The story behind one of the greatest investment opportunities Matt McCall has ever come across
In 1999, I had a little money burning a hole in my pocket and I was looking for a stock, despite having no real idea what I was doing.
I was one year out of college and working at Merrill Lynch. I was the assistant of a successful stock broker who was reorienting his clients’ portfolios toward tech.
A friend of mine had just told me about a cool computer company I should look at — Apple. So, I went to my boss, told him I was looking to invest and brought up the name.
I don’t recall exactly how it went down, but my boss had another idea for me … an amazing phone-maker that allegedly was going to rule the world … Nokia.
He brought up the stock charts of Nokia and Apple over the prior 4-5 years and put them side-by-side for me. It looked something like the below, where Nokia had soared nearly 550%, while Apple had climbed a little over 100%.
My boss told me that while Apple would probably do okay, Nokia’s returns were illustrative of a much stronger investment, and one that was just getting started. The gains were going to be huge, and this was the stock for me.
You know how this turns out, but let me provide details so I can relive the pain once again …
Below we see Apple’s stock gains versus Nokia’s stock losses since that fateful conversation.
Apple has returned over 8,500% while Nokia has lost nearly 85%.
Nearly all of us have such a story.
Today, I want to try to help you prevent having a second one.
***“An investment that may have the biggest upside potential I have ever seen”
That quote is from our own Matt McCall, editor of Early Stage Investor.
That’s a bold statement coming from an analyst who — in just the past 10 years — has made over a dozen recommendations that have gone up 1,000% or more — and over 200 in the 100%-999% range.
So, what’s Matt referencing?
Chinese biotechs.
Now, if you suddenly feel deflated after reading that, I get it. After all, the majority of us tend to invest in what we know … and what we know are predominantly U.S. stocks. And the international stocks we know are usually the mega-caps that have become household names.
But Chinese biotechs?
Yes — and let’s turn to the numbers to illustrate why.
***The math behind 100X returns
As Matt has written to his subscribers, simply by looking at numbers, you can identify some of the greatest investment opportunities of a lifetime.
Let’s look at the numbers behind the case for Chinese biotechs.
From Matt:
• $5.4 billion: The current size of China’s biotech industry
• $15.7 trillion: The projected size of China’s economy (gross domestic product, or GDP) in 2020
• 4%: The percentage of GDP that the Chinese government would like the biotech sector to constitute in 2020
• $627 billion: The value the Chinese biotech sector must grow to in order to be 4% of GDP
• 116: This number sealed the deal for me. If China’s biotech industry grows to 4% of 2020 GDP estimates, it will increase 116X.
The Chinese government is getting behind an industry that it has publicly stated should grow 116X … in less than two years.
That’s the big-picture summary of this unprecedented opportunity.
So, when I read this, my first question is “how realistic is this?”
Here’s Matt with the answer:
To be honest, that kind of dizzying growth in two years would be pretty unrealistic in a free economy, but China is different …
The push in biotechnology isn’t the first time the government has backed an industry with what appear to be unrealistic goals. Ten years ago, China’s government was determined to grow the nation’s technology industry. It was a great opportunity for investors.
At the same time, a little-known technology company was starting to gather assets and extend its tentacles into all aspects of tech. It was a major beneficiary of the government’s support. Today, Tencent Holdings is one of the largest companies in the world. At one point last year, its valuation topped $550 billion. It was even mentioned as one of leading candidates to be the next trillion-dollar stock behind Apple and Amazon.
Tencent rose an eye-popping 67,000% from its IPO in 2004 through January 2018 before it was hit with the Chinese stock market sell-off …
(The Chinese government) is determined to put the industry on the same level with U.S. biotech … and do it in just a few years.
***To get a better idea of the specific types of gains possible, let’s look at the early, high-growth days of the U.S. biotech sector
Matt described this to his readers not long ago. The first biotechnology company to trade on a public stock exchange was Genentech, back in 1980. If you invested in Genentech on its opening day and held until the company was sold in 2009, you would have earned 157X your money.
Then there’s Amgen. It went public in 1983 for $18 per share. Matt tells us the stock has since gone through five stock splits and started paying dividends in 2011. Factoring all that in, an initial $10,000 investment would have turned into $7.14 million.
Or take Celgene. From the end of October 1987 through its high in 2017, the stock would have returned 420X your money.
Here’s Matt on the takeaway:
I think you see the pattern here. You can make big money investing in early stage biotech companies that are discovering world-changing drugs in a country that embraces medical breakthroughs.
That was the United States then. Today it is China.
By the way, speaking of Amgen, just two weeks ago, the biotech giant reported it is taking a 30% stake in one of Matt’s China biotech picks — BeiGene. The Chinese stock shot up 30% higher on the day, and has kept climbing. Matt’s subscribers who acted on his recommendation are up over 61% as I write. Of course, these gains are likely to be dwarfed by what’s to come.
***As we wrap up, I urge you not to brush off Chinese biotechs purely because they’re less familiar to you as an investment
If Beijing is even partially successful in hitting its growth goals, then this sector would still be returning multiples on your money. We all have “the one that got away.” Let’s not let this be another.
Matt has put together a special presentation on Chinese biotechs that dives into more detail than what I was able to address in this Digest. To learn more, click here.
Here Matt is for the last word:
This is undoubtedly one of the best early stage investment opportunities you’ll ever see in your life.
Get ready. We’re about to “partner” with one of the world’s most powerful wealth creating entities … and it’s going to move mountains in the pursuit of making our investments soar.
Have a good evening,
Jeff Remsburg
