Also, one green flag gets a nicotine rush, one red flag gets taken out of its misery... and scam city.
August 9, 2025
▶ Greetings from London, enroute to parts unknown... We tend to avoid traveling during the summer, but this specific trip doesn’t come along often so we seized the moment when we saw it pop up... two years ago. The goal is to avoid crowds. Well, August is August and London is London and vacationing Europeans will be vacationing Europeans... lotsa people out shopping. Middle-of-the-day yesterday at the iconic Fortnum & Mason department store was enough for us to say, “Get us outta here.” But not without first spending a few pounds – the absurdly cheap dollar, notwithstanding. It has been a few years since London was our endpoint – we’re usually transiting through. The new electronic passport control at Terminal 5 was the equivalent of Global Entry in the U.S. – no muss, no fuss, no queue. It took just a few seconds to get through. Next stop starting today, the North Atlantic, where we will be for the next few weeks. As long as Starlink cooperates – a game-changer on ships for those who like to toss in some work when they travel – I’ll post when I can.
▶ From the “history rhymes” department... I haven’t talked with former tech analyst/fund manager Andy Kessler in years, but never miss one of his weekly columns in the Wall Street Journal. Last week's was a Kessler classic, written by someone who has been there, done that. In “Netscape Lessons for AI Mania,” Andy gives a good run-through of the evolution of tech as we know it today, starting with Netscape, which many of us remember for its Netscape Navigator – the browser that bred the Internet. Lotsa lessons from that era, but Andy nails it with this...
With today’s flurry to invest in any company that can spell AI, Netscape’s biggest lesson is that nothing lasts forever. AOL bought Netscape in 1998 for $4.2 billion in stock. AOL’s peak value reached $222 billion in December 1999, and in January 2000 it bought Time Warner for $182 billion. The dot-com boom peaked a month later, and the merger was a massive failure. AOL stopped supporting Netscape browsers in 2008. In 2015 AOL was sold to Verizon for peanuts, and in 2021, along with the remains of Yahoo, it was sold to private-equity firm Apollo.
In the current bull run, the “Magnificent Seven” stocks, growing on the backs of Netscape’s innovation, are worth $19 trillion. Netscape is a footnote in history but proof that the spark of a new idea and the freedom to pursue it, coupled with robust capital markets and even a dose of runaway speculation, can change everything. Even if the first movers, the original innovators, don’t make it.
This time, kids, it won't be any different.
▶ And lest you think all I do is throw poison darts... Then you obviously missed my green flag a week ago on Turning Point Brands $TPB. I explained why a fund manager I know who likes to short the sleaziest of companies, but also has an eye for quality longs, considers this manufacturer of nicotine pouches the best long idea of his career. Turning Point is a fairly new player in the rapidly growing nicotine pouch market... but appears to be on quite a trajectory of its own. That was evident when it reported earnings earlier this week that caused the stock to leap. Premium subscribers can read my full report, which includes a free preview, right here.
▶ Moving on, for those following the Whack-a-Mole WhatsApp stock scams... Ed Dorsey over at The Bear Cave on Substack has rolled out a sitededicated to outing these scams, where victims are being urged to post screenshots of the flagrantly fraudulent posts. Red Flag Alert subs will recall my timely posts on Ostin Technology $OST and Park Ha Biotechnology $PHH, the shares of which are shells of their former selves. The only reason Ostin doesn't trade for pennies is because it recently did a 1-for-25 reverse stock split. But based on the performance of its stock, that has only delayed the day of reckoning, as it looks to be on its way back to pennies territory.
▶ Finally, on the red flag front... eye lens maker Staar Surgical$STAA last week agreed to be acquired by Alcon, which no doubt saw a good deal for $1.5 billion. That’s what happens sometimes when stocks get clobbered, as was Staar, whose shares pre-announcement had tumbled roughly 60% since I first red-flagged it in September 2023. Even with the announced acquisition, they're down roughly 40%.
Staar had originally landed on the Red Flag Alerts list because of lousy earnings quality and the fact that most of its business came from China and one customer generated more than half its revenue. Things haven’t improved since, as this simple chart on revenue growth and earnings per share shows...
All of that is now Alcon’s problem. The beat goes on...
DISCLAIMER: This is solely my opinion based on my observations and interpretations of events, based on published facts and filings, and should not be construed as personal investment advice. (Because it isn’t!) Subsequent to my original report I bought shares of Turning Point, and am under no obligation to disclose any future purchase or sale.
