Mark Twain was a brilliant author. We all remember Huckleberry Finn, The Innocents Abroad, Roughing It, The Prince and the Pauper, and Pudd’nhead Wilson.
But as brilliant and creative he was as an author, he was a terrible investor – one of the worst. In fact, by the time he was 59 in 1895, he was broke, and he owed thousands.
He lost money on the engraving process, on the magnetic telegraph, on the steam pulley, and on railroad stocks. Then, he turned down an offer to take a stake in Bell Telephone. He lost so much money that in 1891 he had to sell his family’s home for a sixth of its value.
However, despite his poor investment decisions, he did offer advice that even Warren Buffett lives by. “Whenever you find yourself on the side of the majority, it is time to pause and reflect,” he’d say. Of course, he was referring to momentum buying, the herd mentality of buying what’s hot and selling what’s not.
Unfortunately, Twain had a lethal character flaw as an investor. He had no patience for details. He could paint a picture of Huckleberry Finn’s adventures with fine detail, but couldn’t apply it to his investments, and flaws like that can destroy any one’s investment portfolio.
However, get the details right, and you can do quite well.
In fact, checking out the details is the core philosophy of The Cheap Investor. Look at Rigel Pharmaceuticals (RIGL), for example, a clinical-stage biotech company dedicated to the discovery and development of novel, targeted drugs for immunology, oncology, and immune-oncology.
We’ve recommended the stock four times. Our latest recommendation was in April 2017. Before that, we recommended Rigel at $1.95 and watched it soar to $4.38 for a potential gain of 125%.
Paying attention to details lead us right back to Rigel, and that’s why we recommended it again in the April issue.
In recent weeks, the company filed its first new drug application with the FDA, which if approved could cause the stock price to explode.
The drug in question is fostamatinib, an oral spleen tyrosine kinase (SYK) inhibitor, which is currently in phase 3 trials for immune thrombocytopenic purpura (ITP) – a condition where a patient’s immune system incorrectly sees the body’s red blood cells as foreign substances, attacking and destroying them. That can result in lowered blood platelet counts, which can then lead to excessive bleeding, fatigue and potential bruising. It impacts up to 125,000 people in the U.S. alone.
The Street has already projected potential sales of $360 million for such treatment. That could more than double the company’s current $370.55 million market cap.
Depending on what the FDA has to say, the stock could move quickly.
Paying attention to the details of opportunities like Rigel Pharmaceuticals can lead to explosive returns; and we find opportunities just like this every month in The Cheap Investor.