The S&A Digest

Stansberry & Associates Top 10 Open Recommendations
(Top 10 highest-returning open positions across all S&A portfolios)

As of 07/01/2013

Back in Miami... Wal-Mart's money mart... Buffett's compensation... Crucell's latest... Our new website... Chewie's scared of Al Gore, too...

In my hotel room this morning, I opened the French doors leading to the veranda. Biscayne Bay stretches out nearly to the horizon in front of me. Humid, temperate air is rushing past my desk and scattering my papers. It's worth it to hear the palms rattling outside in the wind – one of my favorite sounds in the world. My wife and I are in Coconut Grove (Miami) this weekend for my friend's wedding. And I've been reminded, yet again, why I love spending time here in the winter. I can see why Carl Icahn wants to own WCI and all of its land in Miami... it's gorgeous down here. There's no doubt, in the long run, more and more people are going to want to live here – at least in the winter.

According to reports published Thursday, Extreme Value pick Wal-Mart (WMT) may be looking into offering consumer mortgages, home equity lines of credit, and consumer loans. Reminds me of the 1920s, when brokerage houses established satellite offices on cruise ships. Of course, back then America was the world's largest creditor. Now it's the world's largest debtor. Maybe someday soon you'll be able to refinance your mortgage onboard Royal Caribbean.

It looks like the end for New Century Financial. On Wednesday, it defaulted on a loan from Barclays Bank, and the British bank is demanding that New Century immediately buy back $900 million in mortgage loans.

Warren Buffett's total executive compensation for 2006... $214,250. His actual Berkshire Hathaway salary was only $100,000, as was the salary of his partner, Charlie Munger. The rest of the money came from serving on various boards. Buffett's salary has remained at $100,000 since 1980. Buffett and Munger don't even keep all of their comparably meager salaries. They reimburse Berkshire Hathaway for any personal expenses that the company may have paid, such as postage or phone calls. Last year, Buffett returned $50,000, while Munger gave back $5,500.

Shareholders of both companies approved Freeport McMoRan's (FCX) $25.9 billion cash-and-stock buyout of Phelps Dodge (PD). The world's biggest copper company is being formed during a multiyear high in copper prices. Shareholders who sell the stock they receive in these merger transactions typically end up with the better deal... but, so far, Freeport McMoRan remains in two of our recommended portfolios.

Phase 1 pick Crucell (CRXL) has signed a research license agreement with Big Pharma powerhouse Pfizer. According to the deal, Pfizer Animal Health will use Crucell's industry-leading PER.C6 cell technology in the development of a new animal vaccine. Pfizer has an option to convert the research license into a commercial agreement. No financial details were disclosed. So far, Rob Fannon's readers are up 260% on Crucell.

PSIA pick Verizon (VZ) is in the midst of a battle for a $20 billion-$80 billion U.S. government contract. The government wants to upgrade its current communications system, including internet and telephone.

Finally... a new high in our recommended portfolios: Oneok (OKE).

And now, everyone's favorite repository of grief, scorn, and derision... the mailbag. Send yours to: feedback@stansberryresearch.com.

"I get tickled reading the S&A mailbag. When they asked Mrs. Roosevelt what her husband learned while president of the United States, she said, 'He learned ONE thing, YOU CAN'T PLEASE EVERYBODY!!' I say to you, 'keep up the good work!'" – Paid-up subscriber D.L. Thompson

"HA HA HA... Alcoholic Frankenstein... HA HA. Thanks for the great belly laugh. I must have needed some humor that day, and it really hit my funny bone – I laughed so hard, it was difficult to stop – my 65 lb Airedale, sensing my stomach pain (I guess), tucked his tail between his legs and ran from the office. I haven't laughed so hard in ages. THANK YOU, again!! What the hell has happened to Gore? I believe he is trying to look like he is suffering from global warming to prove his point and sell his movie. Alcoholic Frankenstein... perfect description – oh, oh, here I ago again, Ha, ha... Chewie! Get back in here!" – Paid-up subscriber John Lemon

"Steve, you don't have to feel bad for all of us. I bought DHI in the mid-twenties on your recommendation. As it came down from about $30, I started selling as part of my efforts to prepare for the correction. So I sold DHI at about $28 and came out with a little over a 10% gain. I plan on going back in sometime in the future." – Paid-up subscriber Sal Piccolo.

"I went to your home website to do some DD on your company and research letters, and was surprised that there was no info as to cost of subscriptions and no link to sign up for any of your research letters. Invitation only?"

– Paid-up subscriber Rob Hickman

Porter comment: No... as I'm sure you've noticed, there's nothing very subtle or coy about our approach to selling newsletters. We're putting the final touches on a brand-new website, which will be a huge improvement over what we've got up now. Among other things, it will offer subscribers a great new keyword search function.

"I have no confidence in either the dollar nor most US stocks. How about adding offshore investments?" – Paid-up subscriber Mike Coon

Porter comment: My last recommendation was a foreign stock. I didn't recommend it because it's foreign, I recommended it because it's safe, it's cheap, and it's the world's best telecom company. If you buy good businesses at good prices, macro-issues, like inflation, don't play a role in your analysis. On the other hand, I've written extensively on why silver is a better hedge than gold, and a few of our analysts (Steve Sjuggerud and Jeff Clark, in particular) specialize in macro trading. See their letters for dozens of recommendations to get your assets "offshore."

"Too bad you chose a career in investment instead of electing to pursue a career path that would have led to your becoming the CEO of GM. As a former GM CEO said, 'What's good for GM is good for America.'" – Paid-up subscriber Bob

Porter comment: If the chairman/CEO of GM did write a letter like the one I published, he would be a much more successful leader, and GM would have a much better chance at surviving without bankruptcy. Speaking honestly and plainly about the challenges facing your business creates trust – and nothing is more important to employees, creditors, and customers.

Ironically, office politics in large corporations rewards the exact opposite behavior. As a result, aside from national politics, I can't imagine a worse choice for my life. Do you have any idea how much BS you have to endure (and embrace) to become a Fortune 500 CEO? Every time I have to listen to a consultant (our parent company sends them over once or twice every five years), I can barely contain the urge to defenestrate him from the highest floor.

Regards,

Porter Stansberry

Miami, Florida

March 15, 2007

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