Goldsmith comment: Dan is on vacation for the week, so Porter and I will be covering for him today and Thursday.
"It's the most bearish we've seen insiders, on a whole, in two years," said InsiderScore research director Ben Silverman. Executives at U.S. companies are taking advantage of the huge market rally to unload stock... Insiders at S&P 500 companies are dumping their shares at the fastest pace since June 2007 (two months before the credit markets froze) and have been net sellers for 14 straight weeks. So far this month, insiders at S&P 500 companies have sold $2.6 billion in stock... more than 22 times the number of purchases.
The message these executives are sending is clear... They do not believe their companies' fundamentals merit the current, inflated share prices. Be wary going forward...
Last week in The Digest, we told you about Addax – the largest independent oil producer in Nigeria – and its recent foray into Iraq via the enormous Taq Taq oilfield (a 3 billion-barrel project). Addax is only a $6 billion company, but it owns the rights to $37.8 billion worth of Iraqi oil... Matt Badiali recommended Addax in the May 2009 issue of the S&A Oil Report, believing once the company started producing and transporting that oil, its share price would soar.
We weren't the only group to notice Addax's huge potential... One month after Matt's recommendation, Chinese oil giant Sinopec and the Korean National Oil Company started a bidding war for the company. Readers are up more than 30% on the recommendation, but the gains are limited, as Addax will likely be taken over somewhere around $50.
No matter... Addax is but one company operating in the giant oil-producing nation. Iraq holds at least 115 billion barrels of oil reserves. Even more enticing, its reserve figures are based on 30-year-old data – as modern technology is applied to the local geography that number is sure to rise closer to 215 billion barrels... That's second only to Saudi Arabia. As Badiali told us this morning, "Big Oil companies are salivating over the possibilities."
Iraq just started production at the oilfield Nassiriyah, which sat undeveloped for 35 years due to war and lack of cash. It contains an astounding 4.3 billion barrels of oil, and production capacity could reach 300,000 barrels a day if it is properly developed – current production is only 10,000 barrels a day.
Iraq is also ramping up production at the giant Nahr Bin Umar oil field (up to 45,000 barrels a day from the previous 25,000). This field has 6.6 billion barrels of oil – more than double Addax's Taq Taq field. Oil majors Total, Statoil, and Chevron are all currently negotiating contracts to develop this monster field. But you won't make big money investing in these Big Oil companies. The real money – we're talking gains of 50 times your initial investment – will be made investing in small, largely unknown oil companies with deals in Iraq.
Matt's already written about several of them in the S&A Oil Report. And this Thursday, we're recommending our two favorite Iraqi oil stocks in Phase 1 Investor. These are tiny oil companies – one has less than $100 million in market cap, but could be worth several billion... And as Porter said last week, "Even if we're half right, you could make between 20 and 30 times your initial investment."
Don't miss out on what could the single biggest investment trend of your lifetime. To make sure you get in on the trade, sign up for Phase 1 here...
Some of the world's biggest investors are making big bets on inflation... "The deflation scare has pretty much been taken out of the market," said Kenneth Volpert of Vanguard Group. "The inflation scare has not been priced in yet, and we think that's still to come."
On June 18, the Labor Department said the consumer price index fell 1.3% in the year ended in May – the most since 1950. One day later, BlackRock, the world's largest money manager, issued a special report telling investors why they should buy Treasury Inflation Protected Securities (TIPS). And Bond King Bill Gross of PIMCO thinks U.S. Treasuries are a bad bet because the U.S. could lose its triple-A credit rating. PIMCO is still buying TIPS after recommending them in January.
It could be a couple years before inflation creeps up, but why risk waiting? We'll side with Bill Gross and Vanguard and buy inflation protectors while they're still cheap.
Today is your last day to sign up for Mike Williams' bond letter, True Income, at a large discount. If you're looking for a consistent way to get large income payments, this is the service for you. Mike only recommends distressed bonds in True Income. Distressed debt is the lowest grade of speculative debt (as opposed to investment-grade). The market thinks these companies have a high risk of bankruptcy, but Mike carefully analyzes every recommendation to make sure it can repay its bondholders... even in the case of bankruptcy.
Because the markets were so volatile this past year and no banks were issuing credit, investors expected distressed companies to default on their bonds... But fears were overblown, and now you can buy these bonds at ridiculous discounts.
Mike's past eight recommendations are all winners. The biggest gain is 175% in just over four months... And that bond is still paying 10% a year. Remember, this offer ends tonight at midnight. Click here to learn more...
More torture and copyright rants in the mailbag... And I'm not touching either one. Anything else you'd like to chat about... feedback@stansberryresearch.com.
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uld have made enough to buy an Alliance membership himself and I have told him as much. So, hopefully he will be sending you a check for an Alliance membership when you re-open the Alliance to new subscribers." – Paid-up subscriber Fred Fleming
Goldsmith comment: Tell your son to get ready... We're reopening the Alliance to new subscribers soon. It will be your last chance to get everything we publish for life for less than $10,000.
Regards,
Sean Goldsmith
Baltimore, Maryland
June 23, 2009