Three-year anniversary of Elon Musk's 'funding secured' tweet; 100 biggest companies in the world; Freedom Holding: The Red Flag Factory in Belize; Reply to readers regarding our marketing e-mails

1) Tesla (TSLA) CEO Elon Musk posted his infamous "funding secured" tweet three years ago this week:

Of course, he didn't have funding secured, so he got in a lot of hot water with the U.S. Securities and Exchange Commission – but no matter: TSLA shares are up nearly 10 times since then.

While I would have given 100-to-1 odds against this outcome, at least I had the good sense to recognize that this open-ended situation was a bad short (as I said then – and continue to say)...

2) A hat tip to VisualCapitalist for this interesting graphic of the world's 100 biggest companies in 2021 by market cap, showing country and industry:

3) In my January 5 e-mail, I wrote:

My friend Roddy Boyd at the Foundation for Financial Journalism recently exposed one of the most obvious promotions I've seen in quite some time – which has a $3 billion market cap! Freedom Holding: After 'Borat,' the Silliest Kazakh Import of the Century.

Since then, it's even clearer that the company is a promotion at best and fraud at worst, yet the stock is up 30%. Here's Roddy with an update: Freedom Holding: The Red Flag Factory in Belize. Excerpt:

Freedom Holding has some explaining to do.

The financial services firm has quite improbably become one of the fastest growing companies on the planet. It lists its shares on the Nasdaq, is incorporated in Las Vegas, but for all intents and purposes runs its operations mostly in Kazakhstan.

As a December investigation by the Foundation for Financial Journalism showed, Freedom Holding's ballooning profits have resulted from baffling and opaque business practices that its management is not keen to discuss.

Among the arrangements is Freedom Holding's close connection to FFIN Brokerage Services, a Belize-based securities trading firm owned by Timur Turlov. He also is Freedom Holding's billionaire founder and majority shareholder.

Even the most seasoned investor has probably not witnessed related-party transactions of the scope of FFIN's dealings with Freedom Holding.

Last year more than 56% of Freedom Holding's revenue came from FFIN commission payments, and in 2019 they represented over 65%. What Freedom Holding does to earn the commissions is not readily apparent, however. Yet the two companies are so intertwined – Freedom Holding's senior managers use FFIN email accounts – it's not clear the two companies are separate in any real sense.

Let me get this straight... This is a business incorporated in Las Vegas, headquartered in Kazakhstan, which earns the majority of its revenue in commissions from a Belize-based securities trading firm, and earns most of its profits from a unit in Cyprus...

How is this even allowed to trade on a U.S. exchange?

4) I get e-mails like these regularly enough that wanted to address them...

• "I am overwhelmed by the never-ending daily sales pitches to buy more expensive services from you or your company. All I have gotten from my base subscription is that I have purchased an opportunity to be continually pitched to buy more, spend more. This is a great disappointment." – Dave S. 

• "Dear Mr. Tilson, I have very much enjoyed reading your daily newsletters since I subscribed in January/February last year, and the actual newsletter content and commentary has been great and enjoyable to read.

"However, and I mean no disrespect of course when I say this, in each newsletter you provide 'Recommended reading' links, often two or three of them, which are, to be blunt very spammy adverts that one would not associate with trustworthy, reputable or honest people.

"Like I said, everything else in newsletters has been great to read and been very informative, but I thought I should mention to you just how those spammy, clickbait adverts make you look and in my opinion, reflect negatively on you.

"May I ask, why you do these ads, even though I am sure you know they are not a good look on you? Surely you can do better (again I mean no disrespect)! " – Omar A.

My reply: First, thank you for the feedback.

We do not accept outside advertising, earn fees from managing money, or commissions for steering our customers' trades – as, for example, trading app Robinhood (HOOD) does.

Our sole source of revenue is selling subscriptions to the various newsletters and services that we and a few of our corporate affiliates offer.

To do so, we run ads in our two free dailies (this one and my colleague Berna Barshay's Empire Financial Daily) as well as sending e-mails to our existing subscribers about other newsletters they might be interested in (i.e., cross-selling).

We are always trying to strike the right balance between running a profitable business – which allows us to hire more people and provide even better research – yet not antagonizing our readers/subscribers with too many promotions.

As for the nature of the promotions, perhaps this analogy will help you understand why, after decades of trial and error, our marketing and copywriting folks do what they do...

Imagine you owned a gym and were designing an ad to attract new customers. You could run one that had a picture of average, out-of-shape person with text that read: "Join our gym and if you really work hard and suffer a lot, you might gain some muscle tone and lose a few pounds."

Or you could run an ad that had a picture of a super fit and beautiful model with text that read: "Join our gym and you could look like this!"

I'm sure you'd agree that the latter ad will attract far more new customers, right?

In summary, as an individual, I try to go through life under-promising and overdelivering.

But the most successful businesses, I think, make big promises – and then deliver on them.

That's what Enrique, Berna, and I aim to do...

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.