THE S&A DIGEST: Defeat

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

As of 07/05/2013

Ford’s "Way Forward"… Inner workings of Wall Street… The real way we choose winning stocks… Stansberry’s Waterloo…

Bullets from Goldsmith, filling in for Stansberry today…

In the past few weeks, Goldman Sachs, Merrill Lynch, and Lehman Brothers have all upgraded Freeport McMoRan to outperform. Today, we quoted Dennis Gartman in DailyWealth, claiming that Freeport drastically overpaid for Phelps Dodge in one of the largest takeovers in the history of mining. I figured that one, if not all, of these firms trying to pump up the share price would be involved in financing the takeover, so I called investor relations. Freeport manager Daniel Mead confirmed that the company is using Merrill Lynch for the acquisition. See how Wall Street works?

We wrote it, did you buy it? "American Real Estate Partners’ stock is at 10 times reported GAAP earnings, and holds property for sale with a book value of $200 million. The share price is around $18. Book value is $26.74. That’s a 33% discount to book value, making this worth a second look, even though the stock has risen 60% over the past year," wrote Dan Ferris in the June 2004 Extreme Value. His pick, American Real Estate Partners (ACP), has been on a tear, reaching new highs almost every day in the past week. Readers who got in on the ground floor made 300%.

Ford’s "Way Forward"? Buy out the union. So far this year, 38,000 Ford employees have accepted contract buyouts, which range from $35,000 to $140,000 based on years of service. These buyouts account for 46% of the unionized workforce.

And now… the mailbag. I’ll do my best to reply with as much wit and flippancy as our founder. To give me something more to work with, let me know how great a job I did today, or to give us your condolences for our defeat (see Porter’s essay below): feedback@stansberryresearch.com.

Tommy King, paid-up subscriber, former marine, and avid paintballer, was concerned for the health of the "Stansberry Research Rangers" when he heard of the paintball challenge. "In all fairness I hope the [Agora Financial] group does not bring in ringers for this event or else it will be Dien Bien Phu for you and yours."

Goldsmith Comment: Can you join the roster next year?

Paid-up subscriber Warren Perry has a better challenge than paintball… "A paintball contest with those purveyors of The Daily Reckoning? I think you both would be better served by a challenge of a one-year period of investment results with a two-man team from both parties. Let the subscribers benefit from some real competition. That’s the American way!"

Paid-up subscriber Hugh Rhodes wants to use Google Earth to see Porter’s "compound... complete with swimming pool, riding stables, skeet range, and large dartboard with ticker symbols on it for your next great pick."

Goldsmith Comment: You use the dartboard method, too?

Defeat

"Stop shooting, STOP SHOOTING AT ME!" I was yelling at the top of my lungs, trying to communicate back to my troops.

At the beginning of our seventh game of paintball, we were one down. Fighting against a much more experienced Agora Financial team, we’d held our own so far by playing defensively, trying to win games on body count differential. We’d won two games, lost three games, and tied one.

Now, at the start of the seventh and deciding game, we’d moved to a new playing field. It was much more heavily wooded, with thick briars and undergrowth. At the start of the game, I’d sprinted ahead of the 20 or so people on my team to capture a key bunker in the center of the field. Controlling this bunker was the key to the game, because it was heavily fortified and offered a clear field of fire to defend our right flank. The way this field was laid out, to win the game the other team would have to advance past this bunker...

I quickly "killed" two opponents. Not realizing I’d made it to the bunker, they were moving up on our right. I had a clear line of sight, despite the dense undergrowth and trees. Perfect, I thought. I can keep the other team pinned down here while our attackers move up the left flank.

Then I got shot... In the back.

The only line of fire into my bunker was from behind me, from my own troops. Miraculously, the paint pellet didn’t break. I was still alive. And I began to shout back to my troops... But the firing continued. I was to become a victim of the fog of war.

George Huang, our elite Ph.D. biotech researcher, had a foggy mask. Standing near our flag, in the rear, he could only see someone crawling around the bunker in the middle of the field. He didn’t hear everyone shouting... He kept shooting.

And he hit me right in the right bicep. White paint splattered up my arm and shoulder and into the right side of my mask. I was dead.

We lost the bunker. We lost the battle.

We lost the war.

Regards,

Porter Stansberry

Baltimore, Maryland

November 29, 2006

Stansberry & Associates Top 10 Open Recommendations

Stansberry & Associates Hall of Fame