rewrite this title Announcing the 2024 Turkey of the Year

Happy Thanksgiving Week!   It’s Turkey of the Year time again!

One of our grand traditions here at Stock Gumshoe is the awarding of the annual Turkey of the Year — the teaser pitch that provided us with the worst-performing, most-overhyped, or otherwise just the goofiest gobbler of the past twelve months.  We try to avoid those that were just bad luck or bad timing, like maybe a hotel or travel stock that was recommended a month before COVID hit, but, like creating a great Thanksgiving dinner, it’s not exactly science.

This honor is not bestowed lightly — to be named Turkey of the Year in Gumshoedom, you must have been a truly awful stock idea, chosen within the last twelve months, and, preferably, you should stand for all that is entertaining (and misleading) in stock newsletter teaser ads.

Most years, we’ve got plenty of candidates… over-promised technology names, failed biotech trials and over-hyped mining stocks tend to fill out the bottom of the Teaser Tracking spreadsheets here at Stock Gumshoe in any given year, with the occasional smattering of fraud and bankruptcy, so who are the most promising nominees for our annual prize?

The time frame we work on is “about a year”… but it wouldn’t be fair to call out a Turkey just a month or two after it is teased, so we actually usually use the September-to-September period to find a qualifying bird.

And I should start with the standard caveats — we don’t subscribe to all these newsletters, we just review their promotional materials, so we don’t usually know when they first recommend a stock to their subscribers, whether their commentary to subscribers is more nuanced than their promotional materials, or if or when they might recommend selling it… all we know is when and how they dangle a recommendation as bait to recruit new subscribers.  As with all the picks on our tracking spreadsheets, we assume that the stock is bought the day they tease it… and held forever.

So who are our candidates this year?  Well, after two very strong years in the stock market, the bottom of the tracking spreadsheets is looking rosier than it usually does.  And the top is unusually strong, too, with the nuclear and AI names soaring higher, so about 100 of the 240 stocks we’ve looked at during that September 2023-September 2024 time period have actually beaten the market… and thanks to those 300-400%+ winners at the top, the average newsletter teaser pick has beaten the S&P 500 by about 12%.  That’s awfully unusual, we’re impressed when the average teaser pick is only trailing the market by a few percent.

So we often have a half-dozen 90% losers to choose from, or even a few bankruptcies or frauds to make it easy to choose our Turkey — but not so much over the past year… here’s the  Dirty Dozen:

So… a pretty typical array of risky companies — tiny firms, commodity explorers or producers, a smattering of biotech.  And most of the big publishers make an appearance.

And the very worst of the picks are fairly old, from September or October of 2023 — partly because they just missed out on the market’s surge since then, so they start out with a strong headwind (the relative performance is that last column on the right — what you would have earned from investing in that stock vs. what you would have earned by investing in an S&P 500 index fund on that same day).

So there are two clear leaders from September of 2023… what do we pick?  Or is one of the slightly-less-disastrous picks a better Turkey for some other reason?

For me, there’s not much doubt — much as I’d like to again spend a few paragraphs pointing out how absurd James Altucher’s pitch for Kopin was earlier in the year, the Turkey of the Year is one of the stocks that was most opportunistic in trying to sell itself as an AI juggernaut throughout 2023, and convinced a few newsletter editors along the way, but is still essentially a self-promotional startup, without much of an actual business:  VERSES AI (VERS.NO, VRSSF).

A couple pundits have teased VERSES over the past couple years, but the one who catches the flying Turkey this time around is Alex Reid at Wealthpin Pro, who, according to the Thinkolator, tried to sell us on VERSES as the “Apple of AI” — a way to “Turn a $2 stock into $156,750.”

Here’s what I wrote to the Irregulars in the Quick Take for that particular tease, back on September 11, 2023:

“This is a pitch for VERSES AI as the developer of the next big operating system, which is a reference to their not-yet-released KOSM platform which they call a “network operating system for distributed intelligence.” The goal is to get developers to build programs to use this to build “smart” systems, Alex Reid pitches it as being something like the Apple App Store/Apple Operating System for the artificial intelligence future. That may be possible, though it takes a lot of imagination to get there — VERSES is starting at a hair above zero, so it’s all speculation at this point. Personally, I find the management presentations pretty compelling, and the technology sounds cool… but I also don’t think that Microsoft and Alphabet have a lot to worry about from this penny stock that’s still finding its first couple customers and is burning tons of cash — particularly since they’re also competing against well-funded private companies in such a hot space (Microsoft’s $10 billion investment in OpenAI was the headliner, but AI venture funding totaled more than $25 billion in the first half of this year). I’m still where I was a few months ago, when I last looked at VERSES — I’d rather pay a higher price in the future for a company that’s more established and has proven it can build a customer base and sell its products, not just its shares. There’s too much that can go wrong for a company that has to sell stock every few months to fund their pre-commercial work.”

And for those who learn in pictures, here’s the chart for VERSES since then — Reid at least didn’t catch the top, VERSES got over $3 a share for a hot minute back in June of 2023, but his tease came over the transom when it was trading (that’s the S&P 500 in orange):

What’s going on with the company now?  I don’t really know, but whatever it is, it’s not generating revenue… and they’re still diluting shareholders like crazy as they presumably try to develop their technology and convince someone to buy it, with the share count almost doubling in just the past six months.

Gobble, gobble.

Turkey History

If you’re newer to Stock Gumshoe, we’ve been tracking the heavily promoted teaser stocks pitched by big investment newsletters since 2007, and named our first Turkey of the Year in 2008 — and you can go all the way back to see how those 16 previous Turkeys matured or recovered.

And there’s not much cheer in those trips down memory lane — a visit with any of the past Turkey of the Year winners will quickly turn into a cautionary tale about the dangers of bottom fishing.  A few of from the past five or six years have survived, but most of the past Turkeys have either been reverse-split to infinity, with a few name changes along the way, or have been through bankruptcy at least once. None have yet recovered from their “Turkey” day to become successful investments…. but hope springs eternal.

For posterity’s sake, here are the other previous winners… most of them are gone now, total losses for the investors who got sucked into those stories. A couple of the names still exist in some form, mostly because they came back out of bankruptcy after washing out their shareholders… but all the pre-2017 Turkeys ended up being 100% losses for investors who bought anywhere near when they were initially teased and held through to the bitter end, and only one of the more recent Turkeys is anywhere near break-even (that’s Indivior, from 2018 — the other more recent ones are all down at least 80%, several have lost 99% or more):

2023: Lion Electric Warrants (LEV/WS) (Nomi Prins) — Last year’s Turkey was one of the few electric bus/truck companies that had some decent revenue growth for a while, and was briefly a SPAC darling during the 2021 mania… but the story has continued to get worse over the past year, and that goes double for the warrants (the right to buy the stock for $11.50 in 2026 ain’t so valuable when the stock is trading for 22 cents).

2022: Voyager Digital (Enrique Abeyta/Empire Financial) — That once-exciting crypto brokerage firm had already gone into bankruptcy, before they won Turkey of the Year (which I think makes them the fastest tease-t0-bankruptcy pick in Gumshoe history).

2021: Intrusion (Bryan Beach/Stansberry) — This dramatic overpromise-er in the cybersecurity space showed some life in 2020, but it turned out they were blowing smoke, the company is now the merest shadow of its former self.

2020: LimeLight Networks, later changed name to Edgio (Andrew Snyder/Manward) — A hopeful competitor to Akamai that has always looked a little bit cheap… apparently for good reason, they finally went bankrupt this year (and Akamai bought their customer accounts at the courthouse door, coincidentally enough).

2019: Crop Infrastructure (Alex Koyfman/Angel Publishing) — This marijuana pretender merged with Vert Infrastructure, then went into receivership a year or so later and has wafted into nonexistence like a smoke ring.

2018: Indivior (Chris Mayer/Bonner & Partners) — Indivior makes drugs to treat addiction, and was one of the more “real, just disappointing” businesses to win the award… and is also the only one whose share price today is still pretty close to where it was on its “Turkey” day.  Still way down from the initial tease, but not a complete washout.

2017: Aqua Metals (Tyler Laundon/Cabot) — This battery recycler has survived by continuing to sell shares, and had spikes of popularity when folks got suckered into the story later on, particularly in 2021… but they split 1:20 just this month, so on a split-adjusted basis they’ve now gone from about $80 to $2.

And the rest of the motley crew…

2016: SunEdison (Kent Moors’ Energy Advantage) — bankrupt2015: CT Partners (Louis Navellier) — bankrupt2014: Solazyme (Jimmy Mengel and the Motley Fool both pitched this one) — bankrupt2013: HRT Participa (Byron King) — bankrupt2012: Gasfrac (Sean Brodrick and Keith Kohl) — bankrupt… and even the company that bought Gasfrac’s assets out of bankruptcy several years later, STEP Energy (STEP.TO), has lost most of its value since2011: Tengion (Steve Christ) — bankrupt2010: SuperMedia (Hilary Kramer) — recovered briefly when merging with Dex One, and the ashes persist as Thryv Holdings (THRY), but in the meantime it went through at least one investor-destroying bankruptcy.2009: Raser Technologies (Nancy Zambell and the Oxford Club both teased this one) — bankrupt2008: Potash North (Andrew Mickey) — bankrupt

Interestingly, most of the newsletters that were teasing those particular stocks don’t exist anymore, and more than half of those pundits are no longer active in the newsletter industry… some have passed away or retired, from what I can tell, and a few had their letters actively shut down (Abeyta and Prins saw publisher parent MarketWise pull their plugs in 2023, and Andrew Snyder had his Manward letters taken over by Shah Gilani) That might not mean much — newsletters die and are reborn all the time and many of those editors have worked for several different publishers over the years — but it still catches the eye.

A few caveats for this whole exercise, just to be clear:

We don’t know what the specific advice was from any of these newsletters — maybe they doubled down on the stock when it dropped, maybe they stopped out or changed their minds the day after we covered the tease, we don’t subscribe so we don’t know… because all we know about a stock is when it was teased as a world-beater, we set our tracking to just assume that you bought the stock on the day the newsletter teased it and held it forever.
And as a corollary to that, this is not necessarily a reflection on the newsletter pundit who promoted the Turkey — yes, we should use this moment to remind ourselves that the marketing pablum skews our perception and has to be actively ignored, but sometimes the newsletter editors don’t even really have anything to do with the teaser pitches their publisher uses… and the overall performance of a newsletter’s portfolio is presumably often different from the performance of their most actively touted “teaser” stocks. Stocks that are teased aren’t necessarily really the “best idea” of the newsletter pundit, sometimes they’re just the stock whose story is easiest to sell.
This is not necessarily meant as a criticism of those particular newsletters — I think of the annual Turkey Award as being a bit more light-hearted than that, since we all do dumb things sometimes (and I’ve owned a few of those stocks, or similarly terrible ones), but also as a reason to be cautious about exciting stories. The best way to do that is by pointing out, at least once a year, a few of those moments when the emperor, at least in retrospect, wasn’t wearing any clothes.

Past Turkey of the Year winners have won for lots of different reasons — sometimes they ended up being actual frauds or scams, with management who lied… sometimes they just borrowed too much money at the wrong time. Often they were sold as a story but hadn’t yet gotten past the first chapter and turned that story into a real operating business, and occasionally they were bets on a big event that failed (like a hoped-for oil discovery, or a drug trial).

What’s missing? There has (very) occasionally been a little bit of revenue growth behind a Turkey finalist, and once or twice one of them even reported a profit, but the winner has never been a company with any kind of history of stable operating results… let alone rising revenues or growing earnings. Lion Electric looked for a few minutes like it might end up being an exception to that rule, since they at least had growing sales… but even that Turkey from just a year ago is looking pretty rancid now.

So what’s the lesson?  Same as it ever was… stories disappear more easily than dollars.

If you stick with companies who have proven their promise to some degree, with evidence of actual growth or meaningful profitability in their financial results, not just in their future daydreams and their investor presentations or in the minds of optimistic pundits, maybe you can avoid bringing a Turkey home.

Nobody’s perfect, though — I’ve speculated on at least two of those Turkeys in the past, and been burned (didn’t hold on until the bottom, thankfully, but certainly lost money). The world continues to be unpredictable, and I imagine we’ll all make more mistakes than we’d like.

And to be close out with some fair self-reflection… what’s my biggest blunder of a buy over the past year?   Well, my biggest mistakes over the past year of yet another booming stock market, in retrospect, have mostly been my decisions to either do some hedging or take some profits off the table with large positions (like NVIDIA) that have kept soaring after I sold.

But when it comes to a stock or story that I just got wrong, and turned into a big red mark in the portfolio, I’d say my biggest Turkey so far is Celsius Holdings (CELH), which I first bought after it got cut in half in July, and it continued to fall from there.  I do still own that position, and I think there’s an opportunity for them to recover, but this past quarter was another weak one, and it’s just getting uglier at the moment.  That position is now down about 35% for me, and the lesson there might be something about not catching falling knives, or being more cautious with stop losses… but some of us are too stubborn to be completely programmatic in our buy and sell decisions.

So that’s it for this year’s roasting of the Turkeys…. Happy Thanksgiving, everyone! I’m thankful for your continued readership and your support of Stock Gumshoe (if you’re not already a premium member, we have our special Gumshoe Gives Back campaign running this week only — sign up now!), and delighted that you continue to make this the finest spot in cyberspace. We will be closed for the holiday, so enjoy your break from my blather — no Friday File this week, and I’ll be back to dazzle you with more stories of promise and peril next week… thanks for reading!

P.S.: In case you’re wondering, we will have an optimistic version of this look-back as well… right around the end of the year, usually between Christmas and New Year’s Day, we’ll highlight the BEST teaser stocks picked over the last year. And, of course you can always peruse the Tracking Spreadsheets to see which winners… or turkeys… might be your favorite.

P.P.S. Have a Turkey of your own to get off your chest? It can be good for the soul to acknowledge it and move on, and we’re ready to listen. Think I should have picked somebody else? Have an ugly Turkey from the investing world that never graced the pages of Stock Gumshoe?  Think I’ve done something dumber than buy Celsius so far this year?  Feel free to share with a comment below.

Disclosure:  Of the companies mentioned above, I own shares of NVIDIA and Celsius Holdings, and call options on UIPath.  I will not trade in any covered stock for at least three days after publication, per Stock Gumshoe’s trading rules.