James Altucher’s Top 1% Advisory Review – Scam Alert!!

James Altucher’s Top 1% Advisory research newsletter is making absurd claims that you can make millions using his secret backdoor method by investing in start-ups. If you didn’t know James background and past track record before reading the sales page, you’d think it was a complete scam. Trying to find an honest opinion of his service is almost impossible as every website who “reviewed” his newsletter are affiliates. They make 40% commission’s for every person they refer, it’s clear that these people haven’t even signed up to his service and have virtually no experience of stock trading. $2500 for a one year subscription is an insane price to charge, he must be going through some financial difficulties. Although it’s estimated James net worth is near $20 million, I’d guess it’s substantially lower than that figure after two divorces.

Background

James is pretty much a jack of all trades, hedge fund manager, angel investor, author and entrepreneur. He’s a machine; I don’t understand where he get’s the time to do all this stuff. Writing 17 books and writing for publications such as Huffington, theStreet.com and Seeking Alpha. If you’ve had a chance to look through his resume, it’s quite impressive, full of high and low’s. Being an entrepreneur is part of his DNA and in total has started and co-founded 20 different companies. Most of these businesses were in the finance industry with 17 of them ultimately failing in the end. Reset Inc and Stockpickr were the most successful ventures.

Reset was a web design firm that had celebrity clients that included Wu-Tang and Time Warner. HBO ended up buying the company for $15 million but somehow managed to lose all that money in the space of a year. He went from $15 million in the bank to $143 from reckless spending and bad investments during the dotcom bubble. James worked his way back up, setting up a hedge fund and developing software that was able to model the market so he could identify profitable trade ideas. Through his experience in the hedge fund industry, he learned about every single hedge fund strategy and built up a solid network of connections. After that in 2006, he created Stockpickr, a social network for traders to share investment ideas. A year later TheStreet.com stumped up $10 million to acquire Stockpickr.com. Once again Altucher went from an average Joe to multi-millionaire until the crash in 2008. He picked up himself back up again and became a seed investor in Buddy Media that was later acquired by Salesforce for $800 million.

Altucher’s Top 1% Advisory Explained

Leveraging his super-connected network of wealthy friends he can recommend early start-ups opportunities not available to the general public. He proclaims that these groundbreaking opportunities have the potential to provide crazy returns of 1000% for the average investor. Althucher brags that some of his network are the same venture capitalists who backed well-known start-ups such as Uber, Airbnb, Dropbox and Buzzfeed. This is a high-risk, high reward strategy that requires a lot of luck and patience. It’s kinda funny for someone so intelligent his net worth has seesawed for the past two decades, going from broke to rich three times.

Pro’s

  • Apart from providing members with stock picks he shares his wealth of knowledge on a wide range of topics. Rather than just being a sheep you could learn to trade on your own and generate your own ideas.
  • Investing in the next Twitter is unlikely but at least you’re odds are slightly better with his idea’s. James put’s a considerable amount of effort of research into every report and makes a compelling reason why you should buy each idea.
  • $2,500 is very pricey, I suggest you create a group buy with 10 other people and split the cost. $250 among 10 people is obviously more affordable, one person joins and forwards the emails sent out to the rest of the group.
  • Altucher found a “loophole” to overcome the SEC’s 501 rule that permits people with less than $1 million investing in start-ups.
  • Offers a 30 day trial to members to try it out risk-free.

Con’s

  • The newsletter is targeted towards more wealthy investors with at least $20,000 to invest in his ideas, to make it worthwhile. His recommendations are mainly mid cap stocks around the $15 range with some penny stock picks thrown in.
  • His marketing tactics are very shady; even penny stock promoters would be like “wow that’s a bit too much buddy”. People are expecting to sign-up, just buy his stock picks and make thousands overnight. If only it was that simple.
  • His secret “1000% backdoor” plan is interesting but disappointing, it’s just a gimmicky pdf. This sounds good in theory but for every success story like Twitter and Facebook, there are 100’s of failed startups that went nowhere.
  • The performance of his portfolio is hit and miss, a few are up 10%-30% and a handful are down 20%. These are long-term picks, 18-24 months are the suggested holding times so you need to be patient. Overall he breaks even.

Portfolio

Top 1% Advisory portfolio of stock picks in 2016.

TEDx Talk

Short Example of Stock Report from September 15th 2016

Hertz: Super Contrarian Play

Positives:
» Hertz recently partnered with Uber and Lyft to get in on the ride-sharing trend.
» At the urging of billionaire investor Carl Icahn, the company brought in a new all-star management team with a history of turning around struggling businesses.
» Several members of the new team— including the CEO, CFO and CIO— are buying up shares, and institutional investors are also establishing large positions.
» Management plans on cutting up to $950M in expenses through 2020, which could help grow earnings by 25%.
» Hertz saved more than $2B by restructuring its debt, and it plans to use some of that cash to buy back to $1B worth of its shares.

Risk Factors:
» More travelers are using ride-sharing platforms for airport rides, which
is how car rental companies typically generate the most revenue. Hertz generates about 75% of its U.S. sales from airport operations. But most of this risk is factored into shares with the stock down 40%-plus from its highs.
» Though the company is reinventing itself, historically these kinds of transitions can present major challenges,
resulting in lower stock prices as investors lose patience.
» Over the past two years, the company share price has dropped by 40%.

The Top 1% are building huge positions in Hertz
In late 2014, billionaire and legendary hedge fund manager Carl Icahn took an 8% stake in Hertz. We’ve already talked about that.
As I explained earlier, Icahn used his influence to change the entire management team. He also has one of his own experts sitting on the board of directors.

Today, Icahn is the largest shareholder in Hertz. His stake has grown to 15.2% after adding to his position in June. This amounts to roughly $640 million. Since he continues to add to his position each passing quarter, Icahn appears to be in Hertz for the long term.

Other big institutional players who are big owners include in Hertz include Blackrock ($4.8 trillion in assets under management), Fidelity ($5 trillion in assets under management), Vanguard ($3 trillion in assets under management) and Parametric Portfolio Associates ($150 billion in assets under management).

David Einhorn’s Greenlight Capital also established a new position in Hertz. In August, the billionaire hedge fund superstar revealed he has taken a $5.4 million stake in the company. Einhorn usually builds his positions over time. In other words, I expect Einhorn to become a significant shareholder in Hertz over the next three to six months.

Not only are these superstar hedge fund managers and large institutions buying shares of Hertz at these depressed levels, but company insiders are buying shares as well.
• CEO John Tague recently purchased 50,000 shares for just over $900,000
• CIO Tyler Best bought 27,450 shares for roughly $502,000
• CFO Thomas Kennedy purchased 25,000 shares for $456,000
• And General Counsel Thomas Sabatino, Jr. bought 15,000 shares for a price of $270,675

These insider purchases amount to combined $2.1 million.

I’m sure these insiders who help manage the day-to-day operations would not be buying the stock at
these levels unless they could more than double their money on the stock over the next few years.

Based on my analysis, Hertz should be trading over $65 a share right now. That’s more than 30% upside from the current price.

Longer term, Hertz could generate triple-digit returns for investors as they continue to cut costs,
generate huge cash flow and buy back massive amounts of their stock.

Investment Synopsis:
» Buy-up-to price: $53 per share
» Fair value: Fair market value is $65 per share.
» Exit strategy: Hold for at least 24 months. This is when the stock is likely to see its greatest gains come to fruition.
» Position size: 2%-3% of total portfolio

From reading my Top 1% advisory review, it’s clear that although it’s expensive, James Altucher’s newsletter is a great resource for wealthy investors looking to generate a safe return. My advice is to join only if you have at least $20,000 to invest in his picks.

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