The Hook
Cabot Value Investor, $197 a year with a 30-day refund, is running an ad that opens with a value investor’s quiet lament: “A promising company rarely comes with an invitation that says, ‘Now is the perfect time to buy.’” When a stock looks cheap, there are usually reasons, the ad admits. Earnings disappointments. A struggling division. Headlines that make you want to wait for things to look better. The pitch, from editor Chris Preston, is that waiting for confidence is exactly how you miss the price that made you nervous before it looks like the opportunity you wish you had taken.
It is a refreshingly honest frame for a financial promo. The ad then teases two of Preston’s current BUY recommendations, both large, familiar companies trading far below their peaks while their businesses keep growing. StockGumshoe covered the first pick and the second in two articles on the same day.
The Big Claim
Two specific claims anchor the pitch. The first company has “total annual revenue that has essentially doubled from fiscal 2020 to fiscal 2026,” while its share price sits at “barely more than a third of its October 2020 peak,” and its cloud revenue “rose 45% in the latest reported quarter.” The second is “a streaming powerhouse whose shares have fallen sharply, even as its business continues to grow,” with revenues up about 14% and earnings up about 42% this year, trading more than 40% below its peak. The claim is not that these are undiscovered; it is that the price has fallen further than the business’s prospects justify.
The Mechanism
The first pick is Alibaba (BABA), the Chinese e-commerce and cloud giant. The mechanism here is genuinely interesting and worth unpacking. Alibaba is not just an online marketplace anymore; it has become one of China’s leading cloud and AI infrastructure providers. Its cloud revenue grew 45% in the most recent quarter, and it is building out data-center capacity at a scale comparable to the US hyperscalers. Its Qwen family of AI models is quietly competitive: Airbnb has integrated Qwen to lower token costs, and even Amazon is reportedly using Qwen to optimize AI spending. On the numbers, BABA is cheap by almost any Western yardstick: less than 14x forward adjusted earnings, with earnings growth of 70% this fiscal year, 40%+ next, and 30% the year after. Revenue has roughly doubled from fiscal 2020 to 2026.
The second pick is Netflix (NFLX). The mechanism here is the streaming subscription model with its unusually favorable unit economics: content is expensive to make, but once made, its cost is essentially booked, and every new subscriber or retained subscriber it attracts arrives at near 100% gross margin. Netflix remains one of only two streaming platforms that are obviously valuable and irreplaceable, alongside Alphabet’s YouTube. YouTube captures about 99 minutes of daily viewing per user globally and Netflix about 94; in the US, YouTube has a 14% viewing share and Netflix about 8%, with no one else above 5%. Netflix has 325 million-plus global subscribers and more than 250 million ad-supported viewers, and it keeps compounding its content library, including a large volume of non-English production that gives it durable local appeal. Our What Takeover Targets Won’t Tell You About SpaceX’s Secr… article covers the details.
There is a broader backdrop worth naming, because it is the quiet thesis behind the whole ad. For years the market has rewarded narrative and growth over valuation, and now the pendulum may be swinging. StockGumshoe noted that even NVIDIA has come down to a historically low forward P/E ratio, which is the kind of thing that happens when the growth trade starts to hand the baton back to the valuation trade. If the next cycle belongs to companies whose prices finally reflect their fundamentals, then a value investor like Chris Preston is fishing in the right pond. That does not make either pick a guaranteed winner, but it does explain why a $197 value letter is running this particular ad right now.
The Real Pick
| Ticker | Company | Current Price (10/05) | Tease Price | Change |
|---|---|---|---|---|
| BABA | Alibaba Group (ADR) | $110.80 | $105.85 | +4.7% |
| NFLX | Netflix Inc. | $67.50 | ~$67 | ~0.0% |
Prices are from Polygon as of the October 5, 2026 close. The Alibaba tease price of $105.85 comes from StockGumshoe’s Teaser Summary; the Netflix figure is approximate from the article body (“just under $67”).
Does the Math Check Out
For Alibaba, the math mostly holds up, but the discount has a name. The stock trades at less than 14x forward earnings with 40%+ growth, which would be a screaming bargain for a US company. The reason it is not priced like one is that it is not a US company. Foreign ADR holders do not own Alibaba directly; they own a Cayman Islands shell that holds contractual rights to the profits of a company whose operational licenses, voting control, and ultimate veto power all sit with Chinese executives and the Chinese government. That VIE structure is tolerated, not endorsed, and it is the single biggest reason the stock trades where it does. Add the regulatory crackdown history and Jack Ma’s three-month public disappearance in late 2020 for speaking too freely, and the “cheap” multiple is a political-risk discount, not a free lunch. Charlie Munger put a large slice of Daily Journal’s portfolio into Alibaba in his final years, which is a real vote of confidence, but even he could not convince Buffett to follow. The bullish case, which Munger clearly saw, is that a dominant AI and e-commerce leader in the world’s second-largest economy at under 14x forward earnings is a historically rare setup, and the discount has often been widest precisely when the fear was loudest.
For Netflix, the math is more straightforward but the multiple is doing some of the work. The forward P/E is near the lowest it has ever been, comparable only to the global financial crisis and the 2022 inflation panic. But that low multiple reflects real deceleration: Netflix no longer reports subscriber or ARPU numbers, content costs keep climbing, and it carries roughly $20 billion in off-balance-sheet content obligations plus $7-10 billion in future stock-comp dilution. The failed Warner Bros. Discovery acquisition, abandoned after investors balked at the price, at least netted a $2.8 billion cancellation fee. The October 20 earnings report is the near-term scoreboard.
The Verdict
This is a genuinely defensible “growth at a reasonable price” pitch, and both names are legitimate value candidates for a patient investor who understands what they are buying. Alibaba is cheap because of China risk that is real and not going away; Netflix is cheap because its hyper-growth era is over and the market is still recalibrating. Neither is an “undiscovered” bargain, but neither is a broken business. For a value investor willing to hold through the discount, both are worth a close look, with Netflix’s October 20 report as the next concrete data point. The honest test, in both cases, is whether you can stomach the reason the stock is on sale in the first place.
What They Got Right
- The “price of waiting until everyone agrees” framing is genuinely good advice about the psychology of value investing, and it is stated without hype. For the specifics, our What Skousen Wealth Network Won’t Tell You About Elon’s… article is worth a read.
- Alibaba’s cloud and AI transformation is real and under-appreciated. A 45% cloud-revenue growth quarter and Qwen’s adoption by major US firms are concrete facts, not hand-waving.
- Netflix’s subscriber and viewing-share dominance is verifiable and durable, and the ~100% gross margin on incremental content is a real economic advantage.
- The ad is honest that buying a fallen stock can be an “expensive mistake,” and it does not pretend either pick is undiscovered.
What They Got Wrong
- The Alibaba pitch underweights the VIE risk. “Who really owns the company” is not a footnote; it is the reason the multiple is low, and the ad’s framing skates past it.
- The “revenue doubled, price at a third of peak” comparison for Alibaba cherry-picks a 2020 peak that was itself inflated by pandemic-era enthusiasm and a different regulatory climate.
- For Netflix, the pitch leans on a low forward P/E without foregrounding the decelerating subscriber growth and the rising content-cost and dilution burden that produced that low multiple.
- Bundling two very different risk profiles (a China VIE and a US streaming giant) under one “value” banner can blur how different the actual downside cases are.
Compliance Disclaimer
This is not financial advice. NewsletterVetter has no position in any stock mentioned. As a reminder, Alibaba’s ADR structure means investors hold a Cayman shell with contractual rights to a Chinese operating company, which is a risk the promo’s ad copy does not prominently flag.
NewsletterVetter is an independent publication. Nothing on this site is investment advice. Always do your own research.