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[Update July 2022: Paul Mampilly has just announced that he would leave Banyan Hill publishing and no longer be affiliated with Profit Unlimited.]
So, is it worth it to subscribe to Paul Mampilly’s Profits Unlimited?
Is he legit?
Can you really achieve better investment returns by following his stock recommendations?
Are there any better alternatives?
Who Is Paul Mampilly?
So, what is Paul Mampilly’s background?
Should you listen to him and follow his stock recommendations?
Here’s his background that I found on his Linkedin profile.
He finished his primary school education in India, then attended high school in Dubai.
Then he went to Montclair State University to get his degree in accounting in 1991.
Following his MBA graduation from Fordham University in 1997, Paul Mampilly started out as an assistant to a financial advisor and portfolio manager.
Later on, he slowly rose to become a portfolio manager managing private clients’ portfolios at Bankers Trust.
Then, he moved on to become a research analyst covering mainly healthcare stocks.
In 2006, he joined Kinetics Asset Management as a portfolio manager.
Here’s the performance of one of the funds that he co-managed.
As you can see from the period of time marked by the red lines, the price of the mutual fund essentially stayed the same from 2006 to 2011.
From 2011 to 2012, Paul Mampilly made investment recommendations for 4 newsletters for Common Sense Publishing.
After that, he left to join Agora Financial in 2014 as the author and editor for Agora Financial’s FDA Trader which is designed to alert you to breakout moves in the medical markets, whether that be an announcement from the FDA or an overlooked drug trial that could ultimately drive huge stock market gains.
About one year later, Paul Mampilly left to join Stansberry Research in 2015 as the author of “The Professional Speculator ” which is a stock advisory service focused on speculative stocks.
By the end of the year, he quit and started his own stock trading newsletter and advisory service called “Profits Unlimited” in partnership with Banyan Hill Publishing.
Paul Mampilly’s Stock-Picking System
What is Paul Mampilly’s investment strategy for Profits Unlimited Newsletter?
He uses a stock picking system called the GoingUpness system.
At the core of GoingUpness system are demand and supply.
To be more specific, there are six factors to look at when you determine GoingUpness.
These six factors are broken up into two sets.
The first set is comprised of the qualities you look for in stock:
The second set is the three abilities that a stock needs to have:
Let’s start with the first set.
InDemandness means that a stock is in demand by buyers.
Essentially, someone keeps buying the stock at current prices or higher.
Paul Mampilly believes that most of the time, once the stock price falls below the trend line, you can expect it to keep dropping.
So, he recommends buying stocks that are at or above their trend lines (i.e. 10-day moving averages)
On top of that, he wants stocks that are at least 20% above their 52-week lows.
Here is his reasoning.
He thinks that an official bull market is one where a stock has gone up by 20%.
And the 52-week low is an important indicator for investment analysts because if a stock hits it, it’s probably headed lower.
But, if a stock hits a 52-week low and then climbs 20%, it’s officially in a new bull market.
Once a stock is in a bull market, he wants to see it rise steadily to its 52-week high because he thinks the odds of it going higher are better.
Also, when you see the stock go up two days in a row, with rising volume, it also signals InDemandness.
When you see this happening three days out of five, for two or three weeks, that’s a sign the stock is going to keep climbing.
Insiderness refers to insiders with good knowledge of the business buying share either in the last six months or after a rapid decline.
It means that the insiders (i.e. the management) don’t believe whatever put pressure on the stock is going to be permanent.
It’s also a sign that they think the stock is cheap and likely to go up soon.
Buyness means that a stock is hard to buy.
When a stock is being accumulated by insiders, they make the stock unattractive to other investors.
An example is the difference between the ask price and the bid price is higher than normal.
The difference between “quality” and “ability” is that “ability” is something that relates to the company’s stock, rather than the people associated with it.
Let’s start with the first ability.
ScarceAbility means there’s a limited quantity of stock.
For example, many companies use shares to pay compensation and bonuses to their employees.
This dilution of the shares is not good for shareholders.
ValueABILITY means that a stock has to control something of value, and there are two main types.
It owns a growing business, where sales are rising, profits are expanding and free cash flow is soaring.
Apple is a good example.
Its revenue and profits have been growing year after year.
Or the company owns a highly valued asset, such as prime real estate, a big stake in another company, a huge amount of gold or silver, a collection of valuable art, etc.
Sometimes, the value could be in the company’s large cash holdings.
The key to this kind of ValueAbility is that the stock must be selling at a large discount (20% or more) to the value of these assets.
ManageAbility means that a stock’s primary business is easily managed.
Essentially, this means there’s nothing innately wrong with the economics of the company.
So, it could still do well even if it would be led by a regular person.
His strategy is meant to find stocks that would go up right away.
In other words, he is trying to time the market.
But, the thing is no one can predict the market in the short term.
Even Warren Buffet says that he and Charlie Munger only looks at the business and ignores the short-term market volatility.
Paul Mampilly’s Stock Picks
Most of Paul Mampilly’s picks in 2021 are young, unproven, future-looking companies, especially technology stocks.
He is betting on the “possible potential growth” of these unprofitable companies.
One of Paul Mampilly’s 2021 stock picks is TDOC.
It has since dropped almost 90% from its peak.
Another stock pick is Momentus.
It has dropped more than 90% as well since its peak.
Most of his stock picks in 2021 have dropped massively so far, causing his Profit Unlimited subscribers to lose a lot of money.
Below is a conversation between two paid members of Paul Mampilly’s Profit Unlimited ( i.e. PU as mentioned below) on Twitter.
There are so many other stocks such as BYND, RH and TSP.
As you can see, the risk is very high when you invest in these so-called high-growth stocks that are still not making money yet.
Why did Warren Buffet manage to grow his wealth exponentially even through crises, wars, and market crashes?
He has a very sound investment strategy – value investing.
That means only investing in profitable companies with a wide moat and that are currently undervalued.
Morningstar is one of the best investment research and analysis service that helps you find these undervalued fundamentally strong companies with a sustainable competitive advantage.
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For each stock, you can find the latest Seeking Alpha Premium ratings on the stock:
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The most interesting of all is its proprietary Quant rating.
It was developed by CressCap, quantitative analytics and data platform that was acquired by Seeking Alpha.
So, what exactly is Quant Rating, and also how does it really work?
Quant rating is derived by comparing over 100 metrics for the stock to the same metrics for the other stocks in its sector.
These metrics include the company’s financial data, stock price performance, and analysts’ estimates of future revenue and earnings.
There are five types of Quant ratings:
- Strong Sell (i.e. a score of 1)
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- Hold (i.e. a score of 3)
- Buy (i.e. a score of 4)
- Strong Buy (i.e. a score of 5)
The advantage of this method is that you can use Quant Rating to find the best performer of any particular industry or sector.
Here’s one of the best ways to make use of Seeking Alpha ratings.
Every day, Seeking Alpha publishes a list of stocks that earn top ratings from Seeking Alpha authors, Wall Street analysts, and its proprietary Quant System.
Personally, I think that just this list of Top-Rated Stocks is like a gold mine that could potentially help you increase your investment returns significantly.
Below is the performance comparison between Seeking Alpha’s Strong Buy Recommendations vs S&P 500.
As you can see, it outperformed S&P 500 by a large margin.
Seeking Alpha also provides you with a stock screener that you can use to find investment ideas in the stock market.
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So, is it worth paying for Seeking Alpha Premium?
The annual subscription is priced at $239/year.
$239/year works out to be about $19.90/month (i.e. $0.66/day).
A cup of Starbucks coffee costs about $2.75.
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