out aren’t special and that consumer doesn’t really care about labels. You know, they’re shopping at Kohl’s, they’re shopping at Walmart, they need what they need at a price they can afford.

 

Frank Curzio: Yeah, and it’s amazing that you said that, because I just let the audience, every one of our listeners know is every single retail expert I’ve ever talked to said the same thing. They all say the same exact thing. Once you lose a client, it’s very, very, very difficult to get them back; and they lost 25 percent of their clients. So, yeah, it’s pretty insane, but there are a lot of hedge funds that are starting to bite down here on JCPenney. I suggest waiting for the sales trends to get a little bit better before jumping in.

 

Kristin Bentz: Yep.

 

Frank Curzio: But, Kristin, as always, thank you so much for coming on. I know this is your busy season. I just wanted to make sure that you came on to just go over some of the trends that you’re seeing out there; and, hopefully, you’ll join us again soon.

 

Kristin Bentz: I’d love to. Thanks so much, Frank. Have a great holiday.

 

Frank Curzio: All right, you too. Take care.

 

[Kristin Bentz interview ends at 0:46:46]

 

Frank Curzio: Okay, guys, great stuff from Kristin. Any feedback – fcurzio@stansberryresearch.com. That’s fcurzio@stansberryresearch.com. Remember, guys, these two people that I had on today are talking about different trends. A lot of times we like to have analysts on here giving you different stocks, but this is a good starting point for what they’re seeing in the marketplace and what they like, and then I’ll go back.

 

Just like the last part of that interview with JCPenney where I’m like, you know, we’re obviously seeing terrible trends right now; but some hedge funds are starting to pick up the stock at the $15.00-$16.00 level – it’s a little bit higher now. So, you know, just because you’re seeing terrible sales trends doesn’t mean that the stocks are an automatic sell. You have to do the research to see the evaluation.

 

So, again, all this is incorporated to the research process, which is a long drawn out process until we come up with a lot of good ideas – at least for my newsletter. So if you have any questions or comments about today’s guests, fcurzio@stansberryresearch.com. Yeah, just let me know who you like, who you don’t like, because I’ll always invite these guys back on; and they love to hear the feedback.

 

It’s pretty cool if you get interviewed and you get 20-30 emails and they’re like, “Hey, that guy was really cool and I really like him.” You know what – then they’re going to definitely come again. So be sure to send any emails, fcurzio@stansberryresearch.com.

 

Now, let’s get to my educational segment. It’s all about small caps. Still, I’m pounding this in your heads on purpose. For the past three weeks, I’ve been patting the table for my own account in small caps. I mentioned Groupon earlier, one of the most hated stocks in the world; yet, some of the best hedge fund managers in the world – from Tiger Global Management to George Soros just took large stakes in the discount online marketing firm.

 

And, look, I personally think Groupon is a really good company. I know, a lot of you probably listening this and go, “What? What, are you crazy?” I think it’s cool, I get those deals all the time, it’s awesome. I’m not talking about the stock yet, I’m talking about the company. I like getting those deals that a restaurant that I go to is offering a 30 percent discount if you go there tomorrow. I like that. I think that’s pretty cool, the concept is cool.

 

So, yes, I do like the company, but I always hated the stock, especially at $25.00. I mean you have to be kidding me, at $25.00. It fell to $2.75 in 12 months from its IPO – so $25.00. Imagine coming out of IPO and one year later, you’re $2.75.

 

And the market isn’t even that bad. It’s not like the market crash. And how crazy, it’s insane! Yeah, I tell my subscribers all the time, “Don’t hate the stock, hate the stock price.” In other words, even if you hated Facebook at, say, $35.00 – it went as high as $40.00 – you know, if it falls to $20.00, reevaluate. I mean you can’t hate it for the same reasons you hated it at $35.00.

 

Reevaluate the company. I mean maybe you hated it at $35.00, you said, “Wow, I did all my research, I hate Facebook at $35.00.” After that, you should ask yourself, “At what price would you buy Facebook?” That’s an interesting question. If you’re done with your research and you’re like, “There’s no way this stock is worth $35.00.”

 

You know, you might have said, “I won’t even pay $25.00 for this. I don’t know if it’s worth $25.00.” But it fell to $19.00. Now, you know, a lot of people – and they make this mistake all the time, because a lot of people bought Facebook. Right? Let me give you this example.

 

A lot of people bought Facebook and they’re like, “Oh, you know, I love Facebook, it’s great,” and now they got killed. Now their mind is all screwed up, they’re crazy.

 

If I go out in the newsletter – and I’m using a large cap as an example when I deal with small caps. If I go out and say, “I’m looking at Facebook from a fresh perspective. I love the company at $19.00 or $20.00.” People who bought it at $30.00 are going to be sending me emails saying, “Frank, you’re crazy. This stock is terrible. You have terrible research.”

 

You know, it’s one of the biggest mistakes in investing. Like people analyze companies, and when the company actually comes down, they use the same reasons that they hated it for not to buy it when it’s at a tremendous discount. I’m not saying Facebook is at a tremendous discount, I’m using it as an example.

 

But, you know, you can’t say Facebook is terrible, because they’re not into mobile at $35.00; then the stock falls to $20.00 and they’re making progress in mobile. I know they are, they’re doing well. I think one analyst that has been dead right on this stock, selling this stock, telling them that everything is terrible. They just upgraded to a buy at least going to – I want to say over $30.00 a share. So they finally figured out their mobile problem. I mean this is one analyst that has been dead right all along. A lot of buyers came out in that stock when it first came out. Not right now.

 

So you’re looking at Facebook, you know. Again, you can’t have the same thesis when it’s a $35.00 and then look at $20.00 and don’t even reevaluate. It’s a big mistake people make. You look at a Citadel hedge fund buying American Eagle Outfitters. That stock was left for dead. I mean trade-and-blow ten-time earnings, strong balance sheet. Stock was $28.00 on November 13 guys, a couple of weeks ago. It’s $44.00. It’s up 60 percent in three weeks – insane. I mean these are the deals. These are the deals that I’m seeing.

 

And if you want to take it on a global scale, look at Europe, and 25 percent unemployment in what – Spain, Greece – austerity measures going to happen in France, Italy – terrible. And you’re look at evaluations, they’re 10 percent below historical levels. That’s on the equity side. You go to hedge funds, everybody in their own hedge fund communities in Europe. We’ve been buying distress debt that banks have been forced to sell on pennies a dollar. It’s amazing.

 

There are a ton of deals out there – a ton. And, again, I’m seeing a ton of these in the small cap world, which is why I’m pushing my newsletter so hard. You never see me push my newsletter like this ever. I’m just saying if you’re going to do it, do it now; if not, don’t worry, don’t listen to me, it’s all right – or do your own homework on it. I mean that’s up to you.

 

And that leads me to one stock that looks attractive right now – and you’re going to laugh when I say its name. As I said earlier, the most controversial stock in the world by far – and it Dendreon – and I bought Dendreon from my subscribers at $7.00 and sold literally with $13.00 a share in just a few months. I mean it was just great. The sentiment – it was just like it was today. It was so absolutely horrible, terrible. Nobody like the stock and the company came out with just the slightest bit of good news, I’d know it would take off, and it went to $16.00.

 

We sold half at $16.00, I think, half at $12.00, and we made a great profit. And since then, the stock crashed to $4.50. This is off of small stock specialists. And sales turned out to be terrible. Investors worried about competition – which, you know, offer’s a cheap alternative to treat prostate cancer.

 

Now, look, Dendreon is a crazy stock, so I don’t think I’m going to recommend it again anytime soon. We’ll see, I may. I’m still in my research process here. You know, it depends on where it is. I mean by the time my publishing day comes through, it could be 20 percent higher or 15 percent lower because of the crazy buyouts of that company. It’s got a huge shore position.

 

But I’ve read through almost every single analyst report over the past few days. You know, I just started reading the next day and I just wanted to see what the analysts think – and they hate the stock. I mean 22 analysts covering it and it only has four buy ratings. Guys, that’s really, really low. I mean you never, ever, ever see that with that many analysts only four buy ratings. Very rare, and I’ve been in the industry for almost 20 years. Very rare that you see that.

 

I mean you think about it because the reason why – which nobody wants to talk about, but it’s true – is companies want to have buy ratings, because you know, your firm, you want to get investment from banking business. So when you’re a sales side firm – say at Goldman Sachs – and if you have a sale rating on a firm, and this company comes out and needs to raise money, you think they’re going to go to Goldman Sachs?

 

I mean how is Goldman Sachs actually going to tell its clients, “Hey, listen. You should buy this stock, but it has a sale rating on it, okay.” That’s all the behind-the-scene crap.

 

All right, so what you’re going to do is you’re going to see a firm – no, they’re going to go to the top 5 or 10, whatever. If you have 30 analysts covering, they’re going to go to the top 10 and say, “These are the guys that have buy ratings, let’s see if we can raise money through them.”

 

They have four buy ratings. I mean it’s incredible – out of 22 analysts. It’s terrible, terrible. However, if after reading these reports, the analysts hate the stock so much, but yet, almost every single one of them has a target higher than $3.50 – which is incredible, because the stock is trading what, like $4.50 today. It’s about 20 percent down. I mean not bad for a volatile stock that seems to, you know – yeah, it has a lot of risks, but it seems like you’re downside could be 20 percent here, the price you could probably get out on bad news. It depends what the bad news is. I’m not staying with the CEO and his fraud – forget it, the stock can go bankrupt. I’m not saying that happens.

 

But, you know, another bad sales report – I mean it seems like it’s already baked in to the point where even if they come up with another bad sales report, I think you’d probably be able to get out within 10-15 percent – which is the risk here. That’s how I look at stocks. It could be worse, I’m just saying. However, if you look at the upside, it could be huge.

 

I mean the competition concerns are completely overblown, because competitors treatments are not replacement for Provenge. That’s their signature drug. And I studied the technology behind this. I really went into depth, talked to biotech analysts, “Why not recommend this stock?” I don’t just say, “Hey, Dendreon looks good, put it on paper, and say that to my subscribers a lot more than that.”

 

I study the technology behind it; and chances are, good chances are, Provenge is going to be used with these new products to extend the lives of patients with late-stage prostate cancer. They’re going to be used together. It’s not, “Use Provenge or use this.” No, they’re being used together. This way you can extend it for an extra few months.

 

Also Provenge has absolutely no patent concerns. It’s not a pill where it could be easily duplicated. It would cost tens of millions of dollars for a company to duplicate their technology. It has to do with sending the blood from the lab. You know, you draw blood, you take it, you send it to the labs, you know, you add to Provenge, and then you put the blood back into the patient.

 

You know, you have to set up lab work and stuff like that. So you have no patent concerns, unless someone wants to spend like $20-30 million. That’s not what these generic companies do. They just basically take the ingredients in a pill, it costs nothing to manufacture, and that’s how they make their profit. So you don’t really have patent concerns with Provenge.

 

Finally, if you’re looking at the technology, it’s groundbreaking technology; and a lot of biotech analysts may disagree here, but I don’t. You know, I believe this could be applied to other cancers. And it’s not just prostate cancer, and if it does – I mean think of where we are with cancer. I’m mean seriously. My dad died of lung cancer. I have other relatives that died of cancer.

 

Guys, I mean really, have we come far at all? Have we come far at all in cancer research? I mean there’s people out there listening that said, “Yeah, sure we did.” Really? I mean if my dad had to do it all over again, he wouldn’t do chemotherapy. I mean the guy, he lost 70 pounds. He was like 80 pounds throwing up every day all over himself, couldn’t even walk.

 

I mean that’s a solution right now to late-stage cancer – really. And people are going to say, “If your dog got sick,” and all this – really, I don’t know. At this stage, this long. You know, the way the world is right now and this technology, no – which tells me Provenge and the way they treat it could be used for other cancers. And if it is, the stock will just skyrocket from here.

 

So you’re looking at Provenge from a stock perspective, it’s interesting. You know, also if you’re looking from a technical perspective, it looks interesting. Pull up a chart and it’s bottoming out here over the past month or so. You know, it’s touching at $4.00 level, bouncing out, touching at $4.00 level, bouncing up. Seems like it’s finally bottoming out. Looks attractive here and I have to do more homework on the stock.

 

I also talked to several of my friends who are analysts in the biotech industry. But I think it’s worth a look and also another example of how investors are just selling small caps at whatever price.

 

I mean you look at Dendreon. Dendreon used to be $40.00 stock. It’s $4.50, it’s $4.50. I mean isn’t it amazing? It’s trading at the level before Provenge got approved – and it’d been more accurate before the Phase 3 studies actually came in positive. That’s when the stock went from $4.00 and just went straight up. So you’re telling me right now Dendreon’s worth less than when Provenge was actually approved by the FDA at $4.50? Because that’s what it’s doing right now.

 

So, again, I’m seeing a lot of ideas just like this, a ton of industries. You look at coal, natural gas producers, semiconductor stocks. When I just recommended a semiconductor last week, trading at ten-times forward earnings, it pays a 5 percent yield, which is perfectly safe – and this is a very good company.

 

The company had a great balance sheet, generating huge cash flow, and it’s trading at ten-times earnings. I mean all you need is a little bit of a technology cycle and you’re going to see these semis really take off; but they’ve gotten I mean plummeted, plummeted, some of these stocks. It’s amazing.

 

But amazing, amazing deals. That’s why I am telling you that small caps are one of the best buys that I think – at least individual stocks in 20 years, just about 20 years since I’ve been doing this.

 

So okay, guys, that’s if from me. Any questions or comments, fcurzio@stansberryresearch.com. If you’re interested in my small cap newsletter, which is Small Stock Specialist, email me, fcurzio@stansberryresearch.com on Thursday, which is tomorrow. We’re going to set up a link because we’ve got so much demand.

 

Again, it’s going to be a great deal. It’s going to be under $50.00 if you want it for the year – which is incredible, guys. So, again, you’re not going to pay that the following year or years ahead. I just really would like to get you in now, because if you come in now, then I think you’d be a client for a very long time; because I am seeing good deals, so I’m offering the best deal possible. It’s the least I could do for you guys. Again, it’s not going to make me rich.

 

I have another newsletter, which is Phase 1, which we sell for $5,000.00. That’s a little different. [Laughter] If a lot of you signed up for that, that’d be good for me. For you’re buying this newsletter at $50.00, or under $50.00, really it’s not going to do a lot for me. It’s my way of giving back to you.

 

So if you want that deal, you can go email me, fcurzio@stansberryresearch.com or go to investorradio.com. That’s investorradio.com tomorrow, we’re going to set up a link. It’s not a video or anything, it’s just going to be an order form for people who don’t want to email me. Also if you want to contact me, you could tweet me at frankcurzio.

 

So hope all of you had a wonderful Thanksgiving and I will see you in seven days. Take care.

 

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Announcer: The information presented on S&A Investor Radio is the opinion of its hosts and guests. You should not base your investment decision solely on this broadcast. Remember, it’s your money and your responsibility.

 

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