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For those of you who have been following the discussion sparked by my previous blog entry titled Imitation, The Best Form of Flattery?, given below is Mr. Wagner’s response reproduced here with his permission.
“This situation was brought to my attention by one of my members. First, I take full responsibility for this problem. I do not condone any type of copying or plagiarism. In my next email tonight I will ask Seeking Alpha to remove the EMC article, taking responsibility for what happened, explaining how this happened, and what steps I am taking to assure it will not happen again.
Now I want to explain how this occurred. I hire Business graduate students from a local university to perform some research for me on a part time basis. I like to use students to help me as it provides them a way to learn about investing and gives them some work experience. This is with the approval of a professor who sponsors the students. Normally each student works about 5 to 10 hours a week, depending on their class schedule.
This semester I hired two students who do some basic stock research. Normally, they follow my thoughts, though I also encourage them to come up with their own ideas and bring them to me. We meet weekly to discuss current ideas and they present the research that they have performed. We then decided what stocks to work on over the next week.
One of these students brought ICON Clinical Plc (ICLR) to me in early February. I liked the idea as I often seek unknown companies that have the potential to do well. After more extensive research I added ICLR to my watch list and on February 15, 2007 I added it to my Premium Aggressive portfolio informing my members by email of the decision. I set the price at 42.90, the high of the day to help account for slippage and commissions. I did not know that you had also recommended ICLR. I also was unaware that you mentioned the ICLR article in your March 2007 newsletter. While I am a subscriber to your newsletter, it is placed in the “reading when I have time” folder. I rarely get to these emails, including yours and usually end up deleting the emails after several weeks.
I do not hold anything against this student for using your newsletter to get stock ideas. I just would have liked to known the source. I was told by this student that he got the idea from a recommendation from a friend who works for a biotech firm. He said his friend has contracts with this company and likes their service.
Regarding EMC Corporation (EMC) I had identified this company in my Themes for 2007 commentary for my Premium Members. I believe that in general technology companies do not do well in the first half of the year and then do much better in the second half of the year. My intention was to do more complete research on EMC later in the spring or early summer of 2007. If I liked what I found, I would add it to the Premium Members Watch List.
After reading about the EMC IPO of VMware in early March, I became more interested in researching the company earlier than I originally planned. In our weekly meeting with the two students in the middle of March 2007 I asked the same young man mentioned earlier to do some basic research on EMC. I use much of their material as well as my own research to prepare a detailed write up of each company I decide to include on my watch list. I also try to write an article on the company that I send to Seeking Alpha. These students know how the material is used and they also know of the articles I write. This student asked if he could help with the article and I said that would be fine. I had completed most of the work on the detailed write up on EMC and had scheduled to release it on April 4, 2007. It usually takes a couple of weeks of work to complete these write ups, as there is a lot of reading, listening to conference calls, etc to do. The next week on April 3rd, he came back with a draft of an article that was quite good (it turns out that this article was a copy of your piece on EMC from your news letter). I inquired how he did such a good job on this article and he replied, just hard work. I congratulated him on a job well done and asked if it would be a problem if I did not use it verbatim. He did not mind, though I told him he should plan on writing an article on another company in the near future. I rewrote parts of this student’s draft article and submitted it to Seeking Alpha to coincide with the release of the EMC write up on my watch list for Premium Members. That is the one you discovered that looked just like yours. I also added some lines from this article to the detail write up on EMC. I will remove these and make other adjustments as well to remove any hint of a copying problem. I am considering removing EMC from my watch list as well; to further separate my site from the problem.
I apologize for this problem and as I said at the beginning I do not condone copying of any kind. I am a graduate of the US Air force Academy and I live by the Honor Code they have: “I will not lie, steal or cheat, not tolerate those among us who do.” I am meeting with this student and his professor on Tuesday to address the problem. I am also developing procedures to prevent this type of problem from ever happening again. Unfortunately, it will probably entail limiting the kind of work I can ask of these graduate students, but that is the price we must pay.
I am also reviewing all your emails to be sure there have not been any other problems. I do not suspect any, as in my quick look at the companies in your portfolio; ICLR and EMC were the only ones that showed up. To be sure you are comfortable that I am not copying your ideas I am giving you full access to the Premium Members site for life. Should you find any problems, please bring them to my attention and they will be corrected immediately. I believe you are an honorable man and will not borrow my ideas inappropriately.
Regarding my site, I believe I offer a quality service that includes substantial research on each company with only 20-30 ending up on the Watch List. I then let every member know in advance of when I am making a buy or sell via email. Each buy is priced at the high of the day to allow for slippage and commissions. Each sell is at the close of the day. I also offer updates on the companies including stops, when to sell part of the shares and other pertinent information. Every trade is documented and made available. Each member receives a weekly market commentary that includes a thought for the week, as well as economic and trend analysis of the markets. I also include personal service answering each member’s questions. One of my goals is to teach members how to invest so they are more prepared to handle this important task on their own. They cannot depend on their company pension plan or the government to provide financial independence. I receive very good feedback and have a very high renewal rate. I believe the site offers a very good value, when compared to all the other fee based sites. I welcome your comments and critique.
I hope you understand how this problem occurred and recognize that it was not intentional nor part of an effort to copy your intellectual property. Please let me know what I can do to further correct this situation. I look forward to hearing from you.”