Under the Radar - The Quiet Risks That Drive Market Movements

Dear Benzinga Member,

This week I want to talk to you about one of the biggest risks we all face in life, in the financial markets, and almost all other aspects of our lives.

No one ever talks about it, but it poses a real danger to you and your family.

It is the biggest reason that most mutual fund managers underperform the indexes.

It is why no one wants to admit that things like value, money, and trends work better than traditional wisdom.

It is why professors in universities all over the world continue to teach things they know are false.

If you want to yank some risks right off the front pages, it is the reason that FEMA employees have been keeping people from taking risks to get aid back in the mountains of North Carolina and Georgia.

It is the reason politicians make promises they know they cannot keep.

It is why bureaucracies will always be miserable failures no matter how noble their original purpose.

It is not some evil collection of conspiracies or against civilization.

It is career risk.

Far too many decisions are based on doing whatever is necessary to avoid getting fired rather than on what is most likely to get the job done.

When the average Wall Street fund manager or broker heads into the office in the morning, their number one priority is not to make you money.

He or she has a mortgage, car payments, two kids in private school, country club dues, and a host of other costs that are required to keep up a certain lifestyle.

They cannot afford to lose a fantastic job with a big salary and the potential for monster bonuses.

The best way to not get fired is not to do anything different from the herd.

If everyone owns Nvidia NVDA, then you should own Nvidia for your clients.

If everyone is telling clients and subscribers to chase sucker yields with covered calls, then you should also suggest this strategy, no matter how awful it is.

The simple truth is that you will not get fired for doing what everyone else does.

There is safety in the middle of the herd.

However, history has shown us that you probably will not make much money either.

Sir John Templeton pointed out that it is hard to be above average if you own the same stocks and bonds everyone else does.

If you recommend Nvidia or Microsoft MSFT and it goes down, that is the market’s fault.

If you recommend an obscure company that owns a reservoir full of water in the Mojave Desert that has very little Wall Street coverage, and it goes down, it is your fault.

The truth is that Cadiz (CDZI) is a stock that almost every growth-oriented investor or market speculator should own.

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Cadiz, Inc. CDIZ

Source: Benzinga Pro

You do not need to own a lot, as unless Southern California finds an incredible new water source soon, this stock could easily soar 5 to 10 times its current price.

The company will be the chief architect and service provider of a public/private partnership to bring fresh water to communities in Southern California.

The Cadiz aquifer in the Mojave Desert stores 30-50 million acre-feet of water, more than Lake Mead, one of the region’s primary water sources.

Cadiz will build a pipeline to bring this water into Southern California’s populated and water-starved region.

The Bureau of Land Management has already issued the necessary permits for Cadiz to begin developing the pipeline.

The only analysts I am aware of following the stock are Mike Crawford and Griffin Boss at B. Riley, an LA-based research and brokerage shop that is a long-time favorite source of ideas with little career risk and lots of upside potential. They think that Cadiz will soon select a regional water utility to be their partner on the project.

Cadiz and the partner, most likely Metropolitan Water District, the largest water supplier in Southern California, will form a master limited partnership (MLP) to finance a groundwater storage bank as part of the project.

The analysts estimate that completing the Cadiz Project will help the stock soar to $15, or almost five times the current stock price.

For years, activists and environmentalists have worked to keep this pipeline from being built.

I feel this under-the-radar opportunity may be getting close to becoming a reality, and it could give investors a massive payout.

The analysts’ final time estimate will be too low, as once completed, the Cadiz project will solve major problems for communities in the region.

First, the need for water in the American Southwest is becoming dire. Southern California has had a water shortage and infrastructure problem for decades, which is worsening.

Your broker will not be telling you about this.

The financial media will not champion a stock that could take years to pay off.

That is short-sighted and smacks off what sells today, not what works for readers.

Cadiz is an updated call option for the water needs of the American Southwest. You are basically long water and the growing need for water in the region.

A small investment could pay off with huge returns for patient, aggressive investors.

Regards,

Tim Melvin – Editor, Benzinga Research

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