Forget 3D Systems Corporation and Buy These Stocks Instead

Who wouldn't want to own a stock that's shot up more than 2,000% over the past five years?

Despite losing nearly half of its value so far this year, 3D Systems  (NYSE: DDD  ) is a stock that has made investors a tremendous amount of money in recent years.

But not everybody is celebrating the stock's success. Whitney Tilson, the managing partner of New York hedge fund Kase Capital, thinks that 3D Systems and the rest of the 3D printing sector is simply over-hyped.

In an interview at the Berkshire Hathaway  (NYSE: BRK-A  ) (NYSE: BRK-B  ) annual meeting, Tilson said:

Most investors will, by far, be better off sticking to things like Berkshire Hathaway or AIG  (NYSE: AIG  ) or Citigroup (NYSE: C  ) ; solid businesses, trading at low multiples of earnings or book value. You won't have a lot to talk about at cocktail parties, but you're not going to lose your shirt either...

To see what else he had to say about the 3D printing industry, check out the video clip below. A transcript follows the video.

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Koppenheffer: Kase Capital now also has some short positions. Last year, tough year to be on the short side of the market.

Tilson: I'll say. It was a once every 10 years kind of year, where it was just carnage for short sellers, and a lot of people gave it up entirely. I'm too stubborn to do that, though.

Koppenheffer: This year, we've seen maybe a little bit more turnaround in the opposite direction.

Tilson: Sure. My short book's really been working this year.

Koppenheffer: For investors on the long side of the market, what parts of the market should they be looking out for? What are the danger zones?

Tilson: Just generally, anything with a lot of hype and momentum. It's almost staggering to me that six years after one of the worst downturns and financial crises in history ... I thought it would take another generation -- it would be 20 years -- before unbelievable stupidity and speculation and so forth, returned to the markets, and where we are back at full force.

When I saw "The Wolf of Wall Street" movie, about the bucket shops promoting these fraudulent companies 20 years ago or something -- as I watched that movie I'm like, "Nothing's changed."

I'm short a bunch of companies that I know are being promoted by fraudsters and bucket shops and so forth -- guys just like the Wolf of Wall Street. These tend to be a little bit smaller companies, probably off the radar screen of most investors, but just be careful.

Classic example is the 3D printing sector. Every good fraud or promotion has some legitimacy, some veneer of legitimacy. 3D printing has been around for 20 years. There are companies that have real revenues -- it's not a fraud -- but it just got promoted to the Moon.

A lot of stuff in the biotech space ... the areas where the frauds and promotions tend to occur are medical devices, exciting new technologies, that kind of thing.

Most investors will, by far, be better off sticking to things like Berkshire Hathaway or AIG or Citigroup; solid businesses, trading at low multiples of earnings or book value. You won't have a lot to talk about at cocktail parties, but you're not going to lose your shirt either, and right now we're in an environment where investors should be thinking first and foremost about not losing their shirt.

A lot of these momentum names, they've been cut in half, and they're still wildly overvalued by any ... there are no value guys that are going to step in and support that stock. I think 3D Systems has got another 50% drop in it.


Read/Post Comments (21) | Recommend This Article (6)

Comments from our Foolish Readers

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  • Report this Comment On May 20, 2014, at 2:27 PM, spinindog wrote:

    A stupid person once said..."Every good fraud or promotion has some legitimacy, some veneer of legitimacy. 3D printing has been around for 20 years. There are companies that have real revenues -- it's not a fraud -- but it just got promoted to the Moon."...

    A wise person just thought ...In 1985, paper printers had been around for 20 years - but I wish I would have bought Hewlett Packard right when they were about to hit every business and household.

    I once trusted Motley Fool to provide decent advice. Now they are just publishing garbage to help this Tilson meet his shorts.

    It doesn't take much imagination to see 3D as an outstanding long-term play.

  • Report this Comment On May 20, 2014, at 2:33 PM, ingr72 wrote:

    SIr why should an investor believe that there still is a drop of 50% more going to happen to DDD ?

    You were short last year in a year that was fabulous for the long investor ...

    Sooner or later you might get it right , but I'm glad my funds are not with you ...

    I do like all 3 of the stocks you mention in this article, but a little speculation should be part of an investors strategy ....

    I've owned DDD since 2010 and have done extremely well ... and I still own DDD, and I on the contrary am a believer that this company will one day regain it's " Mo " ...

  • Report this Comment On May 20, 2014, at 2:54 PM, rrgems wrote:

    This has be the worst article I've ever seen from Motley Fool. It is an obvious ploy by a short seller to attempt to drive the stock down further for his own profit with nothing whatsoever to back it up.

    Wow, fools! How did this get published?

  • Report this Comment On May 20, 2014, at 3:20 PM, tyler91988 wrote:

    Maybe 3D Systems won't be the best bet. Fair. Got it. Thanks.

    The 3-D printing industry? The future. Sure, they're a bit pricey, but after the run-up of 2013, why wouldn't they be? Sure, they got hyped up last year,but that goes hand in hand with the stock prices jumping.

    EVERY article I have read on 3D printing gives fair warning on the rocky road; how investors will need strong stomachs to endure the rises and falls.

    DDD and SSYS will do great things. Overpriced now? Sure, but how will we feel once profits increase and the "3-D printing revolution" takes off?

  • Report this Comment On May 20, 2014, at 3:51 PM, uyutnaya wrote:

    Pure hypocrisy of shorts. Shame.

  • Report this Comment On May 20, 2014, at 4:03 PM, junkstuff555 wrote:

    Well I am out now. Held DDD and SSYS after listening to the video on Motley Fool about 3D being a game changer as well as the recommendation from Tom g that DDD was a buy. Now TMFKoop is posting all over the internet that 3D stocks are frauds like on the Wolf of Wall Street and DDD which was at 97 in January is actually worth only $10. Makes you wonder whether the Gardners were shorting DDD stock while they were touting it. Now they have their MFKoop destroying the stockholders who were tricked into buying DDD on Tom Gardine recommendation. I am done with 3D now. It will never go up with Motley Fool promoting 3D as a fraud. I cannot believe those who subscribe to the Motley Fool and listened to the stuff about #D are happy about this. I lost a fortune and i wonder how many at the top of Motley Fool were shorting this sector. What a rip this was!

  • Report this Comment On May 20, 2014, at 4:15 PM, silentobserver wrote:

    AIG and Citi are solid businesses?

  • Report this Comment On May 20, 2014, at 4:15 PM, junkstuff555 wrote:

    Maybe 3D Systems won't be the best bet. Fair. Got it. Thanks.

    Come on this article wasnt about 3D not being the best bet. It was all about 3D being one big fraud that was hyped to suckers and had a true value of $10 while Tom Gardiner was promoting this as a buy near $100. Thats a fact.... i know because I bought into the recommendation. Now A Motley fool bureau Chief is calling DDD as a scam.... as well as all other 3D sector stocks. This isnt just a subscriber. its one of their bureau chief putting out its worth $10 ....Its pretty much the same as calling Tom Gardner a scammer who was promoting a stock that was worth no more than $10 in my opinion. Its not in my imagination that Tom was !00% wrong on DDD being a good buy. As it dropped like lead from $100. MFKoop seems to be just telling it like it is. I cannot help but guess that people at Motley Fool were shorting. Why else would a bureau chief be calling this company a fraud and still be working at Motley Fool. Outrageous how I was conned into losing a ton on DDD. Wish i read MFcoop a few months ago. I cannot be the only fool who read these motley fool articles promoting DDD as being worth $10. How can you hold onto any 3D stock through this type of slashing? Not a penny more on 3D garbage for me. Lost enough

  • Report this Comment On May 20, 2014, at 4:22 PM, junkstuff555 wrote:

    Let me see the article says forget 3D stocks and has this in it

    "before unbelievable stupidity and speculation and so forth, returned to the markets, and where we are back at full force.

    When I saw "The Wolf of Wall Street" movie, about the bucket shops promoting these fraudulent companies 20 years ago or something -- as I watched that movie I'm like, "Nothing's changed."

    I'm short a bunch of companies that I know are being promoted by fraudsters and bucket shops and so forth -- guys just like the Wolf of Wall Street. These tend to be a little bit smaller companies, probably off the radar screen of most investors, but just be careful.

    Classic example is the 3D printing sector. Every good fraud or promotion has some legitimacy, some veneer of legitimacy."

    This article is by a Motley Fool who just has to know 3d was promoted heavily on the Motley Fool and that there are many subscribers who bought and held 3d. what are they to think after a Motley fool Bureau Chief puts this out. Why would I ever buy any recommendation when one of their bureau chiefs might be posting this type of stuff. DDD Stock was up almost $2 today ... not anymore and likely has a lot farther to fall now. Wish I knew Motley fool was publicly going to pull the plug! Darn!

  • Report this Comment On May 20, 2014, at 4:47 PM, junkstuff555 wrote:

    This is right square on Motley Fool main page

    3 Stocks To Own For The New Industrial Revolution Download the PDF

    Its a long video about 3d - particular DDD and SSYS. Both stock down a ton in 2014. Their Motley Fool bureau chief MFcoop is putting all over the internet an article to forget 3D stocks and including stuff about 3d being a fraud hyped stock worth 1/5 of whats it at now 1/10 where it was in January 2014. It quotes 3d as being in the same ilk as the penny stock frauds in Wolf Of Wall street. I do not understand how the Motley fool can be posting such videos on its website (and all over the internet) while it allows one of its bureau chief to post such an article. Look what happened to DDD stock today. How much more will DDD shareholders lose with this type of article. Why recommend stock and all a fool to give credance to DDD and other 3d stocks being way way overpriced. unreal what happened here in my opinion. Unreal!

  • Report this Comment On May 20, 2014, at 5:12 PM, fitness358 wrote:

    I still have faith in where 3D printing is going in the future, but like many others, I'm very discouraged that TMF allows an article that compares any of the 3D printing companies to "Wolf on Wall Street".

    Dear TMF - are you playing both sides? I've subscribed and followed you for a while and this makes me want to rethink where I put my trust. I suppose I mistakenly thought that TMF employees would be responsible for writing factually based articles and opinions, not random speculation with unjust comparisons to Hollywood movies. Oh well shows how dumb I am for believing.

    Yes - I own shares of 3D, have owned and sold shares for profit for the past year. Yes - I'm under my price point now but not by much, so my post is not about stock loss but more about disappointment with TMF.

  • Report this Comment On May 20, 2014, at 5:14 PM, junkstuff555 wrote:

    Motley Fool Bureau chief Matt Koppenheffer (MFcoop) putting out lots of stuff lately quoting Whitney Tilson as 3d and DDD being a scam type stock that is way overpriced and worth no more than $10.

    Check out his articles that appear to me to be Motley Fool articles

    May 20th, 2014 Forget 3d systems... read it and weep if you hold DDD shares

    May 17th, 2014 3D Systems 'I shorted more...." read it and weep if you hold DDD shares

    May 16th, 2014 An interview with Whitney Tilson.... read it and weep if you hold DDD shares.

    All 3 of these article pretty much equate DDD and the sector as fraudulent or way overpriced scams. I dont really appreciated being a subscriber who enrolled after seeing the long video about SSYS DDD being great investments (its still on the MF main webpage) and then seeing MMcoop putting out such articles day after day. Dont mind articles that question value, but fraud and scam? that a whole different story. i cannot imagine I am alone. but I am not happy about MFcoop being a motley fool mouthpiece for Whitney Tilson. Come on.... 3 articles all warning pretty much the same thing about 3D. Will the gardiners be listing DDD and others as a sell as you can pretty much sumise MFcoop is doing? Unreal how this 3d sector is being called a scam from pretty much everywhere now. Motley Fool should take down the video about 3d if the wires are going to be flooded with 3d is a scam type stuff with Motley Fool closely associated with it. Unreal...wish I never heard of 3d Wish I never saw the video. Certainly not happy about these articles flooding the news.

  • Report this Comment On May 20, 2014, at 6:04 PM, CoffeeIsLife wrote:

    This article has made me reconsider my subscription to Motley Fool. First, MF recommended 3D printing stocks for quite some time and now they seem to be attempting to drive the same stocks down by publishing articles calling the sector a scam? Rather suspicious to say the least.

  • Report this Comment On May 20, 2014, at 8:35 PM, junkstuff555 wrote:

    Well I am sticking with what 3D stocks I have. No way DDD is worth $10 in spite of what Tilson says. The only reason I think 3d stocks fell so hard was a combination of lots of shorters like those who short anything that climbs fast and has high multiples regardless of the story and that DDD is investing BACK into their business rather than go for short term earnings. Its just disconcerting when I read news articles equating 3D sector stocks with mundane stocks with little growth. Zacks does the same thing when they put DDD as a sell and recommend something with little growth. Same with Barrons too. Seems like there is no end to it. Like I said i dont mind giving voice to someone touting overvalue... but to equate it to the scammer penny stocks in Wolf Of Wall Street now that was way over the top. Well i am holding through all this incessant negativeness on 3D particularly W. Tilson!

  • Report this Comment On May 21, 2014, at 9:59 AM, london1958 wrote:

    Should we have a name change....Motley Idiot!

  • Report this Comment On May 21, 2014, at 2:36 PM, jademonki wrote:

    Motley Fool hyped this stock and sector more than anyone out there... Just like they hyped SWIR and many others. I'm starting to think they are pump and dump guys now.

  • Report this Comment On May 21, 2014, at 3:06 PM, jademonki wrote:

    @junkstuff555 - have you ever tried using some technical analysis along with your fundamental approach? Slap a 50 day moving average on DDD with the idea you are long above it and out below it. It's not a hard rule but a good quick view of the trend.

  • Report this Comment On May 21, 2014, at 4:45 PM, anindakumars wrote:

    We have found a real FOOL here, not a Motley Fool fool ! Doing the bidding for Tilson in the last couple of articles is he Matt K? I have never found much 'foolishness' in His Highness's advice, so I hear what he says and stay away from them.

  • Report this Comment On May 21, 2014, at 4:48 PM, anindakumars wrote:

    If in the rare event it falls to $10 very well then, I am going to double my investment in 3D stocks. They are here to stay for decades on the end.

  • Report this Comment On May 21, 2014, at 9:59 PM, mfregon wrote:

    Well I just bought 3D. I saw the video, read the article

    and made my mind. I want to tell my history. Yesterday I received from mail some spare parts for my old slot cars from 70's and for my disapointment I don't have a tool to install these spare parts. I will have to wait more two weeks to have this tool. I which I had a 3D printer at this moment because I'd be having fun with my son right now. I live in Brazil and will be in USA on Jan/2015 and certainly I will look for a 3D printer. I hope I can afford it.

  • Report this Comment On May 27, 2014, at 11:27 AM, spinindog wrote:

    I think the tag team of Tilson and Koppenheffer are having a really bad Memorial Day weekend. The stock they they pumped and dumped has jumped!

    Thanks for your money. I've been selling you those puts.

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