“You never see investment returns like this.
“32,000% on one deal. 900% on another.
“All told, these guys have made nearly $14 for every $1 they’ve ever invested.
“So who are they?
“It’s not Warren Buffett and his team at Berkshire Hathaway… or the exorbitantly paid investment team at any of the big New York hedge funds.
“This track record – stretching back nearly 15 years – belongs to a group of natural resource investors who’ve discovered a way to capture the upside of mineral prospecting while taking almost none of the risk.”
That’s the latest intro to a teaser pitch from Dan Ferris for his Extreme Value newsletter over at Stansberry & Associates, and I’ve gotten such a crazy number of questions about it I felt the need to share the solution to the tease again. I wrote a little bit about this teaser ad for the Irregulars about two weeks ago, when this version of the ad campaign really ramped up again, so I’ll re-share some of that and update my thoughts a little.
I won’t beat around the bush so much this time, since I’ve covered the stock so often, but yes, Dan Ferris’ pitch for Extreme Value over at Stansberry that’s headlined “If I had to pick one stock to put all my money in – this would be it” is indeed another pitch for Altius Minerals (ALS.TO, ATUSF).
Altius is one of my largest equity holdings personally, and I have no interest in selling it at these prices, so I understand the enthusiasm Dan has for the stock — but this particular paragraph is a bit much…
“I recently told readers to SELL Microsoft, Intel, even Berkshire Hathaway. They no longer meet my high standards.
“But I would bet my savings, my house, and my career on a single, cash-gushing company in the world’s most lucrative business.”
Now, I’m sure he sold those stocks for other reasons, having to do with perceived overvaluation or having met his “target price” criteria, he didn’t sell them just to plow all that money into Altius — but still, implying that you should sell several brand-name blue chips to put all your money into one commodity stock, even a great one like Altius, gives me a little bit of the heebie jeebies. He sold Berkshire last June, if you’re curious (he announced as much publicly, it was around $128 then), but the others were recent sells (Exxon Mobil, Wal-Mart, Procter and Gamble, Microsoft, and Intel were sold from his portfolio, he says).
All were likely sold at large gains, I suppose, since they fall in his “World Dominators” category of long-term dividend growers and some of them were probably bought near the trough of the financial crisis. I don’t think I would make that kind of a market call even with lots of big “blue chip” dividend payers being relatively expensive, so I guess we should give him some credit for being bold. And, to be fair, he does carefully say that although this would be the one stock he would buy if he was told he had to buy just one, it’s dumb to put all your money into just one stock.
It’s possible that he’s being terrifically prescient and that we’re at or near a peak for all these large cap dividend stocks, and I haven’t been terribly tempted to buy any of them recently (I don’t own any of those specific ones, aside from a teeny Intel position), but selling them all at once really means that you’re effectively timing that segment of the market — and for most people, it’s psychologically very hard to get back in once you’ve sold a “forever” stock like those.
Personally, I sold some of my lousier commodity stocks not that long ago in order to buy more Altius — and the jury’s out on that call as well (though it looks good thanks to Ferris driving the price up this week). It just seemed silly to hold a handful of speculative commodity price-driven companies when I knew that one of them, Altius, has a much better risk/reward tradeoff than the others. I still feel that way, this is certainly the first “mining” stock I’d buy, and it’s by far my largest position in the natural resources sector, but I’m not selling Berkshire Hathaway (or Apple, or Markel, or Facebook, or any other good companies who aren’t primarily commodity-driven) to buy more Altius.
Is there a reason for the big push for Altius as the “If I had to pick one stock to put all my money in” investment today? Anything other than the fact that Ferris is still calling it the “Next Great Royalty Company,” as he’s been doing for the past year or so?