Oxford Club’s “‘The Greatest Investment of All Time’: Collect 212% Instantly, Plus 25.7% Yields.”

What's Alexander Green's $8 Investment being teased by the Oxford Club?

By Travis Johnson, Stock Gumshoe, February 13, 2018

The latest pitch from the Oxford Club is all about another change from Trump’s Washington that they think will make you rich — and they’re not at all shy about throwing some hyperbole on the fire, saying that Trump will “unleash the greatest investment of all time.”

So what is this investment they’re hinting at, with 212% “instant” gains and an ongoing 25.7% yield? There’s gotta be a catch, right?

Let’s feed some clues into the Thinkolator and see what we learn…

“You see… in August 2012, as part of so-called financial ‘reform,’ President Obama quietly set a major restriction on this particular investment.

“Now… some might say he did it to ‘protect the American people.’

“But there was something rather peculiar about this restriction.

“In short, the rule made it so the government could profit from this investment…

“But the public could not!”

And many folks in Trump’s camp are apparently interested in changing this — or, in the ad’s words, “lifting the restriction” …

“This is a 2018 issue. We are going to fix it.”
– Treasury Secretary Steve Mnuchin

But this is something that you can apparently invest in without waiting for these “restrictions” to lift… so what’s the deal? Here’s a bit more from the ad:

“[Mnuchin] and Trump declared it a ‘top priority’ and have laid the groundwork to get the profits from this investment back into the hands of everyday investors like you and me.

“But here’s the best part.

“You can already buy into this investment today… for as little as $8….

“If all goes as planned, the moment Trump rolls back Obama’s move… this specific investment will automatically jump in value.

“And overnight, it should climb from $8 to a predetermined new price of $25.

“That’s a 212% gain in a single day!

“But from there… there’s no telling how high it could go.

“PLUS, as long as you get in today, this investment will also begin shoveling out a massive 25.7% payday.

“Imagine collecting a 25.7% annual payout… for the rest of your life.”

Then we get into a long spiel about how this special kind of secret investment has a long record of making people wealth, from the early railroad investors to Warren Buffett…

“America did not yet have the strong financial markets necessary for businesses to raise needed capital.

“So as a way to entice investors…

“An entirely new type of investment was introduced on a Baltimore and Ohio Railroad project.

“One that offered everyday investors…

“MASSIVE upside
“MASSIVE yields
“And SECURED payouts, on top of a slew of other benefits.

“Investors piled in…

“And the railroad projects flourished…”

And apparently it’s not just this particular investment, but the broad class, that they’re calling “the greatest investment of all time” … more from the ad:

“I Call It ‘the Greatest Investment of All Time’ for a Very Good Reason…

“In short, the basis of the greatest investment of all time is a special class of ownership in a company that gives you a higher claim on assets and earnings than common stockholders.

“With this special class of ownership, you get massive upside.

“PLUS, your risk is much more limited than it is with regular investing.

“And you get huge, safe dividend yields (much bigger than those of common shares) that in almost all cases cannot be cut.

“In fact, Forbes says they ‘tend to be steadier than regular stocks, thanks to their big dividends.’…

“You also get priority over common stockholders when it comes to these payouts… meaning you’re paid first… AND you can be paid monthly.”

OK… so in case that sounds unfamiliar to you, what they’re referring to is preferred stock — a type of equity that is senior to common stock and usually trades more like debt, with a relatively high (but usually fixed) dividend.

Sometimes preferred stock is also convertible, sometimes the dividend is flexible, sometimes it is redeemable or callable, the individual offerings vary… probably the most popular structure is a fixed dividend that’s substantially higher than the dividend yield of the common stock and often also higher than the coupon on any debt the company offers, and these are usually offered in $25 increments and have public listings on the NYSE or other major exchanges, but are generally fairly illiquid and don’t trade a lot. The preferred dividend is ranked above the common dividend, and preferred shareholders also get priority over common stockholders in a liquidation or bankruptcy… but they are behind debtholders, which is one reason why the preferred often trades at a higher yield than the debt.

A lot of the examples you’ll hear of fantastical returns on preferred stock are either from historical fantastic bull market runs, like the more speculative railroad stock preferreds they mention in the ad, or are specific preferred offerings that were not publicly traded — like the hugely lucrative preferred stock deals that Warren Buffett engineered for Berkshire Hathaway when Goldman Sachs and Bank of America and others came to him in need of liquidity during the dark days of 2008 and 2009. Even if you’re very fortunate with your timing and you get a chance to jump in on a forgotten preferred during the next crash, you’re probably not getting deals like those.

So the broader tease is about preferred stock… but clearly the specific hints are about a particular company that’s got some regulatory or government issue that needs to be resolved What is it? More clues:

“U.S. Government’s $251 Billion Profit Stream Would Shift Back Into the Hands of Everyday Investors

“The moment Trump officially rolls back Obama’s anti-American initiative, a flood of riches will instantly pour into the hands of ANYONE who owns one particular set of this special investment.

“Each special share of the investment currently sells for around $8.

“But the moment Trump makes his move… I believe the price MUST immediately jump to $25.

“This could even happen as quickly as within 24 hours.

“It’s not a guess as to whether it will go to $25. It’s a predetermined figure.”

OK, so it’s a preferred stock with a $25 call or liquidation price that has something to do with the “U.S. Government’s $251 billion profit stream.” What the heck does that mean?

Thinkolator sez this is getting back to one of the most talked-about hedge fund speculations of the past five years: Fannie Mae and Freddie Mac, and, particularly, the publicly traded preferred stock of Fannie Mae.

You probably know Fannie Mae (FNMA, trades OTC now) as some sort of government mortgage agency, though they are not officially part of the government (they’re a GSE, a government-sponsored enterprise) — for many years they were used by the government as a way to encourage home ownership, by backstopping and securitizing mortgage loans into bonds that people could invest in, creating easy access to mortgages. The US government never officially promised that they would make sure that all mortgage bonds created by Fannie and Freddie and the other GSEs would never default, but they allowed the “inferred promise” to be top of mind for investors, and so when the housing crisis turned into a crash and those mortgages were defaulting like crazy, the government did step in and provide the capital for Fannie Mae and the others to backstop their guarantees. The alternative would have been a giant wash of bankruptcies.

But as part of the deal to take FNMA into government conservatorship, Fannie Mae and the others were effectively taken out of the “rewarding investors” business in September of 2008. They gave up about 80% of their equity to the government and were forbidden from paying dividends, with all profits from then on going back to the government (their profit comes from a fee on each mortgage, and on whatever they earn by packaging and selling those in-demand mortgage bonds — which still carry that inferred government promise of “no defaults” and yield more than regular government bonds, so they’re still in high demand around the world… with the Federal Reserve being one of the biggest buyers during their quantitative easing program).

But Fannie Mae and Freddie Mac were both publicly traded before the financial crisis, and those stocks remain — though they trade over the counter now and are no longer listed, and the Feds have not allowed them to pay dividends since the financial crisis (other than the preferred dividend they pay to the government, of course). And the preferred stock that they used, lots of different tranches of it, is also still traded and still available, despite the fact that none of the preferreds have paid their required dividends since the government takeover.

So the speculation, from Alexander Green and the Oxford Club folks, is that the Trump administration will fulfill its promise and start to get the government out of the “backing and sponsoring mortgages” business, which would mean getting investors involved in Fannie Mae and the others again to recapitalize them. Which would bring back the legal rights of those preferred and common shareholders, they hope (this has been in court for years as hedge fund guys and other major investors have claimed that the government takeover/rescue/conservatorship of Fannie Mae constitutes an illegal “taking”, but the court cases have not generally gone the investors’ way so far).

For a long time the poster child of the “take back FNMA” movement was Bill Ackman, who presented on that idea many times and still holds a substantial amount of the stock in the GSE’s in his Pershing Square fund — you can see the presentation he gave to the 2014 Ira Sohn Conference here, entitled “It’s Time to Get Off Our Fannie”… he hasn’t had any luck getting traction in Washington or in the courts, or at least that’s what the share price indicates, but Pershing Square is still a major holder of both Fannie and Freddie and he still talks publicly about his expectation of a 5-10X return on those positions.

More prominent recently has been John Paulson, perhaps because he was such an ardent backer of Trump’s presidential campaign, and Paulson and Blackstone floated some proposals last Summer for privatizing Fannie and Freddie. The budget deal that passed recently, with its expected framework for government spending over the next two years, did not address the fate of the GSE’s as far as I know, and President Trump’s proposed budget reportedly raises some money through the GSE’s by increasing the fees that they charge — and the new tax law will actually have a big one-time cost for Fannie, apparently, though I don’t know what that means in the long run.

The government, in the persons of Treasury Secretary Mnuchin and new Fed Chair Powell, at least, has long been committed to re-privatizing Fannie and Freddie, but what form that takes — or if they can do it if Congress objects, or if they have to give up the government’s dividends from Fannie, I don’t know.

So there’s plenty of uncertainty about what will happen — whether the pre-existing shareholders in FNMA get what they want, or whether the preferred shareholders get the payday they’re hoping for, or whether there’s some negotiated deal, or the government throws the hedge fund guys (and their campaign contributions) under the bus. This seems to me like pretty unprecedented stuff, in a legal sense, and I don’t logically see how you can get political cover for a windfall profit for some of the major investment community members who were or are major Trump backers, like John Paulson and Bruce Berkowitz (and even the beaten-down billionaire Bill Ackman), though we have certainly seen that you don’t have to embrace logic or consistency to make a name for yourself in Congress or the White House… and it’s also hard to see the government holding on to Fannie Mae forever.

So yes, those preferred shares still exist… and most of them should be paying out dividends on average of about $1.50 or so per $25 preferred depending on which series you look at, though there are some higher-rate preferred as well so perhaps that’s where the 27% numbers are coming from (there are also some $50 preferred shares — the $25 ones tend to trade just under $8 these days, the $50s trade in the range of $12). So if you bought one of the $25 preferreds for $8 today you could theoretically someday be looking at a huge yield if they start paying dividends again, or a jump up to $25 if the government calls your preferred shares at par. But they might also be worthless, and we’re coming up on the tenth anniversary of the last time these preferred shares paid a dividend. I would be very hesitant about assuming a particular outcome, because even the folks with the most skin in the game, the hedge fund investors who have had armies of lawyers working on the case for at least four years now, have not gotten what they wanted. They might, and I find the case fairly persuasive that Fannie Mae shareholders have gotten a raw deal… but it’s not me they have to persuade.

If you’d like to look into some of these different preferred offerings from Fannie Mae (or, really, any preferred stock) my favorite research source on this is QuantumOnline, which is free and fantastic — their list of FNMA-related securities is here. Read the prospectus, think about the risk you’re taking, and make your own call — just keep in mind that several billionaires have lost a lot of money on this already, and the presence of several champions of their cause in government for the past year has not made much difference… at least, not yet.

The best relatively short and recent commentary I’ve seen on the situation is here, from the folks at Northern Trust, but there are lots of very different prognostications floating around on this point. And yes, the Republican budget proposals in the House last Summer floated FNMA privatization again, though that didn’t get anywhere just yet and there’s almost certainly more than one way to “reprivatize”.

So yes, these crazy securities exist, and some very wealthy people are betting on either the common or preferred shares of the GSEs… but make sure to weigh the risks and probabilities yourself, and think about the possible range of outcomes. Preferred stock is generally a lower-risk investment than common stock, partly because of high dividends and senior status in the ownership structure (often, interest rate risk is the larger concern with preferreds), but don’t imagine that these investments in a quasi-governmental agency that remains in conservatorship are without risk — there are probably a range of possible outcomes, but they certainly aren’t paying those “secured” payouts now and they haven’t for almost a decade, and I’d personally assume that there’s a non-trivial risk of losing 100% of your investment in any of the common or preferred stocks associated with Fannie Mae or Freddie Mac.

Doesn’t mean a speculation here won’t work out, but you don’t generally get the potential for 200-1,000% gains without putting your principal at real risk — if it were obvious and clear that Fannie Mae would return to its former glory and resume paying dividends to preferred stockholders, the shares wouldn’t be trading at these levels, optimism among Fannie Mae investors is lower now than it was a year ago.

With that, dear friends, I’ll leave you to your musings and your moneymaking — what do you think? Ready to jump aboard FNMA common or preferred and bet on that government or legal decision that might let you reap a windfall? Think any of those preferred shares look better than others? Let us know with a comment below.


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58 Comments on "Oxford Club’s “‘The Greatest Investment of All Time’: Collect 212% Instantly, Plus 25.7% Yields.”"

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kerrmac
Member
5

Too many words. Seems like a scam. I can’t understand why people don’t try to differentiate themselves from scams by using less words. It’s a shame because everyone gets tarred with the same brush and some people miss out on good opportunities because the salesman has not done enough to differentiate himself from the con man.

Marc Pearsall
Guest
0

In the newsletter business, they are ALL con-men. Just like mining executives (definition of a miner – a liar standing at the top of a hole in the ground!)
Just kidding about the miners, but I have little respect for the newsletter business. Just talking heads that want to sell you, then up-sell you, subscriptions.

jillsami
Irregular
58

Marc, are you talking from personal experience ? I receive newsletters from three writers, and they have helped me to
invest more intelligently. Perhaps you’re more experienced
than I am at stock trading. Newsletters may be a waste of
money for some investors, & might be for most investors.
It has been worth the six thousand dollars I’ve spent.

pallee12
Irregular
6

I always just skip to the end and look at the cost. The wordiness is goofy and ultra-repetitive in most cases, and I think is there to soften the blow of the ridiculous cost of signing up for a scam. They are pretty much all, in my experience, scams of one kind or another, although I have had some luck with a few of the Motley Fool suggestions presented in similar format.

jillsami
Irregular
58
Who the heck tells it without all the “fluff” ? I’m willing to pay for good information, even if the stock picks don’t pan out so good. I started subscribing to several newsletters, a few months ago, and I’m already disgusted. with all of them. Do the writers get paid according to how long their newsletters are ? It seems that way to me. Have any of you found a reasonably priced newsletter that has been a benefit to them a good percentage of the time. I’m not looking to make a fortune, just a good return. If I could… Read more »
Gr8Full!
Irregular
11091

tells it without all the “fluff”… StockGumshoe.com
#Best2ALL!

vivian lewis
Guest
0

dear Jillsami
look at http://www.global-investing.com

Lyryn
Guest
0

Alessio Rastani ….

Jeff Furlong
Guest
0

Oxford Club Communique. 49bucks And good returns. Don’t try to cherry pick, you may pick one of the not so great ones, but following the Trailing stop system you will never lose more than 1% of your portfolio.Due some DD on them. You may like what you read. Long live Travis! TY for the platform.

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msanghadia
Irregular
3

I think their aim in writing those long and wordy newsletters is to progressively lull the reader into a hypnotized state wherein the reader begins to give the story the benefit of the doubt, eventually giving in and abandoning any rational chain of thought. This is why I so appreciate Travis, who somehow keeps his rational head on while analyzing those newsletters and gives us a “quick take” on the spiel.

william
Guest
0

for jillsami. Contrarian Outlook is an excellent source for solid returns in the 8% area. It is not a stock picking service. One will not lose money, in my opinion, with this service. And some recommendations have returned as much as the S&P 500 over a several year time period.

oldguy
Irregular
-2

So I buy FNMA at $1.86 x 25 then I’m get the divided?

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586
crumdo
Member
8

Oxford Club??? If they have such stock hits why are they not in their portfolio. You want to see how good they are look at their portfolios..most are losers. They make their money on the suckers that sign up and then discover if you want to know the real stock symbol you need to sign up for one of their several options along with outsiders they tout and get a fee. No, thanks, I checked em out and cancelled within the 30 days…

Barry
Guest
0

Just to add a little balance to your post – I’ve been with the Oxford Club for many years and I have made some nice money on their picks. I subscribe to their main trading portfolio (The Communique) and Marc Lichtenfeld’s Income Letter. It’s all about dividend-paying stocks, which is my main interest. To each his own of course.

Jeff Furlong
Guest
0

That’s why we have Travis and I don’t think you have enough info. Telephone call told me the True Value Alert averaged 37%, I don’t have the capital to follow 2 newsletters, TheCommunique will have to do for me.

Chuck P
Guest
0

Sounds way too high risk for most investors. Anytime you have the Government involved you can’t really be sure of anything.

Glenn Henderson
Guest
0

FNMA shows no dividend payable ????

wcdave
Irregular
5

Thanks for your insight Travis. I also appreciate and share the views of folks comments with regards to newsletters. I have a friend that subscribes to a couple that he finds helpful but as a general rule my opinion is if they’re making so much money in the stock market why are they working so hard to sell newsletters. I have a hunch that the majority of their income comes from making “recommendations”.

4lllls
Guest
0

Pi k n shovel sellers of the gold rush. If everyone would complain to their attorney general’s office about your losses and their push to get you to buy the stock so they know when to dump theirs. I am told this is illegal but until enough complaints are filed they will continue. They should be shut down.

sparhawk
Irregular
7

Very true, the info commercials are the worse of all They drone on and on for 30 to 40 minutes. At the end of the videos you need to subscribe to their newsletter to get the stock symbols they are promoting. Scam. And it you take them up on their “Free” sample you get charged $99 dollars a month or more, which is in very fine print. I don’t trust any of them, just a ruse to get y0ur money. Travis is the best, long live “Gumshoe”.

Gary Anderson
Irregular
24

Good research Travis. This wouldn’t be investing, it would be gambling on a legal outcome for which one has no reasonable way to gauge the probability of success. Thanks for poking into this.

yukonjack
Guest
0

The vast majority of these newsletter make more money selling subscriptions than do their recommendations. It is always amazing how they can predict the returns down to the exact percentages. My experience has been that for every 1o stocks or bonds or whatever they tell you to buy, 1 or 2 might actually make a positive return. Unless you have at least $100K to throw at these recos, you’ll not do well. Of course, there are always exceptions and some investors do make a good return, if they are lucky.

orphan brigade
Guest
0

Snake oil salesman…better luck betting on a horse race..

Jeff
Guest
0

Thanks gumshoe!

Mackke
Guest
0

Travis is an absolute treasure to us regular Joes
who are just not ever going to buy in to one of
these newsletters. Thanks so very much, Travis!

Dayton
Guest
0

Ohhhh, if only these were cumulative. . .

queenbeehoney
Irregular
5

I finally cancelled my subscription to the Motley Fool, should have done it months ago. So much hype, so little help.

green2017
Irregular
2

I subscribe to a number of Motley Fool Canada services and I have been happy with their recommendations. I still spend 45 minutes to 2 hours researching each stock but it helps to have some extra ideas about where to look.

star5707
Guest
0

I am inquiring about a new energy company ,without transformers and wires’t is started by an Indian dude and is called Bloom Energy. I have no clue ,how successful it will get, At this point he is using sand discs and dropping some O2 and some accelerators. It sounds too phony ,but he has already sold such equipments to Google for more than $500000. John door from Silicon Valley is pretty confidence that this might work for homes and small businesses. Need to know what you think about this invention?

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SageNot
Guest
0

I clearly remember when Alex Green was one of the best & trusted gurus, what gives with Alex now?

Janis
Guest
0

I have a lot of preferreds and they’ve been great for the 5 or 6 % income each year, but I wouldn’t buy them now with interest rates going up because the older ones will come down in value per share. I would wait for the new ones to come out at 7 and 8 % when money starts getting tighter and they corporations have to offer more to their investors.

batlady
Irregular
0

Anyone know about” Identity Bitcom”

SageNot
Guest
0

BTW Travis, is this ID Coin deal flashed by Stansberry legit? Seems t/b a fairy tale!

pauldizadji
Member
2

I hold a few preferred stocks, they are generally sound. Liquidity can be an issue, and then when you find one that’s fairly liquid, it also has increased volatility. But they are a decent investment if you know what they are.
As for this FNMA thing, seems like very long odds for a pay-off. Getting this sort of info with my free membership option from Gumshoe is incredible.
Very much appreciated!

laeeqahmad
Irregular
0
As markets become bullish, there are so many Wall Street ex pundits a gurus who want to make you milliners over night with your paid sbscription of $3000 to $5000 but just for first one thousand people who join their club. Majority of them have either silicone valley inside knowledge or they know in and out of the Wall Street. Their presentations, webinars keep going on and on until you just fed up the same mantra they keep on repeating or just for the curiosity you just switch to the text of the same presentation just to get to the… Read more »
laeeqahmad
Irregular
0

1000X3000; 300,000

Tim
Guest
0

3,000,000

Glenn Henderson
Guest
0

Sorry Travis I have no clue what this all means. In looking at this stock symbol I am lost with where this going. Gobbledygook…..

don_x
Irregular
34

I usually start at the end of a presentationo and scroll backwards. The meat is usually at the end.

laa0709
Irregular
88
Out of ignorance and eagerness I subscribed to Momentum Trader of the Oxfordclub for a rather hefty premium on account of a promotion based on so called “Dark Trades” where it was portrayed in very dramatic fashion that Alexander Green sits in some obscure dark back office monitoring legitimate insider trading and hence identifies stocks that attract large volumes of buying, which stocks he then imparts to the select subscribers just before the prices skyrocket – with the added bonus of a virtually guaranteed $80,000 profit opportunity if you subscribe immediately. Very enticing and exciting, the days of research and… Read more »
Paul
Guest
0

What does this mean?

“The tax reform act will discount the value of deferred tax assets held by Freddie and Fannie…”

I don’t really know what “deferred tax assets” are, either.

DanJ
Guest
0

Just searched FNMA on yahoo finance. Not sure where the 8 bucks comes from but it comes up as 1.79 OTC?
Somethings amiss.