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Otto Smackdown Watch: Casey Research and the right to reply

After yesterday's post that mentioned Casey Research and its buy recommendations on Antares Minerals, I received a mail from David Galland, partner in Casey Research. As I always appreciate hearing and airing points of view different from my own and I also think that anyone who has the wherewithall to stand up to my rantings deserves to be heard, I immediately wrote back to Galland and offered him the chance to get his mail published on the blog by way of 'Right To Reply' so that more people could read his objections to my post. So after he'd given his text a slight polish (just to knock off the edges, the post you'll read is for all intents and purposes the same as the original) he sent me what you can read below.

It's only fair that you get to read his point of view without any further comment, op-ed or snark from me, so there's none of that here. My views can wait for another day. I'll leave you with David Galland.


I generally appreciate your analysis, but am surprised at your intensely negative accusations about Casey Research.

Of course, you can't really know who we are - and so I would like to properly introduce myself, and Casey Research.

The short version is that I was a co-founder of a successful mutual fund group (Blanchard Group) and of EverBank, one of the few success stories in the pure online banking space.

But, when EverBank grew too big, I got tired of it and so agreed to join forces with Doug Casey, a friend of long-standing.

When looking over the business he was in, I realized that there was a huge competitive advantage to be had. Namely, in an industry dominated by one-man shops willing to essentially sell their recommendations, a company that based its recommendations entirely on hard research would likely do well. Put another way, when the sole criteria for a stock recommendation is whether the proverbial check will clear, we should be able to provide real value.

Insanely, we build a team that is now over 40 researchers and support staff (this was in 2004 when the bull market in gold was anything but a sure thing) - "insanely" because this, as I am sure you know, is a very cyclical business. Yet, I trusted Doug's analysis, and my own instinct, and we built the team anyway.

It has been a big win - for our subscribers, and as a enterprise.

Consequently, it's sincerely painful to read your blog accusing us of front running our subscribers. If you go back and review your latest article about Antares, you'll see that your evidence is solely a pick up in volume.

Louis James, the lead researcher and editor of our International Speculator, on seeing your accusation, sent this along:

Some relevant facts:

1] We said right at the top of the IS write up that CIA subs had bought earlier.

2] The company had major, value-adding news just before the CIA rec (huge resource increase) that accounts for the volume the writer finds so suspicious. It would have been beyond bizzarre if there had not been high volume then.

3] The company had major, value-adding news between recs that drove the price up (very favorable metallurgy). Ditto as above.

4] Many CIA recs never make it to IS.

5] IS regularly gets recs that were never mentioned in CIA.

6] It is, in fact, almost always the case that stocks pull back after sharp spikes upwards. There were plenty of people who could see our Buy as an exit opportunity -- everyone non-CR who bought before the CIA rec, for example.

I do not believe there is any honest way the author of those remarks could have missed the news that accounts for the share price action. It looks to me like plain and simple maliciousness

David, again. I am sure you pride yourself on your work – and so I won’t attribute mere maliciousness as your sole motivation. But, per Louis, the hard facts are available – and we are always happy to take a call and answer questions.

Now, I can't know your character, or your attitude about anything. Some times I have come across people who form an opinion, and they stick with it no matter what. Others will stop and listen - perhaps engage in a dialogue to see if they may have had a misimpression.

I'm reaching out to you on a personal level, because it sincerely pains me to read you denigrating our organization - and more than that, Louis James who is the most honest and hard working guy I know.

Even if, as a partner in Casey Research, I insisted that Louis write up some company - which I would never do - and he didn't like the company, he would quit on the spot.

In any event, as I said at the beginning, I understand your bias against any research service working in this space - because much of the time you are going to be right. But in our case, you are wrong.

Don’t take my word for it – instead take time to ask around about us, and feel free to contact me at any time to verify the facts, so you don't have to operate off of assumptions alone.

Thank you for your consideration in this matter.

David Galland


Casey Research