Dave Lashmet's prescient warning about Structure Therapeutics; Quantitative view on Pfizer; RIP Jonathan Clements
1) In yesterday's e-mail, I shared comments on pharma giants Pfizer (PFE) and Eli Lilly (LLY) by my colleague Dave Lashmet. He's the editor of our firm's Stansberry Venture Technology newsletter.
One of my friends was impressed with Dave's insights and asked if I had ever quoted him before. I had indeed – back on October 31, 2023. In that e-mail, I discussed how a pharma firm called Structure Therapeutics (GPCR) had piqued my interest:
Last week I saw a compelling pitch for Structure Therapeutics, which is developing a pill version of the revolutionary new GLP-1 weight-loss drugs like Ozempic (which must be injected once a week).
I was intrigued because, with only a $3.1 billion market cap, Structure could be a home run in this white-hot sector if its drug is approved.
As I noted, I'm not an expert on drug development. But that's Dave's area of expertise... So I reached out to him for insights.
Dave was very familiar with GPCR. But he wasn't a fan. And his warning ended up being prescient. Here's what Dave told me back then – which I also shared with readers:
It's a potential train wreck for a number of reasons.
First of all, it's a tiny company competing against giants Novo Nordisk (NVO) and Eli Lilly. Best case, there's only a 1% chance it can compete with them in a decade.
Also, while it has a U.S. address in South San Francisco, we think it's really a Chinese company, as its CFO, CSO, CTO, VP for research, VP for trials, and virtually everyone else resides in Shanghai... And I don't have to tell you about the dangers of Chinese companies...
Lastly, I am very suspicious that the company might have suppressed the side effects in the Chinese phase I clinical trial results that it reported...
Meanwhile, GPCR's dose curves are nonsensical. It's taking a radically different dose than it tested in phase I trials into phase II. We can't see the logic of this.
Amazingly enough, on that very day, GPCR closed at its all-time high of $74.30 per share. Since then, it has crashed 66% to close yesterday at $24.99 per share. Take a look:
Congratulations on a great warning, Dave!
In the future, I look forward to sharing more of his insights with readers.
2) In light of Dave's bearish view on Pfizer, a few readers asked why the stock is a recommendation in the whole-portfolio approach in our latest publication: The N.E.W. System.
Dave provides a qualitative analysis, whereas the approach in The N.E.W. System is quantitative...
It starts with the Stansberry Score – our firm's proprietary scoring system. This grades thousands of stocks across four dimensions: capital efficiency, financial strength, valuation, and momentum. Scores range from zero to 100.
Put simply, the top Stansberry Score stocks (with a score of 80 or above) tend to outperform on a two-year horizon. As my team and I noted in an introductory report for The N.E.W. System:
If you had bought the stocks rated 80 or above on the Stansberry Score back in March 2017 and held them for two years, you would have outperformed stocks in general (as measured by the equal-weight S&P 1500 Index) by double digits. Take a look...
(Subscribers can read the full report here.)
Based on the Stansberry Score, Pfizer looks fantastic with a score of 88. That puts it in the top 1% of all stocks ranked:
Then, The N.E.W. System goes even further...
It takes the stocks with high Stansberry Scores and applies an AI algorithm to not only select the "best of the best" stocks, but also to create a diversified portfolio of 20 stocks.
Subscribers can see the full breakdown of the inaugural portfolio right here. If you aren't a subscriber, you can learn more about The N.E.W. System and find out how to gain access to the whole portfolio by clicking here.
3) The investing world lost one of its great writers recently...
Jonathan Clements, who wrote more than 1,000 personal-finance columns for the Wall Street Journal, passed away far too young at the age of 62. It was only a year and a half after he was diagnosed with a rare form of lung cancer, despite being in superb physical shape and never smoking.
According to the New York Times, Clements "may have done more than nearly anyone who didn't work at Vanguard to bring index funds to the masses." The Wall Street Journal's Jason Zweig echoed this:
Clements was one of the first financial journalists to argue for index funds. His advocacy, he conceded in a 1999 column, was nearly an "obsession" that irked many readers.
In the 1990s, professional investors often derided index funds as inferior and a guarantee of mediocrity; Clements praised them as a sure way to minimize the risk of underperforming the market. Following the trail Clements had blazed, millions of investors eventually made index funds the building blocks of their portfolios.
Zweig also highlighted other reasons why I loved Clements' columns:
Clements also lambasted high fees, murky disclosures and misleading practices. Among his targets: incubation, in which fund companies nurtured many funds in secret, launching only the winners and burying the records of the losers; proliferating share classes with complicated fees; and fund mergers in which a well-performing minnow swallowed a whale with putrid returns, making the big loser's record disappear.
The NYT article summarized five "pearls of wisdom" from Clements:
- Doing the thing you're passionate about is overrated – for the young.
- Winning isn't everything, but not losing is really something.
- The taxman favors the patient.
- Don't just stand there. Do something.
- No, really. Do something!
Lastly, here's Clements' final missive, Farewell Friends. It published on his blog after his passing. In it, he tells his life story and concludes:
And then I got my cancer diagnosis.
The period immediately after was astonishingly busy, as I tried to get my affairs in order and prep HumbleDollar for a life without me, even as my diagnosis triggered a surprising amount of media attention...
Who knew that candor about one's own death would generate so much interest? It was an odd bookend to a life spent partly in the public eye – one that had previously been most notable for pounding the table for index funds.
I faced the final months not with sorrow, but with great gratitude. I had spent almost my entire adult life doing what I love and surrounded by those that I love. Who could ask for more?
It seems like every week, I learn that someone I know – or feel like I know, in this case – has died or is dying of a terrible disease.
It's very sobering. And it makes me grateful for my good fortune (I wouldn't swap places with anybody). It also gives me determination to live life to its absolute fullest.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.