Something smells in the TMF land...(Uncovering the hidden truth)...
I’m sure you’ve all heard about the Hidden Gems – one of the TMF’s paid-subscription stock picking services focusing on small, not widely followed companies.
One thing I always thought about this service when I would see its returns against the S&P500’s returns on the TMF’s front page is “Hidden Gems are sure well hidden from the TMF’s analysts”. The reason, as far as I can remember, the Hidden Gems has always leg the performance of the S&P500 by quite a bit (I think that was due to their heavy bet on small Chinese companies, which btw., turned out to be hiding something pretty big – that they are fraud.
This is exactly why I was very surprised to see today, in the same front-page table with the returns of all TMF’s per-pay services, that the Hidden Gems is supposedly significantly outperforming the S&P500 (61.56% for HG vs. 37.46% for S&P500).
How’s that possible???
I checked my old records, and have a proof that in July of 2012 Hidden Gem’s return was only 14.4% (since inception of the service) while during the same period S&P500’s return was 79.90% (to see the proof of it, click on my July 2012 post “The Motley Fool Pro – what am I missing here?”)?
I don't doubt that it's possible the Hidden Gem's performance has improved as of late, but how is it possible that the S&P500’s return went from 79.90% in 2012 down to 37.46% in 2014 (market was up last two years, as far as I remember)???
At first I thought they possibly made an honest mistake and reversed the returns for the two (new people or people on the 3rd shift tend to make mistakes like that), but that can’t be the case as that would still mean that the market's performance went down from 2012 (79.90%) to 2014 (61.56%).
So what happened?
I can only think of two possible scenarios (excluding the possibility of TMF hidding the real returns by making up numbers that make them look good):
1. Someone made an honest mistake and somehow messed up the numbers (my bet is on the 3rd shifters), or
2. At some point TMF decided to forget the past (bad) performance and start all over from scratch.
Either way, this is not right.
Especially if they decided to "erase" the performance for the period when they severely underperformed against the market, which is what I’m thinking happened here.
I don’t think it’s right to advertise the "good-looking" numbers for this service without being transparent about the past performance.
Basically, I think the public deserves an explanation.
If you don't hear from me for a few days, please go to the police - you know who is responsible for my disappearance.