Louis Navellier is editor of the following investment newsletters: Blue Chip Growth, Emerging Growth, Dividend Investor, Global Growth and Quantum Growth. This review will focus on his Blue Chip Growth and Emerging Growth newsletters but is also pertinent to all his publications, as he essentially takes the same approach for all of his publications. The only real difference lies in the types of stocks selected for each newsletter.

Overview

Editor Louis Navellier is a former computer programmer who has leveraged his programming skills to become quite prominent in the investing newsletter world. His Blue Chip newsletter focuses on Large Cap Stocks and Emerging Markets focuses on small and mid-cap stocks. The Blue Chip newsletter has handily outperformed the Emerging Market newsletter over the past 5,10 and 15 years.

His stock selection process is part technical and part fundamentals. Technically he relies on increasing relative strength (positive price momentum) combined with lower volatility. This is combined with a financial analysis that is focused heavily on earnings growth, earnings surprises and increased margins. Due to that, one has to be comfortable buying momentum growth stocks after they’ve increased in price 50%, 100% or more.

Louis Navellier is an internal optimist who never attempts to time the market. He is always invested 100% in the market. While this can lead to market-beating gains in bull markets, it can also lead to extremely large losses for his subscribers during bear markets.

One of the strengths of all his newsletters is his market commentary. While his stock comments tend to focus on earnings and margin growth, his market commentary has focused on factors such as the dollar exchange rate, consumer and producer price indexes, transports, Federal Funds Rate, employment statistics, and the Presidential term cycle among other factors. If you read between the lines you can determine his true feelings on the overall stake of the market and certain sectors in particular. This can be extremely valuable insight from a market professional.
For his newsletter subscribers, Navellier provides a stock grader. The stock grader ratings can change quite rapidly after earnings or on breaking news.

Composition

On average there about 40-50 stocks in the Blue Chip Stock Newsletter. They are broken out into three categories: conservative stocks, moderately aggressive stocks, and aggressive stocks. It’s recommended that subscribers allocate 60% of their funds to the conservative stocks, 30% to moderately aggressive stocks and 10% to aggressive stocks. Guidance is not given on which stocks to choose within each category.

Once a stock is recommended the buy price keeps going up but no sell price is provided. Sell recommendations are made however as soon as a stock’s prospects change. Navellier will sell his losers quickly – often selling immediately after a poor earnings report.

The stocks that sold at a loss are not counted in the stated monthly returns of current holdings which is an annoyance of mine. He’ll talk about how well his buy list has been performing not accounting for the stocks that were recently sold for a loss. While accurate in real-time, this makes the returns of his stocks to buy list appear to be more attractive than his overall performance. I feel this is a bit misleading.

Positives

  • Louis Navellier provides excellent market commentary and insight. This also can be worth the cost of a subscription.
  • All newsletters provide very good growth and momentum stock ideas for investors to add to their portfolio.
  • Louis Navellier has a long track record of success in the industry.
  • The stocks recommended in the newsletter excel during the early to mid-stages of bull markets when growth and momentum stocks do particularly well.
  • Blue Chip Growth is one of the higher rated newsletters on the market.

 

Negatives

  • Navellier doesn’t make mention that he owns any of the stocks he recommends in his newsletters. One thing I really want to see in a newsletter editor is that they follow their own stock recommendations to a certain extent. Legally this should be noted in the newsletter itself.
  • Like most growth and momentum newsletters, the Blue Chip Growth and Emerging Markets newsletters both suffered significant losses of over 50% during the bear market of 2008-2009. Additionally, they underperformed the market during the 3 years prior to 2009 and during the downturn in early 2000.
  • Neither of the newsletters provides a live portfolio. You either have to have enough funds to maintain 40-50 positions or decide for yourself which stocks to buy and sell.
  • On his website, at the time of the writing, he claims his Emerging Markets newsletter has gained 1,198% in the last 12 years, outpacing the S&P 500 by 6-to-1. The website also claims Blue Chip Growth has gained 343% over 18 years, outpacing the S&P 500 by nearly 3-to-1. I haven’t been able to find data that replicate those returns including the Hulbert Financial Digest. The performance of his mutual funds also seems to question the validity of his published returns. I’m not saying that it’s incorrect, it may just be a matter of selecting time periods that reflect the best performance of each newsletter, as opposed to historical returns.

Louis Navellier Mutual Fund Performance

I was able to find three Louis Navellier Mutual Funds. When ultimately deciding how well his stock picking philosophy works, I thought it would be good to look at the results of his mutual funds for guidance.

American Independence Navellier Defensive Alpha Fund Class Institutional FMGRX. As  FMGRX has underperformed its benchmark and only garners two stars out of five from Morningstar.

American Independence Navellier Large Cap Growth Fund Institutional Class LGNIX lagged its benchmark and the overall market since inception.

American Independence Navellier International Fund Institutional Class IMSSX has done better the FMGRX with 3 star Morningstar rating but has slightly underperformed its benchmark index and carries higher.

Conclusion

Navellier provides some very good market insight in his newsletters. These can also be found for free on his website along with his stock and ETF graders.

He has been in the industry for a long-time and his Blue Chip Stock Newsletter is one of the better ones out there.

The ultimate goal for Navellier and Associates, like Motley Fool, is to use lower-cost newsletters to introduce and eventually convert subscribers to higher cost newsletters and money management services. There is nothing inherently wrong with this as long as the lower cost newsletters benefit the subscribers. If the subscriber makes enough money to afford the higher priced subscriptions and/or advice, it’s a win-win proposition for both.