Louis Navellier, Global Growth and ONP

Who is Louis Navellier

Louis Navellier is just another InvestorPlace expert and author of "The Little Book That Makes You Rich", a book that simply does not work.

According to InvestorPlace "Louis Navellier is one of Wall Street’s renowned growth investors. Investing for over 28 years, he has earned a national reputation as a savvy stock picker and portfolio manager".

Just to give you an idea about how skilled Mr. Navellier is, just have a look at this video, dated August 27th 2008 then have a look at what CF or POT did after that date.

What is Global Growth?

Global Growth is one of Louis Navellier's "services". For only $5.000 per year you can get fantastic advice like this one.

Louis and ONP

On January 11th 2010 Mr. Navellier told his $5.000/year paying subscribers to buy ONP with these words:

China's Orient Paper (ONP) is another thinly traded stock in Asia that is booming right now. ONP produces and distributes paper and paper products in the China. The company's line includes copy paper, digital-photo paper, corrugated and packaging papers, and even antifraud thermal-security paper.

In the third quarter, Orient Paper's sales rose 36.4% to $30.5 million compared with $22.4 million in the second quarter. During the same period, its earnings rose 94.5% to $4.8 million compared with $2.5 million.

The stock recently split and is a great buy. But like CTEL this stock is thinly traded, so I must insist that you only place a limit order within 10 cents of its previous day's closing price. Under no circumstances do I recommend that you place a market order for this stock since you could inadvertently send it soaring and hurt yourself and other investors.

On that day ONP closed at $13.70 and Mr. Navellier recommended to buy it below $18.52 (yes, you read well: eighteen fifty-two).

I do not want to report all the nonsense Mr. Navellier wrote since then, but only what he wrote yesterday, after ONP closed at $5.66:

The second stock that we are selling is Orient Paper, Inc. (ONP). This stock has suffered from a loss of investor confidence. As I mentioned our July 7 Weekly Briefing, research firm Muddy Waters published a report accusing ONP of fraud. ONP categorically denied the claim, saying that Muddy Waters was acting out of spite, but unfortunately the damage to its stock was done. We saw a brief bounce after the report but continued speculation about the company's finances made further gains impossible.

These events greatly have increased the volatility of this stock and I no longer can recommend it, even though its fundamentals are very strong. The risk reward of this stock has dropped significantly and it no longer stands with the top 10% of global equities.

It is unfortunate that such a powerful stock was brought down so unnecessarily, but as a financial advisor I am not here to moralize, I am here to find you the best and strongest stocks. Now is the time to get out of these positions, even if it comes at a significant loss, and to move on to more promising plays on our Buy List.

It is interesting to notice that, according to his Portfolio Grader, ONP is still a buy, but he sells it for a 58% loss in 6 months.