Tuesday, December 2, 2008

Louis Navellier and FRO

Louis Navellier just decided to sell FRO. In the latest issue of his $5.000/year Global Growth newsletter he wrote his subscribers to sell FRO.

First of all, let's read together what Mr. Navellier is able to invent, then we will quickly analyze his strategy on this trade.


This week, I recommend selling Bermuda's Frontline (FRO). We're selling Frontline on a rally, as the stock rose 11.4% last week after the company reported net income of $107.8 million and earnings of $1.39 per share for the third quarter of 2008. Frontline also announced net income of $647.2 million for the first nine months of 2008, equivalent to earnings per share of $8.53. Today cut into some of last week's gains, but I want you to sell on this strong report.

Let's see the chart for the past 5 days now:

Louis, Louis, Louis... what the hell are you saying? Do you really think your subscribers are so stupit to believe to be selling in a rally?

On November 26th FRO jumped from $29.45 to $33.01 (12%) but on November 28th it went down to $29.54 and yesterday down again to $25.10 (lowest close price in more than 1 year).

Where the hell is the rally?

But let's start from the beginning. Global Growth $5.000/year paying subscribers bought FRO on March 3rd 2008. Mr. Navellier was writing:

Company: Frontline Ltd. (FRO)
Country: Norway
Industry: Marine Shipping
Buy Below: $46.38

Price was $44.28.

FRO went up preatty well until May 2008. Then it slowed down its trend, although it went up again until $72 in June 2008.

It would have been a good idea to set a stop here, let's say at around $65 and cash a 45% gain in less than 4 months.

But Mr. N does not like stop losses. In fact he was writing:

June 23rd 2008: buy below $74.54 (never reached by FRO)

June 30th 2008: buy below $72.48 (never reached by FRO)

Somebody may have had the insane idea to follow this crazy advice and buy FRO at around $72.

As you can see in the chart, from July 2008 the game is over and FRO started to nosedive until current $25.10 (what Navellier calls a rally).

In the best case Global Growth $5.000/paying subscribers once more witnessed navellier's magic to turn a 50% imaginary profit to a 43% realized loss.

Those unlucky and trustful readers who bought at $72 (as the icon of growth investing suggested) brought home a 65% loss.


PS: just a quick note: FRO is currently a BUY in Navellier's Portfolio Grader Pro...

1 comment:

Anonymous said...

I would like to hear from others who have been hoodwinked into losing money, like I was. You might want to contact me at: