What’s Altucher’s $5 “Big Buy Alert” Stock? Pick teased as, “I’ll Invest $50,000 into this $5 stock before 2pm on Wednesday”

by Travis Johnson, Stock Gumshoe | September 17, 2024 1:50 pm

Promo for Altucher's Microcap Millionaire says, "out of all 8,000 stocks in the market… It is the ONLY stock that sits at the center of his 3 major wealth trends. But it won’t stay cheap for long. On Wednesday at 2pm ET, it may be too late to buy in."

What is it? And what are Altucher's other four "microcap superstocks?" Thinkolator answers below...

Another week, another James Altucher[1]’s tease about huge riches… this time it’s in an ad “presentation” with Doug Hill[2] for his Microcap Millionaire service ($2,495/yr, 90-day period to cancel for Paradigm credit, no cash refunds)… and Altucher focuses on one particular stock that he says he’s going to buy before tomorrow’s Fed announcement.

Here’s how the ad begins:

“$50,000 BUY ALERT!

“On Wednesday, September 18 @ 2pm ET, I’m investing $50,000 in a tiny, little-known stock trading for less than $5 per share”

The ad is one of those super-annoying “interview” presentations which doesn’t provide us with a transcript, so my paraphrasing and quoting will probably be a little bit off throughout… but we’ll go through the basic idea, see what hints he drops about that $50,000 buy he’s making tomorrow, and get you on your way to understanding the investment. Ready?

The basic timing “catalyst” from Altucher is based on the expectation that the Fed is going to cut rates, tomorrow and that will help some stocks boom — which is certainly possible, though at current valuations it’s also pretty likely that it’s “priced in” to some degree… investors all expect Fed rate cuts, everyone’s just speculating about how big the cuts will be, and what Jerome Powell might say about the trajectory of future rate cuts.

And there is some justification for that argument — Altucher says that rate cuts are good for the market, generally speaking, but that they’re better for small cap stocks than they are for large cap stocks. He says that’s because small caps are more dependent on debt, and we can argue the reason, but it has generally been true that rate cuts help smaller cap stocks outperform large caps (sometimes a little, sometimes a lot).

His argument that this is the best time in 50 years for small caps and microcaps to outperform is partly based on this chart from his presentation — it shows the rolling five-day periods during which small stocks outperformed large caps (presumably the microcap index vs. the S&P 500, or something like that), and he says that the biggest outperformance, that 9.55% move was just recently, in July, so he thinks we’re primed to see small caps outperform for a long time — like they did in the 14 years after that 2001 period of outperformance.

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Whether that’s just because large caps got too expensive and popular in 2000 and today, or because smaller companies are more rate-sensitive, or whatever else, that’s a pretty widely held expectation. Small cap stocks outperformed from 2001-2014 or so, by most measures, and have under-performed for the past ten years, and those cycles have tended to flip through market history… so probably it will flip again.

Someday.

And yes, small cap stocks are generally cheaper than large caps today, and have tended to outperform during times when the Fed is lowering interest rates. “Tend to” is an important qualifier there, of course, especially when you’re talking about individual small cap stocks — those are market averages, covering very long periods of time, and the folks who come up with the data don’t always use the same methodology (ie, do you include the unusually large number of small companies that are banks, or not? How small is small? Which index? What about causes for rate cuts?)

Here’s some good broader-picture perspective on that from earlier this year, if you want a little more background: “Is the Small Cap Premium Dead?” from A Wealth of Common Sense[4], “What’s driving the rotation into small-cap stocks?” from J.P. Morgan[5], and “Four Reasons We Believe Small Caps Are Compelling” from Kayne Anderson Rudnick[6].

And the reasoning Altucher gives for this one particular stock recommendation is that…

“Out of the 8,000 publicly traded stocks, there’s really only one company that rests at the epicenter of my three favorite investment trends

“AI, cryptocurrencies[7], and microcaps…

“This tiny $5 stock sits at the very center.”

And even though everyone knows the Fed will be announcing a rate cut of some sort at 2pm tomorrow, Altucher says, “Once the event occurs, it will be too late to get in…”

So that’s your “FOMO” pitch, which pretty much every high-cost newsletter ad requires. They know full well that if you stop to think it over, and do some research, and ponder the risks… and pay attention to the fact that once you subscribe, you can NEVER get your money back… that will give you alligator arms when you reach for your wallet.

Because yes, it’s all well and good that they offer a “90-day guarantee” when signing up… but they’re also not going to give you back your $2,495, no matter what. That 90 day guarantee just means that during that period, you could swap out this for $2,495 worth of credit that you can use to buy some other Paradigm Press[8] newsletter… which means the publisher risks nothing with this guarantee. You can swap out for something else that Altucher writes, or you can buy something from Jim Rickards[9], who mostly writes about how the world is going to hell in a handbasket and the deep state is going to steal your money and you have to buy gold[10], or Ray Blanco[11], who makes speculative tech and biotech stock picks that are pretty similar to Altucher’s.

This is the core money-making engine for most publishers: Convince people that your pundits are experts, build up a group of subscribers who are willing to sign up for a free letter or maybe pay $50 for a basic monthly newsletter, and then pound them with ads for “upgrade” letters or lifetime package deals that are nonrefundable. Then go find some new folks to pour into the top of that marketing funnel, and do it all again.

That doesn’t mean some higher-cost letters aren’t of some value, to some investors — but it does mean that signing up for them in the heat of FOMO, when you’re dying to learn a “secret,” usually leads to disappointment.  I don’t know if our ratings system[12] is particularly fair when it comes to those various Paradigm Press newsletters, but I’ve written about teaser ads from Rickards and Blanco and Altucher many times, and I’m not exactly going out on a limb when I say that the reader feedback about those folks has been more negative than positive.

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So yes, your “FOMO” moment here is that Altucher thinks this opportunity will be “like going back and buying stocks like NVIDIA two years ago, when prices were still cheap.”

(Of course, NVIDIA was not actually cheap two years ago, not by any conventional metric — it was cheap relative to the crazy growth they were about to have… but nobody knew that was coming in August of 2022. Back then, believe it or not, the breakthrough ChaptGPT AI service hadn’t yet been released to the public, AI was still an interesting hypothetical that investors didn’t think about very much, it was more about self-driving cars than about replacing knowledge workers or writing essays for dumb kids, and analysts were still quite convinced that NVIDIA’s earnings in 2023 would be flat, or maybe even fall a little bit).

So… what do we learn about this particularly stock that Altucher is going to buy tomorrow?

He says it was also the “number one stock back in 2020, the last time we saw this wealth shift occur.”

Which means it boomed during COVID, which also happens to be when rates were cut to zero to try to stimulate the economy during the pandemic shutdowns.

And specifically, he says it posted a 5,341% gain in 2020. So I guess it was some kind of bonkers speculative stock back then, too.

Which makes sense, since Altucher says this is both a cryptocurrency stock and an AI play.

What other clues do we get?

He says they mine Bitcoin and stake Ethereum, and have also swapped out a lot of Bitcoin for Ethereum, which is what Altucher thinks they should be doing (because it provides more upside). This is apparently a next-generation crypto miner that has made some extremely strategic portfolio allocations ahead of the next bull run in crypto, but they’ve also diversified outside of crypto… the company has also found a unique way to profit from the large demand for AI large language models, and it’s a microcap worth about $500 million. And he think sit can go up 10-20X over the next 1-2 years.

And the company now owns $100 million worth of Ethereum alone, Altucher says… but it’s a tiny fraction of the size of other miners like Marathon Digital (MARA)

He also mentions the “halving problem” that hurt bitcoin miners earlier this year — that’s a reference to the latest bitcoin halving, when the reward for mining bitcoin was cut in half. Altucher says all the miners knew this was coming, so they started to diversify how they make money.

And that’s where the “AI” comes in — they have large mining operations with supercomputers… and if mining isn’t worthwhile, they can instead lease that exact same infrastructure to AI companies who are building large language models. So last quarter Altucher says they brought in $8 million leasing their computing power to AI firms, after zero the quarter before. And he says there’s still huge demand for this… and that when the stock sold off going into the halving, 27 different hedge funds[14] increased their positions, so there’s some “smart money” betting on this stock.

So what’s “Bitcoin’s #1 Superstock” that James Altucher will be buying as “the number one crypto for massive gains?” That’s Bit Digital (BTBT)[15], which is a stock he has also hinted at in the past for previous Microcap Millionaire pitches.

And it’s kind of an interesting play, if only because it has become profitable and holds a fair amount of crypto and cash, but doesn’t have any debt (their profitability in any given quarter is driven by whether their portfolio of cryptos rises or falls in value… but if you ignore that, the operating business is profitable). So IF cryptocurrencies do soar higher again, perhaps because of election angst or changes in interest rates or whatever else, it’s likely that Bit Digital will follow suit. Here’s how they describe themselves:

“Bit Digital is a sustainability-focused infrastructure platform for digital assets and artificial intelligence. With Bitcoin mining operations in the United States, Canada[16], and Iceland, and diversified revenue streams in Ethereum staking, Bit Digital has expanded its expertise with Bit Digital AI, a business line offering specialized cloud-infrastructure services to support generative AI workstreams.”

As of the last report[17], they did say they have more than 27,331 Ethereum and 682 Bitcoin in their treasury, which together, at the current price of about $2,350 (ETH) and $60,800 (BTC), would be worth about $105 million…. and they have 2,000 GPUs available for leasing for AI projects, they say their “256 servers” are currently generating $4.3 million in monthly revenue from AI work. The total liquidity, including their cash and their digital assets (ETH, BTC and USDC) is currently $217 million, as of the end of August, and they’re earning a decent return from that cash and from staking their Ethereum (roughly a 3% yield). So we can think of the company, at $400 million, as being roughly half backed by liquid assets… and what their data center access and their racks of servers, GPUs and mining rigs are worth, I don’t know what a fair price would be today… but it’s something.

This is obviously speculative, but with solid growth recently and the potential of rising crypto prices, particularly the potential for Ethereum to rise a little faster than Bitcoin, maybe it’s worth a speculation… particularly since they’re targeting $100 million of annualized AI revenue, and think they can get to that goal by the end of this year (that business is much more profitable than crypto mining… at least right now). You can check out their investor presentation[18] if you’d like to see their sales pitch.

So I’m tempted enough to get on board a little bit here… but I’ll do so in a constrained way, to get a little leverage[19] if I’m right but also cap my losses if I’m wrong and essentially “pre-commit” to a stop loss.   This might also be a rational candidate for the $100K Lock Box[20], given the potential growth, but I’m not quite ready to commit to that — so I’m not buying the stock directly.  I bought a vertical call option spread on BTBT — BTBT right now is trading in the $2.80s, and I bought the January 2026 $2 calls and sold the January 2026 $10 calls, for a net cost of a little over a dollar (roughly $1.10). Which essentially translates to making money if BTBT goes over $3 during the next 15 months — I get all the profit between $3.10 and $10, and I know that I can only lose about $1.10 or so per share if the stock goes bankrupt tomorrow. Not terribly different than buying and setting a 35% stop loss, which can also work, but I get a little leverage, and I can essentially write that maximum loss into the trade today and not think about it at all in the next year, so I don’t have to count on future me to make a disciplined decision about this trade. The possible returns from my $1.10 per share investment range from a loss of 100% of BTBT goes below $2 and keeps falling, to a gain of about 600% if BTBT gets to near $10 in 15 months.

Small speculation on my part, but I don’t have much exposure to cryptocurrencies, and I like the clean balance sheet and the early success of their GPU leasing for AI work, so we’ll see how it turns out.

Incidentally, this was also one of the stocks that James Altucher teased in his Superstock Summit at the end of July[21]… and he’s also again re-teasing the other four stocks he touted at that time, throwing them in to the various “special reports” he’s including with this subscription deal, so I’ll just repeat the answers about those other four “superstocks” so you’ve got that background — this is my summary of the hints they dropped back in July, not the differently-worded clues he used this week, but they are clearly the same companies this time around:

The five stocks are split among three special reports… the first one teased is “The Second Wave: 3 Superstocks leading the AI 2.0 revolution”…

Basic idea is that the next wave of winners in AI will be on the software side. The biggest winners will be the companies who are solely focused on software. Each one is worth about $500 million, maybe a little less, and they’re using AI in multiple industries.

Clues about the first one?

It’s focused exclusively on data, and is a leader in its field. You can’t do AI without large amounts of data

Last year it signed a major deal with one of the world’s five largest technology firms. Recently signed another deal with one of the Mag 7, worth over $40 million in annualized revenue. Have now secured deals with five of the Mag 7, working on the other two.

The business is helping customers use data to create white label generative AI projects. Financially rock solid, revenue almost $100 million, and they turned a small profit last year.

That’s Innodata (INOD)[22], which did indeed recently announce a deal with a “Mag 7” company that they say will lead to $44 million in annualized revenue… and they did just become marginally profitable last year, with about $86 million in revenue. Valued at about $500 million today at $18 a share, so trading at about 6X sales and 150X expected earnings (only two analysts, so take that estimate with a side of caution). Their last Investor Presentation is here [23]if you want their overview — good growth, improving margins, some AI optimism, and that’s all I know about these guys offhand.

Next?

AI applied to the field of medicine, develop next-gen medical imaging systems at much lower cost.

Founded by a serial entrepreneur who established more than 20 companies and set up more than 70 patents

Has access to 30 million patient record and 500 million medical images.

Revenues up 1,000% from two years ago. Rev much smaller than the $50 million he’d rather see, but growing.

Steve Cohen from Point72 bought over $3 million worth of the stock just a few months ago.

Cathy Wood and Ken Griffin both bought, too, about $3 million each, normally they’d focus on larger stocks. Only a tiny stake.

That’s Nano X Imaging (NNOX)[24], which we might remember mostly because the stock got a stupid boost in February when NVIDIA had to file its first 13F[25], reminding the world that they have owned a little bit of NNOX for along time, a result of an earlier partnership between the two. Super tiny business, not really growing much in terms of revenue at the moment, but still arguably elevated by that NVIDIA connection, last business update is here.[26]

And the third one…

Last is personal favorite of these three, security company that specializes in identity verification, biometrics, fraud prevention and other cybersecurity[27] stuff, becoming an increasingly huge issue.

Emerging leader in its field, several fortune 500 companies are already on board, millions of customers

Helped one of the UK’s four largest clearing banks achieve a substantial drop in fraudulent applications
Helped Virgin Money completely digitize its customer journey, sped up application process and helped them get new customers.

That’s actually a stock which is already in our $100K Lock Box, Mitek (MITK) — that Virgin Money case study is here[28], and the UK bank (NatWest) study is here[29].

Mitek got its start handling imaging for mobile check deposits, and has built on that to do mobile ID verification for banks and similar entities. They’ve had a rough time catching up with their filing obligations and couldn’t file real financial reports for more than a year, and they were in the doghouse as a result, but they seem to have finally caught up with their accounting, and they’re growing at least a little bit again. Currently at 13X forward earnings, so arguably value priced, but when you spend a couple years screwing up your filings that makes many investors wary. Fingers crossed that they’ve fixed the issues.

And there are two others… here are my notes about the hints for the first one, which is a 3D printing company…

Altucher’s favorite stock, “Deal of a Lifetime” report.

Nothing to do with AI or bitcoin

Quietly emerging as a dominant player in a new mode of manufacturing

3D printing, benefits from broken supply chains. 97% of manufacturers expect to use it more over next five years.

Uses 3d printing to create circuit boards for microchips.

Making inroads in aerospace, defense, automitive, medical, telecom.

Revenue is up nearly 2,000% in last four years since 2020

Still only worth about $500 million, sitting on over $800 million in cash.

Mar 2020 to feb 2021 stock went crazy, they sold a ton of shares to fund next level of growth, then they sold off, became probably the biggest bargain that I have found.

Company and all its assets worth maybe $1 billion, market says it’s worth about $500 million. Someone will figure this out and it will more than double in price, and the revolutionary tech could send it much higher than that. Best chance of 1,000% gains.

That’s almost certainly Nano Dimension (NNDM)[30], which does have about $793 in cash on the books at the moment, thanks to equity raises in 2020 and 2021. They’re trying to use some of that cash to buy another former darling, Desktop Metal (DM)[31], for about $180 million, so the cash balance will be declining and the revenue will grow considerably if that happens.

Back to September again now…

So BTBT is now his favorite, and the one he’s investing in personally… but Mitek (MITK) is perhaps his second favorite, as implied by the presentation… and six weeks ago it was NanoDimension (NNDM) that he thought was the “deal of a lifetime” heading into the Fed’s rate cuts this year. Perhaps a grain of salt is warranted in our assessment of what being his “favorite” at any given moment in time might mean.

Incidentally, here’s the chart of how all five of those stocks have done since Altucher hinted at them in his “Super Stuck Summit” on July 25 (that orange line at the top is the S&P 500… so those “super stocks” have clearly not had their day in the sun of late):

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Might that all change when the Fed announces its rate cut tomorrow?

Well, investors in all of those stocks have known for months that there will be a rate cut… and have been betting for at least the past month that it would be a more dramatic 50 basis point cut, rather than the 25 basis points which was seen as more probable earlier in the year. And that near-certainty of a rate cut hasn’t caused any of those stocks to do anything exciting in the last month.

Which is not a surprise. The data doesn’t tell us that smaller companies soar on the day that rates are cut… it tells us that they generally, on average outperform larger stocks during the years following a rate cut.

Will any of these five be among those outperformers in future years?

That’s a much more nuanced guess to be making, and I think you can take your time — those stocks will still be trading next week, and next month, and they probably won’t soar dramatically tomorrow at 2pm. You can take some deep breaths, read some filings, think about valuations and risk, and make your own call.

Have a favorite among those five? Think they’re all great or terrible microcap ideas? Let us know with a comment below… thanks for reading!

Disclosure: Of the stocks mentioned above, I own shares of Mitek and NVIDIA, and I have a January 2026 vertical call spread on Bit Digital.  I also own some Bitcoin and Ethereum. I will not trade in any given stock for at least three days after publication, per Stock Gumshoe’s trading rules.  

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