An afternoon with T. Boone Pickens... Stealing watches, wallets, and ties... Will Russia cut off the gas?... Cooperman bullish on U.S. equities... Why European stocks should soar... Some nice feedback from Dallas...
As I write this, I'm on a plane returning from our Natural Resources Investment conference in Dallas. The show was a huge success. And I'd like to thank the nearly 600 attendees who showed up to support our new business.
The highlight was Porter's 20-minute discussion with legendary oilman T. Boone Pickens... They chatted about everything from oil, clueless governments, and hunting. Mr. Pickens also shared a story about how he once sat on a microphone and "talked out of" a certain body part for the first five minutes of a speech he gave.
I spoke back stage with Rick Rule, CEO of Sprott U.S. Holdings... Porter asked him to speak about the most hated commodity in the market today. He was having a difficult time crafting his speech because it was a "target-rich environment." In other words… when you're looking for hated commodities, you have lots to choose from.
Rick settled on uranium... and gave one of the best talks of the show.
To read some of Rick's thoughts on uranium, you can read the May 27 DailyWealth.
We also heard from S&A Resource Report editor Matt Badiali; Leslie Haines, editor of Oil & Gas Investor, one of the most important industry magazines out there; renowned geologist Brent Cook; successful wildcatter (and our friend) Cactus Schroeder; and radio host Alex Jones, just to name a few.
To wrap things up, we had "the gentleman's thief," Apollo Robbins. If you don't know Robbins, he bases his performances on his skills as a master pickpocket.
At our event, he walked through the audience, pulling cell phones, wallets, and watches from the pockets of attendees... All while staring them in the eyes and holding a conversation. (Don't worry... he returned everything.)
Of course, Robbins is really a master of human psychology. His sleight of hand is based on his ability to focus people's attention away from what he's doing. Robbins' most impressive feat? He untied and took a man's necktie in the middle of a conversation with him.
Don't miss some reader feedback about the show in today's mailbag... Robbins chose this gentleman for an onstage demonstration.
We filmed the whole event, and we're working to host the presentations online for our Stansberry Society members and folks who signed up to watch the conference online. We'll have everything ready soon.
We'll also feature some of the highlights from the conference (including presentation slides and commentary) in Digest Premium this week. If you're not already a Premium subscriber, click here to sign up (it's only $10 a month)...
Again, a sincere thanks to the attendees, our speakers, sponsors, and everyone working tirelessly behind the scenes to make our second-ever conference a huge success. And to the attendees, we appreciate the loads of positive feedback you provided.
Given our team's travel schedule today, our daily missive will be brief...
S&A Global Contrarian editor Kim Iskyan sent me an update on the ongoing Ukraine/Russia conflict. Russia was supposed to cut off Ukraine's gas supply today. But it extended the deadline. Kim explains what this means...
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As we wrote on May 12, Ukraine owes Russia billions of dollars for natural gas from Gazprom... which it can't pay. "Ukraine is living hand-to-mouth," Kim wrote. "Its economy is barely getting by on handouts from the International Monetary Fund."
In April, Putin warned that unless Ukraine paid up, Gazprom would in the future require Ukraine to pre-pay for gas – which is only reasonable, Kim wrote. If the two sides didn't come to an agreement, Gazprom said it would cut Ukraine off in early June.
That deadline was just today pushed to June 9. Over the weekend, Ukraine paid $786 million of its debt to Gazprom for gas. Now, Ukraine is negotiating with Russia over exactly how much more it owes for gas. The two sides agree that Ukraine owes $2.2 billion for gas through early April, Kim said. They disagree on the pricing of gas that Gazprom has delivered to Ukraine since then, he said. Discussions appear to be moving in the right direction. So for the time being, Ukraine won't be cut off. As Kim wrote…
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But plenty of problems remain between Russia and Ukraine. Russia-fueled separatist violence continues in eastern and southern Ukraine... although Russia continues to say that fighters (called "green men" because of how they're dressed) aren't there on its behalf. The conflict could flare up at any time, Kim said. In part, that's because Ukraine staying out of the European Union and NATO remains a red-line issue for Russia. Kim wrote…
My former colleagues at Eurasia Group, a top political-risk consulting firm, told me: "There's a decent chance Ukraine fades from the news over the next few weeks, as a higher level of violence doesn't immediately threaten the new status quo. But the broader Ukraine crisis remains set to escalate."
One of the greatest hedge-fund managers in history is still bullish on U.S. equities...
Leon Cooperman, founder of the $7 billion hedge fund Omega Advisors, said last month in a speech at Columbia Business School that the S&P 500 should produce "respectable" returns in 2014.
U.S. households are starting to take on more debt (after five years of deleveraging), he said. And corporations, which are sitting on record amounts of cash, should start spending again. That will help drive the economy higher… and benefit the stock market for a while.
Whatever immediate benefits the economy enjoys from this debt… we know we will eventually face serious consequences.
In addition to mounting household debt, auto loans and home-equity lines of credit have exploded. (We'll present some stats on that tomorrow when we're back in the office.) The bump in debt and spending will boost the market for now... But we know it will eventually end badly.
However, like us, Cooperman is avoiding fixed income...
"Nearly all of U.S. fixed-income securities, with the exception of structured credit, are uninteresting and unattractive both in an absolute sense and relative to U.S. equities," he presented. "This conclusion includes Treasuries, investment-grade corporate bonds and high-yield bonds."
Also, like us, Cooperman is even more bullish on European equities than U.S. stocks (despite his S&P prediction). He said European stocks (as well as Japanese stocks) are cheaper than the U.S. And as the European recovery continues, those equities have more upside than their U.S. counterparts.
Steve Sjuggerud has been bullish on European equities for months... Like Cooperman, he believes they're a relative value. But he also sees a catalyst to send European stocks soaring... European Central Bank President Mario Draghi.
As we wrote in the May True Wealth (which we excerpted in the May 27 Digest):
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Steve has recommended two ways to profit from a boom in European stocks in True Wealth. You can try a risk-free subscription to True Wealth – and immediately access Steve's European-stock recommendation – by clicking here...
New 52-week highs (as of 5/30/14): Callon Petroleum (CPE), CVS Caremark (CVS), Devon Energy (DVN), Enterprise Products Partners (EPD), SPDR Euro Stoxx 50 Fund (FEZ), Freehold Royalties (FRU.TO), WisdomTree Europe Hedged Equity Fund (HEDJ), Intel (INTC), SPDR International Health Care Fund (IRY), Johnson & Johnson (JNJ), Altria Group (MO), Nuveen AMT-Free Municipal Income Fund (NEA), AllianzGI Equity & Convertible Income Fund (NIE), Pepsico (PEP), PowerShares QQQ Fund (QQQ), Sabine Royalty Trust (SBR), ProShares Ultra S&P 500 Fund (SSO), Skyworks Solutions (SWKS), Union Pacific (UNP), and Walgreens (WAG).
Some great feedback from our Dallas event in today's mailbag. Did you join us in Dallas? Tell us about your experience... feedback@stansberryresearch.com.
"I want to take a moment to say 'thank you' to you and your team for a fantastic event in Dallas. The venue was world-class. The seating was comfortable, the technology worked flawlessly, at least from my perspective as an attendee. I would be remiss if I did not mention the food, very tasty lunch!
"I have attended, unfortunately, a fair number of investment conferences throughout the years, and yours is the one I look forward to attending again. The presenters were fantastic (the sponsors could have used a few pointers, though!). They were engaging, interesting, and provided useful information. James Altucher was entertaining as always, but I give Rick Rule the top spot. I could have listened to him for hours and I enjoy him on your podcast as well. Matt Badiali, what a world class guy, thank you for giving him so much stage time. Dave Collum was a delightful surprise.
"T Boone, are you freaking kidding me! What a fantastic kick off to the event. Alex Jones... I was afraid he was going to do a GM and explode! Which leads me to the keynote, 'Mary Berra'! She was more informative in Dallas than she was on Capitol Hill. I think her voice surprised her at times... and what was going on with the hair! Great job, love the new GM models!..
"Being on stage for the Apollo Robbins act was a treat. Who would have thought it, smuggling cash inside a lemon! Maybe this is how you get the $100k cash prize for the best investment idea on the plane... what could possibly go wrong?!
"Thank you for all you do. While I understand you believe at times you put your subscriber's interests ahead of your own, by doing what you would want if roles were reversed, I believe that is exactly how you build a loyal client base. There will always be crazies out there that will cancel because they do not want to read what you are thinking, but... well, they be crazy!
"I am wealthier – not just monetarily, but also mentally – because of reading your writing and listening to your podcast. Sincerely, thank you for all you do, it is our treat." – Paid-up subscriber Justin S. Fowler
Regards,
Sean Goldsmith
June 2, 2014
An excellent company we never knew existed...
Stansberry's Investment Advisory lead analyst Bryan Beach recently discovered an excellent company when studying companies that pay special dividends. It sells a product you're undoubtedly familiar with.
And as he explains in today's Digest Premium, it also pays large dividends to shareholders and has major inside ownership.
To subscribe to Digest Premium and access today's analysis, click here.
An excellent company we never knew existed...
Editor's note: In last Friday's Digest Premium, S&A analyst Bryan Beach described two companies that make big, frequent special-dividends payments. These are nonscheduled, one-time payments from companies to shareholders. (You can read his Friday write-up here.)
As promised, we're presenting the companies Beach uncovered that have a market capitalization of more than $100 million and paid at least four special dividends since May 2008. And he highlights one company, in particular, we were surprised to see on the list…
The following table shows 20 "serial" special-dividend-payers. You can see each stock's share price as of May 2008, and the amount of special dividends paid over this six-year time frame. You can also see in the column on the far right the "special-dividend yield"... this represents the returns from special dividends and does not include any return for price appreciation or standard dividends.
| Company Name | Ticker | Market Cap ($billions) | Special Dividends per share since May 2008 | Share Price May 2008 | Six-year special dividend yield |
| RLI Corp | RLI | $1.9 | $20.00 | $25.12 | 80% |
| Diamond Offshore | DO | $6.9 | $88.38 | $136.44 | 65% |
| L Brands | LB | $16.9 | $12.00 | $20.80 | 58% |
| National Presto | NPK | $0.5 | $33.50 | $66.69 | 50% |
| Southside Bancshares | SBSI | $0.5 | $7.52 | $16.31 | 46% |
| The Buckle Inc | BKE | $2.3 | $15.25 | $33.39 | 46% |
| Werner Enterprises | WERN | $1.9 | $6.95 | $18.06 | 38% |
| Wynn Resorts | WYNN | $20.6 | $27.50 | $102.63 | 27% |
| NIC, Inc. | EGOV | $1.1 | $1.95 | $7.62 | 26% |
| Bassett Furniture | BSET | $0.1 | $2.70 | $12.17 | 22% |
| Shiloh Industries | SHLO | $0.3 | $1.87 | $10.00 | 19% |
| Gamco Investors | GBL | $2.0 | $9.80 | $52.57 | 19% |
| Cohen & Steers | CNS | $1.8 | $5.50 | $30.72 | 18% |
| Westfield Financial | WFD | $0.1 | $1.55 | $9.36 | 17% |
| Sun Hydraulics | SNHY | $1.0 | $4.00 | $26.74 | 15% |
| Capital Federal | CFFN | $1.7 | $2.53 | $18.19 | 14% |
| Haverty Furniture | HVT | $0.6 | $1.25 | $9.97 | 12% |
| CME Group | CME | $23.6 | $11.90 | $96.90 | 12% |
| Hingham Inst. Savings | HIFS | $0.2 | $1.72 | $28.75 | 6% |
| Farmers & Merchants | FMBL | $0.8 | $156.00 | $4,650.00 | 3% |
| * Includes estimate for stock dividends | |||||
When studying the companies on the list, we were not surprised that more than half of the companies have significant management ownership (10% or more). That makes sense... Management is more likely to pay money to shareholders when they are the shareholders. This is one of the reasons we love it when management has a huge ownership stake...
While high management ownership didn't surprise us, we did learn something new. Although all of these companies are based in the U.S., at least 15 of them also have "shadow" entities trading on the German exchanges. Apparently, that lets them take advantage of Germany's less stringent dividend taxation. This isn't terribly relevant for those of us who own less than 10% of these companies... but we thought it was interesting nonetheless.
When we first ran the screen, we were pleased to see some familiar names at the top of the list. Like National Presto, Diamond Offshore is a mainstay on the Capital-Efficiency Monitor, our monthly evaluation in of the most capital-efficient companies in the market... And Diamond Offshore is also a holding in the Stansberry's Investment Advisory model portfolio. And not surprisingly, property & casualty insurer RLI topped the list. Notice that RLI's special dividends alone have nearly repaid its May 2008 buy-and-hold investors.
One name near the top of the list did surprise us – L Brands. You may not have heard of L Brands, but if you've ever gawked at a model from Victoria's Secret, then you are familiar with the company's flagship product.
The "L" stands for Limited. The retail conglomerate began with the clothing-store chain "The Limited"… But the name outlasted the store, which the company spun off in 2007. So the company recently shortened its name to "L Brands." It also owns the Bath & Body Works and PINK brands.
When we checked the numbers, we realized that the L Brands' 40-quarter return on assets was 9.79%... just 0.21% shy of our threshold to be listed in our Capital Efficiency Monitor.
So can you make money trying to pick off those dividends, buying after a big payment is announced? Take a look at three of the companies on the list…
The following table compares a short-term "dividend grab" strategy against buying them as long-term holdings. The middle column shows the average gain for each stock if you bought one share the day the special dividend is announced and sold the day the dividend is paid. For each of these three stocks, the holding period for the dividend-grab strategy is around 30 days. The right-hand column shows the returns of buying, holding, and reinvesting the dividends of the same shares over the full six years.
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Company
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Average 30-day Return:
'Dividend Grab' Strategy
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Six-year return:
reinvesting dividends
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RLI Corp
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12%
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154% (17% per year)
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National Presto
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-2%
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69% (9% per year)
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Wynn Resorts
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-2%
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183% (19% per year)
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The dividend grab seems to have worked with RLI. Over the six-year period, you would have made four dividend trades that yielded an average of 12% over an average of 33 days... and none of the four trades lost money.
But the trading strategy didn't work as well for National Presto or casino operator Wynn Resorts. Our preliminary research shows that a simple special-dividend grab works about half the time...
For those not interested in keeping track of dividend ex-dates, record dates, payment dates, and coordinating your trades accordingly... the table above demonstrates buying and holding serial special-dividend-payers can be extremely lucrative. The stocks averaged annual returns of 9%-19%.
– Bryan Beach
An excellent company we never knew existed...
Stansberry's Investment Advisory lead analyst Bryan Beach recently discovered an excellent company when studying companies that pay special dividends. It sells a product you're undoubtedly familiar with.
And as he explains in today's Digest Premium, it also pays large dividends to shareholders and has major inside ownership.
To continue reading, scroll down or click here.
Stansberry & Associates Top 10 Open Recommendations
(Top 10 highest-returning open positions across all S&A portfolios)
As of 06/02/2014
| Stock | Symbol | Buy Date | Return | Publication | Editor |
| Prestige Brands | PBH | 05/13/09 | 449.0% | Extreme Value | Ferris |
| Enterprise | EPD | 10/15/08 | 303.7% | The 12% Letter | Dyson |
| Constellation Brands | STZ | 06/02/11 | 296.1% | Extreme Value | Ferris |
| Ultra Health Care | RXL | 03/17/11 | 247.7% | True Wealth | Sjuggerud |
| Altria | MO | 11/19/08 | 204.6% | The 12% Letter | Dyson |
| Ultra Health Care | RXL | 01/04/12 | 204.2% | True Wealth Sys | Sjuggerud |
| McDonald's | MCD | 11/28/06 | 187.5% | The 12% Letter | Dyson |
| Hershey | HSY | 12/06/07 | 163.2% | SIA | Stansberry |
| Automatic Data Proc | ADP | 10/09/08 | 153.1% | Extreme Value | Ferris |
| Blackstone Group | BX | 11/15/12 | 145.5% | True Wealth | Sjuggerud |
Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any S&A publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.
| Top 10 Totals |
| 3 | Extreme Value | Ferris |
| 3 | The 12% Letter | Dyson |
| 2 | True Wealth | Sjuggerud |
| 1 | True Wealth Sys | Sjuggerud |
| 1 | SIA | Stansberry |
Stansberry & Associates Hall of Fame
(Top 10 all-time, highest-returning closed positions across all S&A portfolios)
| Investment | Sym | Holding Period | Gain | Publication | Editor |
| Seabridge Gold | SA | 4 years, 73 days | 995% | Sjug Conf. | Sjuggerud |
| Rite Aid 8.5% bond | 4 years, 356 days | 773% | True Income | Williams | |
| ATAC Resources | ATC | 313 days | 597% | Phase 1 | Badiali |
| JDS Uniphase | JDSU | 1 year, 266 days | 592% | SIA | Stansberry |
| Silver Wheaton | SLW | 1 year, 185 days | 345% | Resource Rpt | Badiali |
| Jinshan Gold Mines | JIN | 290 days | 339% | Resource Rpt | Badiali |
| Medis Tech | MDTL | 4 years, 110 days | 333% | Diligence | Ferris |
| ID Biomedical | IDBE | 5 years, 38 days | 331% | Diligence | Lashmet |
| Northern Dynasty | NAK | 1 year, 343 days | 322% | Resource Rpt | Badiali |
| Texas Instr. | TXN | 270 days | 301% | SIA | Stansberry |