Secret Code: 925335AD3 (More on Secured Investment Contracts)

by Travis Johnson, Stock Gumshoe | June 20, 2008 11:06 am

I’ve had so many folks ask about this one over the last week since I first wrote about it [1]that I thought I should quickly share an update.

This is from the ad for True Income[2], the new bond service from Stansberry & Associates, and just as when it was going out under the headline of the “Secured Investment Contract”[3], they’re teasing the idea of investing in high-yield corporate bonds[4] (many of these would doubtless be called “junk bonds,” if that term is more familiar to you. Doesn’t necessarily mean they’re really “junk”, just that they’re not “investment grade” due to their classification from the ratings agencies.

Now the ad is going out in a slightly different form, saying that all you need to make a mint (well, 181%) is the top secret code — in this case the code in the ad is 925335AD3.

Just to complete the circle here, that is the CUSIP code for one of the corporate bond offerings from Vertis, an advertisting company I mentioned in my original writeup[5] and that was also in the original ad.

The basics of this bond can be found at FINRA[6]. According to them, this particular bond traded at $43 most recently, probably from a $100 “face value” at maturity though I haven’t checked that — that would give you almost a 150% return to maturity just on the principal … if you get your principal back. Big “If”, I’d imagine, but I don’t really know Vertis’ situation in detail. The rest of that teased 181% gain (though it’s carefully described as a gain of “as much as” 181%) would be from the coupon payments you should receive between now and maturity next year. With a coupon rate of 10% (roughly) on the $100 principal I’m assuming, that means your annual gain should be something like 25% if you buy at $43. So that’ show we add up to 181%.

I have no idea whether or not this company will prosper, or if the bond will end up getting returns along these lines. But on average in these cases, I think it’s fair to say that the potential return is high simply because most investors believe that the chance of getting that return is low. As I noted in my original writeup of this concept, there are probably ways to reduce that risk through careful analysis of companies, and diversification so that you’re not too reliant on one of these investments to succeed.

And as I also hope I made clear, I’m far from an expert in corporate bonds, junk or otherwise — don’t make any decisions based on my thoughts here, though I hope I’ve shared enough to help you understand the situation a little better. If you check out the original post make sure to read the comments, a few folks added some good information and perspective there, too.

FINRA, by the way, is a nonprofit that regulates the financial industry — this is the organization that was formed last year (or the year before? Not sure) when NYSE and NASDAQ combined their regulatory arms into one body. www.finra.org[7] has great free data for bonds as well as lots of other useful information for individual investors.

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Endnotes:
  1. first wrote about it : http://www.stockgumshoe.com/2008/06/secured-investment-contracts-legally-obligated-181-gains-stansberry.html
  2. True Income: https://www.stockgumshoe.com/tag/true-income/
  3. “Secured Investment Contract”: http://www.stockgumshoe.com/reviews/true-income/secured-investment-contracts-legally-obligated-181-gains-stansberry.html
  4. corporate bonds: https://www.stockgumshoe.com/tag/corporate-bonds/
  5. my original writeup: http://www.stockgumshoe.com/2008/06/secured-investment-contracts-legally-obligated-181-gains-stansberry.html
  6. found at FINRA: http://cxa.marketwatch.com/finra/BondCenter/BondDetail.aspx?ID=OTI1MzM1QUQz
  7. www.finra.org: http://www.finra.org

Source URL: https://www.stockgumshoe.com/reviews/true-income/secret-code-925335ad3-more-on-secured-investment-contracts/


15 responses to “Secret Code: 925335AD3 (More on Secured Investment Contracts)”

  1. SageNot says:

    Hmmmmmmmm, I know that Vertis Comm is either a German Co. or located in Europe somewhere; but they have NO stock symbol???

    Gumshoe, HELP!

  2. brenda says:

    Vertis is a US company, based in downtown Baltimore — according to their latest SEC filings it looks like they only have 3,000 shares of stock outstanding, so they’re probably not publicly traded anywhere. If you’re the rare soul who’s hankering to invest in this company that apparently mostly produces direct mail inserts, you might have to buy their bonds.

    Not sure if the company they’re trying to merge with in combination with their bankruptcy is US based or publicly traded, though I must admit I have absolutely no interest in the business personally so I’ve made little effort to find out (I worked in direct mail for a while, and like to think that its primary benefit to society is underwriting the US Post Office).

  3. SageNot says:

    Sorry Travis, google came up with this site & it’s in both English & German, which I should have dug deeper to find out why!

    http://www.wallstreet-online.de/nachrichten/nachricht/2419272.html

  4. Carol says:

    Thank you for explaining the secret-code-925335ad3 rigamarole. Whilst the red warning lights flashed and the alarms bells rang, being a novice investor, I didn’t “understand” why I made the decision to eschew the opportunity flagged by Stansberry & Associates.

  5. Bradford says:

    Hi Travis,
    I’ve worked for Vertis Communications for almost 10 years. Speaking for myself here:

    Vertis is an American company, based in Baltimore, as Travis mentions. We are about the third or fourth largest commercial printer in the US (I believe the latest filing shows Vertis as about a $1.3 billion company). We also do billboards, fleet graphics, off-set and digital printing, and advertising and marketing services for many national companies. We have about 20 large printing plants across the US where we can print national jobs regionally to save shipping costs. Also have about 80 other locations that do creative production, studio photography, or technical support. See the website:

    http://www.vertisinc.com/

    The company Vertis is acquiring/merging with, is a smaller company named American Color Graphics. There is a press release on the website and Vertis files with the SEC even though we’re a private company. I didn’t know you could buy the bonds on the public market until I saw mention in the latest Stock Gumshoe email.

    I believe it’s a “pre-packaged” reorg to consolidate and renegotiate both companies debt. It wasn’t explained to us as a “bankruptcy”. Business is going on as usual around here. Hope this helps answer some questions (I’m not a company executive or PR person BTW, just a happy employee, and private stock market investor).

  6. slainte says:

    I am a former senior executive with the Baltimore-based firm. There are the two unrelated companies named Vertis: one in Europe in the software business; the other is the American firm, Veris Communications. The latter is the printing/direct mail company. Its primary business is printing circulars for retailers and it also has a direct mail business. Both are declining industries, superceded by the Internet. The merger is a marriage of two weak sisters. I am not sanguine about the future. The primary investment firm owners, TH Lee, et al, are finding ways to get out whatever little is left of their initial investment in both firms. The ‘turn around’ management in place now( it has been a revolvng door in the executive suite) will put “lipstick on the pig” and do an IPO.

  7. jude says:

    LOLLLLL…….I love the way you put that…I’ll have to remember that phrase [“lipstick on the pig”]!!!!!!!!

    jude

  8. themayor says:

    ALL GUMMIES…….qmnm is on fire….50 cent target…..coal mining…..2 cents a share….DON’T DELAY!

  9. Frank says:

    Cheers guys! Thank you for the input and comments that help me understand. I never know if I should really just be entertained by a company’s creative advertising techniques to “attract” new investors, or if to be insulted they’d resort to treating potential investors as a bunch of dumb sheep that need to be lured by trickery. For some reason, it seems more of an insult by the financial industry for allowing such Tom Foolery on an othwerwise very serious topic (Money. YOU’RE money!) than some tongue-in-cheek “oh, those GUYS are at it again” harmless antic.

    What I think really makes reason stare is the public response to this Top Secret [exclusive] Code to yields of 181% may be increased Scepticism, which may be interpreted by the Financial Industry as consumer lack of economic sophistication (read, “dumb sheep”) which will then have to be met by the Financial Industry with permissiveness of some harmless antic. Because, after all (the logic will have to go) “they’re just not sophisticated enough” to understand.

  10. I can not get a contract pulled up to fill out on
    True Income Basics by Stansberry . Please send me a contract.

  11. RICHARD FRIEDMAN says:

    I get offers from Stansberry & Associates all the time. Is it all BS? The ads are enticing for their secret recommendations.

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