DISCLOSURE: THIS POST MAY CONTAIN AFFILIATE LINKS,MEANING That I GET A COMMISSION IF YOU DECIDE TO MAKE A PURCHASE THROUGH MY LINKS, AT NO COST TO YOU. PLEASE READ FULL DISCLOSURE HERE
So, is Whitney Tilson’s Empire Stock Investor newsletter really good?
Is he legit?
How have Whitney Tilson’s past stock recommendations performed so far?
Could you really achieve better-than-average returns by following his stock recommendations?
Are there other better alternatives to the Empire Stock Investor newsletter?
Who Is Whitney Tilson?
He graduated from Harvard College with a bachelor’s degree in government in 1989.
After college, he helped Wendy Kopp launch Teach for America and then spent two years as a consultant at the Boston Consulting Group.
He earned his MBA from Harvard Business School in 1994, where he graduated in the top 5% of his class and was named a Baker Scholar.
In 1999, Whitney Tilson founded and ran Kase Capital Management, which managed three value-oriented hedge funds and two mutual funds.
From 1999 to 2010, his fund grew from $1 million under management to $200 million under management and outperformed the S&P 500 most of the years.
However, from 2010 to 2017, his funds significantly underperformed the long bull market, which caused investors to get fatigued and fund assets to drop to $50 million.
In 2017, he had lost almost 9 percent on the year by the time he shut down his fund while S&P 500 was up 21.83% that year alone.
The downfall of Whitney Tilson’s fund was due to his wrong prediction about the market.
As the economy recovered and stocks rallied from 2009, Whitney Tilson developed the view that the market was ahead of the fundamentals, so he positioned his fund defensively, holding a lot of cash and even went short on stocks, waiting for the next big downturn.
But, he was dead wrong about the market.
As a result, the investors in his fund lost money and missed out on the long bull market.
After Whitney Tilson closed his losing hedge fund, he launched Kase Learning in 2018 to teach people about investing and starting an investment fund.
But, one year later, he decided to stop live teaching at Kase Learning and instead launched Empire Financial Research to sell investment newsletters.
Here is a list of investment newsletters being sold by Empire Financial Research:
- Empire Stock Investor ($199 per year)
- Empire Investment Report ($5,000 per year)
- Empire Breakthrough Investors ($5,000 per year)
- Empire Elite Growth ($5,000 per year)
- Empire Elite Trader ($4,000 per year)
- Empire Elite Options ($5,000 per year)
Empire Stock Investor Stock Picks & Performance
Empire Stock Investor was launched in 2019.
Inside Empire Stock Investor, Whitney Tilson recommends mostly large-cap and US-listed stocks with an average holding period to be three to five years.
Whitney Tilson’s partner, Enrique Abeyta, is also behind the stock recommendations.
According to their website, Whitney Tilson is a classic value investor that looks for beaten-down stocks trading below their intrinsic value, while Enrique performs similar deep fundamental analysis but focuses more on high-growth stocks that could be potential multi-bagger.
There are about 20 to 25 stocks in the model portfolios.
However, based on the past stock recommendations, it seems that Whitney Tilson does not follow a strict value investing strategy to make all the buy recommendations.
In 2020 and 2021 when Cryptocurrency was all the hype, Whitney Tilson recommended buying Ethereum.
Personally, I avoid cryptocurrencies because it’s not productive assets and they are highly speculative and volatile.
Most importantly, it could go to zero.
In 2021, Whitney Tilson started to recommend some SPACs when SPACs were a very hot investment product that year.
The thing with SPACs is that there are so many SPACs out there searching for mergers and it certainly allows an operating company to play them off against each other.
The result is overpaying for acquisitions and mergers.
On top of that, the way that SPACs are structured puts individuals at a significant disadvantage.
First of all, the allocation of shares and warrants to these SPACs sponsors could typically dilute common shareholders’ shares by up to 20%.
There is also a conflict of interest as the sponsors have a lot of upsides if they close a deal even if that deal is not very attractive.
Lastly, most SPACs would trade below their IPO price and underperform the market, according to Financial Times.
Personally, I don’t think it’s a good idea to invest in SPACs.
In May 2021, Whitney Tilson recommended a SPAC called Pershing Square Tontine Holdings with a buy price of $25.59.
Three months later, he recommended closing this position with a 23% loss.
There is also this stock called “Katapult Holdings” which he recommended in May 2021 with a buy price of $11.89.
Katapult Holdings is a company that provides lease-to-own payment solutions to shoppers and businesses.
Katapult Holdings has been losing money every single year until 2020.
Then, it was only profitable in two years 2020 and 2021.
In 2022, it started to lose money again.
It does not have a proven business model and does not have a long history of consistent profitability, so I was surprised why this stock was even recommended.
Whitney Tilson recommended Katapult Holdings in May 2021 with a buy price of $11.89, and then recommended his members take a loss when the stock price was $3.97 three months later ( a loss of 67%).
As for Whitney Tilson’s other stock recommendations in the model portfolio, they come from a diverse group of industries such as healthcare, e-commerce, technology, utilities, banks, EV, oil & gas, and etc.
Below is the performance of Whitney Tilson’s 2021 and 2022 stock picks in the Empire Stock Investor newsletter.
As you can see, most of Whitney Tilson’s 2021 stock picks are losing money with quite a few stocks losing up to 70% when S&P 500 was down about 20%.
The performance in 2022 was slightly better than in 2021 with fewer losers, although there is still one biotech stock pick “Ginkgo Bioworks” losing almost 80%.
Overall, I think you would be better off investing in market index ETFs that have less volatility.
Whitney Tilson’s 2021 Stock Picks Performance
|Stock Pick||Performance as of March 2023|
|Cell Tower Landlord
Whitney Tilson’s 2022 Stock Picks Performance
|Stock Pick||Performance as of March 2023|
|EV Truck Maker
|Oil & Gas
|Solar Component Maker
Empire Stock Investor Pricing
So, how much does Empire Stock Investor cost?
What do you really get from subscribing to Empire Stock Investor?
Here’s what you get as an Empire Stock Investor:
- 12 monthly issues of the Empire Stock Investor newsletter on the first Wednesday of every month with one stock recommendation
- access to special reports and model portfolio
- you’ll receive immediate alerts for any sell recommendation when they think it’s time to sell
- you will receive Whitney Tilson’s Daily which gives you insightful commentary on what’s happening in the investing world
Usually, Empire Stock Investor costs $199 a year.
For first-time subscribers, it’s $49 for the first year, and then automatically renewed at $199 for subsequent years.
Is it worth it?
The subscription is very cheap for the first year.
But, I think there are better alternatives if you are looking for stock recommendations.
Empire Stock Investor Alternatives
So, what are some Empire Stock Investor alternatives?
Personally, I use Seeking Alpha to get stock ideas and research and analysis stocks.
There are three different types of stock ratings offered by Seeking Alpha:
- SA Author Ratings ‒ ranging from Strong Buy to Strong Sell by Seeking Alpha contributors
- Wall Street Ratings – consensus and price targets on the stock by Wall Street Analysts
- Quant Ratings ‒ based on over 100 metrics, updated daily
The most interesting of all is Seeking Alpha’s 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)
- Sell (i.e. a score of 2)
- 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.
So, how exactly is Quant Rating calculated?
Quant Rating is derived after taking into account the following five “Factor Grades”:
- EPS Revisions
The Factor Grade is determined by comparing the relevant metrics for the factor for the stock to those for the other stocks in the same sector.
For example, to determine the grade for the “Growth” factor, metrics such as past sales growth, projected earnings growth, and stock price performance for the stock will be compared to the same metrics for the other stocks in the same sector.
Then, each factor is assigned a grade, from A+ to F.
Grade A+ means that the stock has the highest growth potential compared to its peers in the same sector.
On the other hand, a grade of F means that the stock has the lowest growth potential compared to its peers in the same sector.
So, how have Seeking Alpha’s Strong Buy Quant Ratings performed, compared with S&P 500?
Do take note that the performance is based on backtesting.
From 2010 to 2022, Seeking Alpha Strong Buy achieved a total return of $174,156 based on $10,000 in investment capital while S&P 500 achieved a total return of $40,721.
Apart from its Quant Ratings, I also find everything I need (from financials, earnings, growth, valuation, dividends, peers, profitability, charting, etc) to do my stock research and analysis.
On top of that, I can read Seeking Alpha’s authors’ analysis of the stocks that I am interested in.
I especially like to read from people who hold different views from me on the same stock because I want to find out if there are any downside risks that I have not considered yet.
So, that is quite useful to me.
Lastly, it also has all the latest market news, company-specific news, notable calls from analysts, and M&A news.
You can use Seeking Alpha to monitor your existing portfolio as well.
Basically, it has everything an investor needs in one place.
Generally, it is priced at $239 per year for Seeking Alpha Premium.
But, for a limited time only, you could get Seeking Alpha Premium for just $119 for the first year.
[Limited Time Only] Claim Your 50% OFF Seeking Alpha Premium
Leave a Reply