About Jack

 
  To better understand Jack's investment approach, it is helpful to know who he is and how he views the stock market. The following will give you some insight:

A BRIEF BIOGRAPHY OF JACK ADAMO

Jack Adamo began self-educating himself in the ways of the stock market in the early eighties while the economy was mired in recession and inflation. Despite the prevailing negative environment for equities, he soon saw that with his analytical nature and common sense, he was better at judging investments than most market gurus of the time.

Never one to do things half-way, Jack returned to college to study accounting in order to better understand the intricacies of corporate finance. He made the Dean's List and graduated Summa Cum Lauda. He recalls with a smile that on more than one occasion, he had to discretely take aside a professor to correct him on some point of investment fact. Jack's years of experience had already given him a post-graduate understanding of the ways of Wall Street.

Following The Insider Connection

Jack's career path clarified when he became interested in Insider transactions through a chance encounter. After reading several glowing broker recommendations of MCI stock, Jack noticed that MCI Insiders had been dumping shares like crazy. After some investigation, he learned that the company had just put on a "dog and pony" show for stock analysts, where they spoke enthusiastically of the company's prospects. Several months later, when the Insiders were safely out of the stock, it took a big drop on a disappointing quarterly performance.

With this sharp lesson serving as his inspiration, Jack visited SEC offices in New York and Washington, D.C., and practically camped out at the Rutgers University Law Library, to learn the intricacies of the rules for reporting Insider transactions. He studied published academic reports on the subject, and even did his own statistical research on years of reported data.

Where It All Led

In 1992, the company that was eventually to become Insiders Plus was formed. After successfully uncovering many profitable Insider gems for his clients, Jack was invited to write a newsletter on Insider transactions for the largest publisher of financial newsletters in America. From the mailing of his first issue to the mailing of his last issue, three-and-a-half years later, Jack's recommendations showed an average gain of 30.9% for an average holding period of 11.8 months.

With this success under his belt, Jack decided to publish Jack Adamo's Insiders Plus and Jack Adamo's Option Income Advisor. While following Insider transactions is still a substantial part of his work, one of the main reasons Jack wanted to self-publish was so that he could share his considerable investment skills in areas besides Insider transactions. His new publications do so.

JACK'S INVESTMENT PHILOSOPHY

The widely expounded "Efficient Market Hypothesis" states that you can't outperform the market because everyone gets the same information at the same time. Jack has always known this theory is deeply flawed. (Indeed, the original proponent of it has repudiated it, but it is still taught.) 

It is not the availability of information that determines investment success, but the correct analysis and judgment of it. For example, Jack recommended shares of IVAX Corporation in August of 1998 when conventional wisdom and virtually every Wall Street analyst said stay away. Jack saw that the company was doing all the right things to turn itself around and the heavy Insider buying wasn't phony public relations buying, but the real thing based on the profit motive. Jack's subscribers are enjoying a nearly 700% profit in IVAX after 2 years.

Information without sound analysis and good judgment is just noise.

Another flaw in the Efficient Market theory is the fact that corporate Insiders get information before the public does, and they get a chance to act on it first. By judiciously analyzing Insider transactions, it is possible for experienced observers to get a big jump on stock price movements.

JACK'S METHODOLOGY

Jack understands that buying a stock is buying a share of a company. His valuation methods emphasize the analysis of company fundamentals, as well as industry and economic trends. Transient noise, like market sentiment, is given little weight. As the recent fate of the dot com stocks shows, sentiment can evaporate suddenly, and with gut-wrenching effect, when it is not based on sound fundamentals.

But this can work both ways. Given that market sentiment is the most volatile component of a stock's price, Jack takes advantage of this to find opportunities when a specific stock, or a whole industry is mis-assessed. His readers made over a 400% profit in less than one year on his recommendation of Oracle Corporation after a big, but short-lived price drop in early 1999.

Jack looks for companies whose intrinsic worth, based on their earning ability, is not yet reflected in their stock price. This worth is often unearthed by a company's price/earnings-to-growth ratio, a measure that he pays a lot of attention to. (Read Jack's article, THE DEEP LOGIC OF PEG for more information on this very enlightening subject. It may completely change the way you look at investing.)

In-depth analysis of financial statements, especially the cash flow statement, is an important part of Jack's work. This type of analysis is the one thing most investors aren't qualified to do. Even professionals make horrendous mistakes by paying too little attention to the cash flow statement. Jack's expertise here pays dividends by avoiding debacles like Rite Aid. Despite heavy insider buying reported in the financial press, Rite Aid was a textbook case of Insider buying you should ignore, and cash flow statements you should heed.

Constant monitoring and analysis of Insider transactions is another important part of Jack's work. Though there are many misleading signals today, there are still plenty of gems to be found by those who know how to see through the fog. Gains like IVAX Corporation's 700% rise after Jack's recommendation, Avid Corporation's 104% gain in 4 months, and Winsloew Furniture's 94% gain in the 21 months after Jack's recommendation, are all good examples.

For many more recent examples, see An Introduction To Jack Adamo's Insiders Plus on our homepage.

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Copyright 2008 by Jack Adamo. All rights reserved.