GorillaTrades Unmasked

Stockpicking site GorillaTrades and its anonymous founder have garnered some buzz with splashy ads, but the record fails to live up to the hype

by Ben Steverman

Thousands of people are investing their hard-earned money following the advice of a gorilla: not an actual primate, of course, but the mascot for a secretive but heavily advertised stockpicking service called GorillaTrades. The service charges members $600 a year for stock picks based on a proprietary blend of technical-market signals.

But does the gorilla deliver for investors? A BusinessWeek analysis of the service's picks found they performed far worse than the stock market as a whole.

The company has attracted attention thanks to its quirky approach and heavy advertising. It has refused to divulge the identity of the firm's founder and chief spokesman, who calls himself "the gorilla." Nor does it give out results on the overall performance of his picks. However, BusinessWeek has learned that the gorilla is a former stockbroker named Ken Berman, in Jupiter, Fla., who has confirmed that fact in an interview.

GorillaTrades' frequent ads, on cable business channels and in financial publications, praise the gorilla's ability to pick stocks with "explosive" potential. The firm says it spent $5 million on ads last year. Newly hired pitchman Davy Jones, of the 1960s band The Monkees, asks: "Why trade like a monkey when you can invest like a gorilla?"

Too Good to Be True?

Here's how it works: Every evening the simian stockpicker sends out an e-mail recommending stocks to buy or sell short, along with a commentary on that day's stock market. Recent picks have included Fiserv (FISV) and Trident Microsystems (TRID), which provided double-digit losses this year, and First Data (a private equity buyout target this year) and McDermott International (MDR), each of which scored handsome double-digit gains. The $600 it costs to join is an amount one ad says "many subscribers say they make back in their first trade or two."

But is it that easy? Readily available data from GorillaTrades make it difficult to evaluate its true, long-term record, but a BusinessWeek analysis suggests subscribers would do far better parking their money in low-cost, tax-efficient index funds, as many mainstream financial advisers recommend. While the broader stock market has racked up big gains in the past three years, a portfolio of GorillaTrades picks falls well behind the inflation rate. GorillaTrades picks even lost money in 2006, when the broad Standard & Poor's 500-stock index was up 12.8%.

Nonetheless, some subscribers say GorillaTrades is worth every penny. "I don't think you can miss with it," says Bruce Liebowitz, a small business owner in Farmington Hills, Mich., who first signed up after learning about the service on an Internet message board in 2000. He wishes the gorilla would start a mutual fund.

The Origin of the Ape

Berman, 43, attended the University of Michigan and, after dropping out of medical school, worked in his father's furniture store. "It didn't interest me," he says. "I was sitting in the back room trading stocks with my broker." A recent GorillaTrade ad claims "the Gorilla" "maintains a network of financial insiders gathered throughout his 25 years in the industry." However, Berman says that after moving to Florida he spent seven years as a stockbroker, at PaineWebber and Smith Barney, before starting GorillaTrades.

In his pre-gorilla days, Berman says, he turned $250,000 into $5.5 million in the dot-com-fueled bull market of the late 1990s, using both risky strategies like leverage and also a new stockpicking method he had developed. That method chooses stocks based on 14 technical criteria, two of which he won't disclose.