Motley Fool One Becoming a Hedge Fund?

Motley Fool One Becoming a Hedge Fund?
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I received an interesting email this weekend from Motley Fool marketing – one that says that Motley Fool One is likely expanding into private company investments. Details were very limited but they’re talking about giving Motley Fool One members a chance to invest in pre-IPO companies. Some examples that were referenced were AirBnB, Homeaway, Facebook, and of course Uber.

The email mentions that a current Motley Fool Director, and former Paulson & Co hedge fund COO Putnam Coes, is now running the Motley Fool Investment Management business, and that Motley Fool One will be exploring private investments. The email then hedges (pardon the pun) a little bit and talks about private investments being part of their potential future.

The email came along side an offer for me to extend my Motley Fool One membership for another 3 years (at $13k total, claiming this is a $5k savings over their regular rate). As an enticement for doing that, they were offering the chance to join a call with Tom Gardner and Mr. Coes to learn more about this possible new investment strategy.

I won’t be extending my membership, so I won’t be able to join that call, but it seems to me that if Motley Fool is sending out marketing emails about private investing, it’s likely to happen.

It’s an interesting move for the Motley Fool, and part of their continuing evolution into a full fledged investment advisory firm, with the newsletters that made them famous becoming a smaller part of their business. My guess is that the newsletters will at some point serve mostly as a marketing funnel to pull investors into the Motley Fool universe, and then aggressively upsell them into Motley Fool One members at some point.

With companies staying private for longer than they historically had, private investing is no longer a matter of just investing in tiny start-ups with great ideas. However, it’s still a much different game than investing in public companies, and I’m not sure this is in the Motley Fool’s circle of expertise. They’ve tended to stumble quite a bit when expanding outside of their bread and butter, long term buy and hold, US-centric investing strategies (witness the recent demise of their Special Ops and Deep Value services). The beginnings of their Wealth Management business was also a series of technical and procedural missteps.

So I’m not overly optimistic about this new strategy either. At the very least, I’d sit this one out for the first couple rounds, see how they develop this new strategy, and maybe reevaluate a couple years down the road.

What about you? Does private investing by the Motley Fool sound like a good idea to you?

{ 5 comments… add one }
  • Anya December 10, 2016, 10:59 pm

    I just received a new email this morning about Explorer from MF. I think they’re wearing too many hats. Personally I feel they were doing an awesome job educating consumers about investing and understanding how to do just that. I believe they could’ve continued to do that and charge a small fee for those of us who wanted a little more coaching or information. I don’t believe this is a good move for them. They should stick with what they know best. I’m not so sure I will renew my SA subscription once it expires.

    Reply
  • Frank December 11, 2016, 6:42 am

    I think it’s a horrible idea, for the readership that is. SA has long been a source of excellent investing ideas, giving long-term stock recommendations as well as sound reasoning underlying these recommendations. As MF branched out into other more expensive newsletter services, I’m noting a perceptible drop in the performance of the new recommendations. Add to the mix the idea of private equity investing and 2 immediate thoughts come to mind. First, they are spreading themselves too thin, by trying to be too many things to too many people. More importantly, it’s beginning to look more and more like flagship products like SA are becoming nothing more than MF’s loss leader. I don’t like the trend I’m seeing and will very likely cancel my SA subscription upon expiration. Too bad, as it really seemed the Gardner boys and crew had the best interests of the “regular guy/gal” at heart for a long time. Now it seems to be all about growing their own business. I suppose that’s a natural evolution in a capitalist world, but I don’t need to like it…and I don’t.

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    • Anya December 11, 2016, 11:07 am

      Frank,
      I thought I was alone. I hate that they’ve done this. I’m also not going to renew my SA subscription either. I had just recently started feeling in my gut that something had changed in their secret sauce, but being a newbie investor I just couldn’t put my finger on it. After reading Kevin’s thorough analysis I felt like I dodged a bullet. I agree with you, they were both doing such an amazing job in the earlier years. But I guess our readership amounts to mere peanuts or crumbs in their book. So sad. I guess I will be adding Investopedia as my go to resource…sigh.

      Reply
  • Frank December 11, 2016, 12:54 pm

    Anya,
    I can’t speak for others, but I strongly suspect you’ll see a rash of posts here complaining about the same deterioration of SA as a solid source of investment ideas. Have to say I do agree with you…it is sad. Who knows, though, maybe they’ll see the light and ease up on the hyping of other costlier services (much costlier!) and redirect their attention back to the “regular folks” investors who got them where they are today. Only time will tell. Best of luck to you in all your investing endeavors.

    Reply
  • Anya December 11, 2016, 1:51 pm

    Thanks a bunch and same to you. I just hope that the people on the MF/SA discussion boards don’t change. I find myself only reading those and finding them to be invaluable and anything that David or Tom say, meh lol. I’ve learned quite a bit from those discussion boards. I’ll miss them when my subscription expires. In the meantime, I will make sure to peruse them every chance I get for all their goodies. lol

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