Why I Joined – Then Left – Stansberry Research

Gone without saying goodbye... Porter and the 'Golden Rule'... Why I joined – then left – Stansberry Research... A proper goodbye... Learn more about Stansberry Asset Management...

On June 15, I (Austin Root) left Stansberry Research...

For good.

Except for the skeleton crew that was in the office that day, I left without even saying goodbye.

Nor, for reasons I can finally explain today, was I able to bid farewell to you, Stansberry Research's incredible subscribers.

So despite serving you over the past few years as Stansberry Research's director of research and portfolio manager for Stansberry Portfolio Solutions and American Moonshots, I simply slipped away.

But in today's Digest, I will share all the details...

In short, I want to tell you why I left and why Stansberry Research was no longer the best place for me – even though I know, deep down, that it's the best place for all of you.

To explain, I first need to start with how my time at Stansberry Research all began...

Let's go back to the day I met Porter...

"I'm a financial publisher. I write and publish independent investment research."

That was how Stansberry Research founder Porter Stansberry described his business the first time I met him more than a decade ago.

We were sitting in beach chairs outside of a bar on the white sand of Dune Beach, on the eastern side of Saint Martin in the Caribbean. We were enjoying a rum punch on the first afternoon of a weekslong trip to celebrate the birthday of our close mutual friend, Jamison Miller.

"That's awesome," I remember saying to Porter. "Kind of like [Jim] Grant's Interest Rate Observer newsletter?"

"Yes, a lot like Grant's. Except for two main differences."

The first, Porter told me, was that while some of Stansberry Research's subscribers were the same institutional investors that Grant's caters to, "our main focus is on individual investors."

"And second..." Porter said, as he flashed a huge ear-to-ear smile that I would later come to know and love, "we don't have a few thousand subscribers like Grant's. We have hundreds of thousands."

I found that amazing.

Then, I asked Porter if he preferred the individual investor market...

"For sure," he said. "It's a much bigger market," noting there are tens of millions of self-directed individual investors in the U.S. alone.

"More importantly," he continued, "the individual investor is why I got into the research business in the first place." He told me when he was younger, he was what his readers were now.

"I didn't have access to the Wall Street research that you have," he said, "so I mostly read investment newsletters."

You see, earlier, I had shared with Porter that I did work on Wall Street...

At the time, I was running a hedge fund I co-founded called North Oak Capital. It was what many folks on Wall Street called a "Tiger Cub," meaning that I had received a strategic investment from legendary investor Julian Robertson and Tiger Management.

In our conversation, Porter went on to explain that some of the newsletters he had read were good. But most of them were "junk," pitching penny stocks, shady pump-and-dump schemes, and the fool's gold du jour.

He explained that he and his good friend, Steve Sjuggerud, thought they could do it better. "We knew we could," Porter said. He and Steve were certain there was a market for the kind of high-quality investment research that they themselves were looking for.

I remember this conversation like it happened yesterday...

It was the first of what would become hundreds of times that I heard Porter explain his version of the "Golden Rule." Treating the subscriber how he wanted to be treated was his North Star.

It's why he founded the company. And sticking with that mission is how Stansberry Research has become so successful and helped so many investors over the past 22 years.

That conversation had a lasting impression on me...

Even though I was in the middle of running North Oak Capital and my clients were only institutional and ultra-high-net-worth investors, I remember being really moved by what Porter was describing and what he was doing.

The individual investor market seemed like a massively underserved one.

Specifically, providing "institutional grade" – or even higher quality than institutional grade – investment research to millions of self-directed individual investors seemed like a great business.

More importantly, it felt like a good business. By that, I mean, it felt like it might be a more worthwhile endeavor and one that spoke to me personally.

You see, what Porter didn't know at the time was that I was not always a part of the Wall Street set. I, like Porter, grew up in the middle class of America (in Ohio, for me, instead of Florida for him), going to public schools and working summer and part-time jobs to help pay for college.

I, too, grew up with an insatiable curiosity for the markets and investing. And I would have loved to have a resource as reliable and as deeply analyzed as Stansberry Research's investment recommendations.

After meeting Porter, I kept running my hedge fund, but I kept thinking about that conversation...

I also kept running into Porter... and over the next few years, we began to develop quite a friendship. We became so close that eventually, in 2013, I confided in him that things weren't going perfectly at my firm.

"Having a bad year?" he asked.

"No," I told him. "Our returns are solid, and we're growing our assets." Neither of the two reasons that hedge funds typically close down were true for us.

I explained that simply, after so many years, my co-founder and I wanted different things for the company...

Our main difference was one of investment philosophy – my co-founder wanted to invest more in securities with lots of "warts" and "hair" that no one else on Wall Street was looking at because they were so ugly and tricky to figure out.

I preferred focusing more on owning "Stansberry-like" investments... well-run, capital-efficient, enduring businesses with excellent returns on investment and long runways for growth.

Sometimes our philosophies overlapped, like when we identified a company that the market had perceived as too indebted to thrive and possibly even survive. But we saw an extremely capital-efficient business with a number of other promising characteristics.

And just as important to me, the company was investing for the future, pioneering the use of the Internet and mobile technology for its business.

That idea worked out... The stock trades for many times more today than what it did back then.

But threading that needle was becoming more difficult...

I found it harder and harder to discover other investments that satisfied what both I and my co-founder wanted in a stock...

Our diverging investment philosophies made it harder to perform well for our investors. And I asked Porter for his thoughts on a solution.

Porter was bold and resolute in his response (as he tends to be). "I have a great solution for you," he said. Porter asked me to help start an asset-management business... and he wanted me to run it.

All at once, I was honored, nervous, and excited by this prospect... And I was also moved by Porter's passion to deliver super-high-quality financial-service offerings to individuals.

I spent a lot of time thinking about this offer. But in the end, our negotiations, concerns about startup delays, and likely some risk aversion on my part, kept me from agreeing to join Porter then. Instead, I took a different job as an investment manager.

But Porter and I remained close friends. And all the while, I read more of Stansberry Research's great investment work and became more interested in the prospect of working on behalf of individual investors instead of institutions.

It took another four years...

But eventually, in the summer of 2017, Stansberry Research got me on board. And after about six months of immersing myself in the company, learning the business, improving my writing skills – and figuring out how the espresso machine worked – I felt like I could start adding value for subscribers...

I began by pitching my favorite ideas for write-ups in the flagship Stansberry's Investment Advisory. Before long, I became the lead portfolio manager for Stansberry Portfolio Solutions.

(For those of you not familiar with Portfolio Solutions, it's designed to take the guesswork out of investing. Its goal-oriented strategies provide fully allocated, "greatest hits" versions of Stansberry Research recommendations to simplify your investing and optimize your results. If you haven't tried it yet, you need to. For more information, click here.)

I also founded the newsletter American Moonshots, which focuses on finding small companies with big growth potential. Then, in 2019, our publisher Brett Aitken asked me to take over as Stansberry Research's director of research so he could devote more time to leading the rest of the business.

Looking back, I'm extremely pleased with the strong performance our collective recommendations produced over the past four years. One quick example...

From American Moonshots' start in December 2018 through June 2021 (when I departed Stansberry Research), the fully allocated portfolio of recommendations produced a cumulative return of 259%. This compares very favorably with the return of the S&P 600 Small Cap Index (which targets the same universe of investments) of roughly 80% over the same period.

But even more gratifying than picking great stocks...

... is receiving notes from subscribers that said we've helped them materially grow their wealth and secure their retirement.

Here's just one example I received, from Alliance member John P...

Austin, we are Alliance subscribers since 2005 and we have benefitted so much from the research. I just wanted to thank you for the thoughtful explanations from your webinar this week and the update you just did with Kelly [Brown]. I'm so thankful we have individuals like yourself (and your team) that are willing to help us who would never be informed about wealth-building opportunities that historically have been reserved for the "few."

All right... so if I love Stansberry Research and its subscribers so much, there's one more question to address...

Why did I leave back in June without telling anyone?

Well, earlier this year, once again, I was asked if I was interested in helping run the Stansberry Asset Management ("SAM") business that I first considered working for. Things had, in a way, come full circle...

Specifically, I was asked to be chief investment officer for SAM... an offer I accepted.

First, I want to explain a little bit why I made this change...

Let me be clear, I loved the work I was doing with Stansberry Research. In fact, I was so energized by it, I wanted to find a way to help as many folks as possible. I now know that delivering world-class financial services and advice to individual investors is my North Star.

And the best way I feel that I personally can do that – on an individual basis – is as an investment adviser, and there's no better place to do that than SAM.

You see, along with the many thank-you notes (and occasional nastygrams) from Alliance members and Portfolio Solutions subscribers that I received over the years, I also began receiving a lot of requests for individual investment advice.

As regular readers know, Stansberry Research, or any other financial publisher, can't provide individual advice. As an investment adviser rather than a financial publisher, I am better able to help folks with those individual investment questions.

On top of that, what has become clear to me is that for so many folks, having a well-thought-out and well-constructed portfolio of investments is not sufficient on its own.

These folks also need to make sure that their portfolio...

1. Is appropriate for their unique financial situation, and
2. Aligns with their goals.

So asset allocation and a personalized, goal-oriented financial plan are mission-critical parts of investing for most individual investors.

Porter has said this before... Every single Stansberry Research subscriber should consider hiring a professional money manager – not because of distrust for the company's research, but because...

Investing successfully is extremely time-consuming work, and it can be emotionally challenging – even confounding. At every turn, your most basic human instincts will prevail upon you to do the very worst thing, at the very worst time.

Enter Stansberry Asset Management...

At SAM, we are working to build a different kind of investing firm. We want to build a firm that aims to avoid the pitfalls that have given the industry a bad name... and one that you are proud to have as a steward of your hard-earned savings.

I want to point to three things that make us different from the typical brokers and money managers you may have used in the past...

First, as a registered investment adviser and fiduciary, SAM is focused on putting your interests first. That means you won't see us investing in high-commission products or charging performance fees.

Second, we – like you – recognize the huge investment benefits of owning individual securities over mutual funds and exchange-traded funds. You avoid paying an extra layer of fees, you generally have more favorable opportunities for tax planning to harvest gains and losses when you want to, and you know exactly what you own so that you – and we – can make better decisions over the long run.

Third, and I think most importantly for you and for me, SAM is the only asset manager out there with Stansberry Research heritage and "DNA."

As longtime readers know, SAM is separate from Stansberry Research and its publishing business, but the firm uses the investment research from Stansberry Research. We read the same newsletters you do, at the same time you receive them. And we employ Stansberry Research's basic investment strategies to manage the portfolios of our clients.

That means that in constructing our investment strategies, we utilize the brilliant recommendations that the 30-plus analysts and editors at Stansberry Research are producing... and then marry them with our own proprietary investment analysis.

It also means that you have me, a Stansberry Research alumnus, helping you with your investment plan. And most important, it means that we are guided by the same core mission that Porter founded Stansberry Research upon decades ago...

We aim to invest and manage your money the way we'd want ours to be invested by you if our roles were reversed.

And that's why I could not say goodbye...

I wanted to write you all on the day I moved to SAM to say thank you for your patronage, your great thoughts and questions, and for the trust you put in me and the whole team at Stansberry Research while I was there.

But for regulatory reasons, we first needed to tell all the existing clients at SAM about the change.

And now I can come back to you all... not with a final "goodbye," but rather a warm "hello." And perhaps, for some of you who want to hear more about SAM or like what you hear already, a "nice to see you again."

Let me be clear... SAM is not for everyone. I know that.

I know that many of you prefer to manage your investments completely on your own. And if that describes you, thankfully, you've found the perfect partner in Stansberry Research.

I know of no other independent financial research firm in the world that produces investment recommendations with as much thoughtfulness and insight.

But if you find yourself wanting to at least consider what it would be like to have a steady-handed partner help you with that task... one that is disciplined, organized, well-informed, and dedicated to optimizing your portfolio outcomes... one that simplifies your investment life and takes the emotions and guesswork out of it... all while delivering world-class customer service and attention to detail... I invite you to learn more about SAM.

We've scheduled an informational session on Wednesday, October 13, at 8 p.m. Eastern time. If you're interested, please join us to learn more about our work. Click here for all the registration details.

In addition to explaining more about SAM, we'll be providing our current economic and investment outlook, plus we'll reveal some of our favorite investments in the market right now... and ones you need to avoid.

In closing, I'll sign off as I usually did in the Portfolio Solutions monthly briefing...

Thank you for your trust and support. And if you're so inclined, I hope you will give me and SAM the chance to earn it all over again.

New 52-week highs (as of 10/7/21): Brown & Brown (BRO), Black Stone Minerals (BSM), Continental Resources (CLR), Freehold Royalties (FRU.TO), Formula One Group (FWONA), JPMorgan Chase (JPM), McDonald's (MCD), Mosaic (MOS), Northrop Grumman (NOC), Palo Alto Networks (PANW), VanEck Vectors Russia Fund (RSX), Telekomunikasi Indonesia (TLK), Tata Motors (TTM), AMERCO (UHAL), and United States Commodity Index Fund (USCI).

In today's mailbag, feedback on the global supply-chain issues that Digest editor Corey McLaughlin wrote about yesterday. Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"My wife and I spend much of the year in central Europe, however we spent the majority of the summer in the U.S. What struck us on the supply chain issues was how little we have been impacted in Europe – at least where we live – versus what we saw in the US.

"Going as far back as 2Q 2020 we never saw a run on the basic necessities of life (think toilet paper), but on our one trip to the U.S. in 2020 we of course saw much of that with empty/depleted shelves in stores.

"We have read the articles about the continuing issues in the U.S. and we can only surmise that here in Europe we import considerably less – or put another way, much less is outsourced to east Asia.

"That doesn't minimize the constraints we know about here in Europe, but they are much less of the consumer oriented types of products – when we go to Aldi/Hofer or the grocery chains we have not encountered bare or scant shelves – we have yet to walk in to buy something in the last 18 months and been unable to purchase what we needed.

"Maybe corporate America is beginning to see the fallacy of making fewer and fewer items in North America, although I suspect that isn't the case given the profit motive – but then I shouldn't complain – better for the stockholders like me." – Stansberry Alliance member Chris R.

"Corey's supply chain news on Thursday has hit home harshly. Coors is having trouble getting beer to Minnesota... Can rioting in the streets be far off?" – Paid-up subscriber Pat L.

Warmest regards,

Austin Root
Towson, Maryland
October 8, 2021

About Stansberry Research and SAM

Stansberry & Associates Investment Research, LLC ("Stansberry Research") is a subscription-based publisher of financial information. Stansberry Research is not regulated by the SEC because it is a publisher. Stansberry Research and Stansberry Asset Management ("SAM") are separately operated and are overseen by different boards. Although SAM will utilize investment research published by Stansberry Research, SAM has no special or early access to such research. They receive information from Stansberry Research just like any other subscriber does – after the issues are published. This disclosure is being provided to you by Stansberry Research in accordance with Rule 206(4)-3 of the Investment Advisers Act of 1940. The disclosure is intended to inform you of the existence of an agreement between Stansberry Research and SAM, an investment adviser registered with the Securities and Exchange Commission ("SEC"), relating to advisory client solicitation services.