What are Chris Mayer’s “CPR Plans?”

Sniffing out the teaser for Mayer's Special Situations

Agora Financial has been trying to sell Chris Mayer’s Special Situations newsletter by pitching his “CPR Plan” — which is a strategy that he says he uses for 53% of his investing portfolio, and which has “NEVER lost money.”

I generally have a fondness for Chris Mayer’s stuff — he gave a good presentation at the Value Investing Congress earlier this month, and, despite the sometimes wacky promos run by his publishers, his actual investing ideas are often well-thought-out value pitches … at least, among the ones that I’ve unearthed in sniffing through his teasers or read about elsewhere. (He’s not alone — many newsletter editors are far more serious and analytical than their overheated teaser pitches would have you believe.) Mayer has had plenty of losing ideas too, of course, particularly in the commodities space, but I like looking into his pitches.

And this time around, he’s keeping his idea very obscure in the ad — he hints around about the existence of some nondescript buildings that will make us rich with these “CPR Plans”, here’s a sample:

“Sitting in a middle-class Texas neighborhood is an unremarkable box-shaped building. It’s close to the Stone Pony Apartments and across the street from the Pitman Creek Estates.

“The city is Plano — just north of Dallas. Nothing is famous about Plano. But if one day you found yourself driving on W. 15th Street in Plano under the hot Texas sun, you probably wouldn’t even notice this boxy building — let alone give it a second glance.

“You wouldn’t know that the activities that go on inside this bland concrete structure every day have made certain Americans — Americans who are in on the secret — about 76% richer in the past couple of years.”

He goes on and on about these buildings, citing a few other examples — but tells us that although the workers insider are doing something perfectly ordinary, and not building secret stuff, the money is flowing:

“Yet inside, workers are making folks far richer in just a couple of years. Returns that double, triple, quadruple their money and more!

“And here’s the amazing part. The workers inside don’t produce any physical goods. The building isn’t a biotech lab… a manufacturing facility… or a store of any type.

“What They’re Doing Inside Is Making a Few Americans Very Rich… Practically Without Any Worry

“Why no worry? Because there’s perhaps no better — or safer — way to make money in America today than by noticing what goes on inside these ‘invisible’ buildings.”

So what are these “CPR Plans?” Mayer pretends to answer that without actually supplying any of the crucial words that would make you say, “oh, THAT’S what he’s talking about!” …

“CPR stands for community profit return. And it could be a lifeline to restoring or growing your retirement wealth — even if you are NEVER a member of the plan. Because the fact is… anyone can use this low-risk, high-gain plan — if they only know about it.

“The origins of the ‘CPR Plan’ date back to the early 1800s. The first plans were created in England, but the idea quickly traveled across the pond to be a staple in American life. The first U.S. plan was created in Philadelphia on Dec. 20, 1816.

“Over the centuries, ‘CPR Plans’ grew in popularity. By 1986, 3,234 of these ‘CPR plans’ existed. But since then, you can thank government meddling for drastically cutting the number of ‘CPR Plans’ around. Only about 600 exist today.

“That’s because ‘CPR Plans’ have been forced to turn themselves over to Wall Street. It’s a final last-resort effort that allows the outsider turned CPR-hunting insider a shot to collect a final bonanza of gains. Most investors remain clueless about this event… and never even hear of this potentially profit-busting opportunity.”

What, “Community Profit Return Plan” doesn’t explain it for you?

Have no fear, your friendly neighborhood Stock Gumshoe is here!

These are mutual savings banks and thrift savings banks that are moving to full public ownership — so called “thrift conversions.” And these locally owned community banks that sell stock in an offering and convert to being publicly traded banks, sometimes over a couple steps, have been a focus of Mayer’s for a while.

He says he sees a big opportunity in these thrift conversions because they generally have an appealingly high level of cash and deposits, they don’t usually have complicated balance sheets or hidden liabilities or risky businesses … and they are likely to all complete conversions and go to full stock ownership in the years to come if they haven’t already, and, most likely, will be bought out in the expected continuing wave of small bank consolidation — largely because new banking regulations are a pain in the neck and sometimes costly, and it’s hard for a small bank to justify staying independent once they’re majority owned by public shareholders.

Here’s how he puts it:

“A recent study conducted by PricewaterhouseCoopers on the impact of Dodd-Frank on ‘CPR Plans’ concludes that ‘perhaps no group faces more substantial challenges to its business model’s long-term viability than [CPR Plans].’

“But for the informed investor, that’s actually good news!

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“That’s because if the business climate gets too tough and “CPR Plans” do decide to “sell-out”, it creates a unique profit opportunity fro investors who follow this strategy closely – like I do.

“All of these new regulatory changes are spurring a final wave of ‘CPR Plan’ profits that you can participate in right now.

“Here’s one more thing you should know about the fate of private “CPR Plans”: Dodd-Frank hammers the final nail in the ‘CPR’ coffin.