Standard Oil’s Last Great Royalty Stream

What's being teased by Oxford Income Letter?

By Travis Johnson, Stock Gumshoe, November 5, 2015

Nobody likes a monopoly… except investors, of course. We love monopolies, as long as we can own shares. There’s almost nothing better than a lack of competition, because that gives pricing power and better margins and a nice steady stream of profits.

And if you can own a monopoly company that also pays out a royalty stream, well, then bring me a cold compress cause it’s gettin’ hot in here!

That’s pretty much what pops in my head after reading through Marc Lichtenfeld’s latest pitch for his Oxford Income Letter… so, wanna make a fortune like John D. Rockefeller because of one of the many companies that’s a legacy of Standard Oil? Let’s see what they’re pitching.

Here’s the intro:

“The company we’ve uncovered is scheduled to pay out a $583 million royalty disbursal in the second week of November.

“Even better… it’s tax-advantaged.

“Let me give you a sneak peek of the opportunity…

“It has to do with a company John D. Rockefeller originally founded 129 years ago.

“It has the same sort of competitive advantages Rockefeller’s Standard Oil monopoly enjoyed more than a century ago…

“Only this time… the competitive advantages are 100% legal.

“In fact, the U.S. government is one of its biggest clients. It recently landed a hefty portion of a $7.1 billion contract to manage fuel for the Defense Department.

“And this company has become even more profitable despite the crash in oil prices from $115 last year to near $40 a barrel.”

As most of the ads do, this one tosses around lots of big numbers — the royalty stream is paying out $583 million next week, and we’re told that some individual investors have pocketed huge payouts…

  • Ralph Marlow of Ponte Vedra Beach, Florida, collected a lump-sum payout of $71,120 on February 12, 2015.
  • Kevin Stratford of Greenville, North Carolina, opened his account to find a deposit of $83,556 on May 7, 2015.
  • And Frederick White of Prescott, Arizona, received a royalty disbursement of $155,237 on August 6, 2015.

To their credit, the Oxford Club folks do say that “how much you can collect depends on how much you put in.” But, of course, we can’t stop thinking about that $155,237 payout from August 6.

And maybe we can even avoid taxes on this royalty disbursement? Man, this gets better and better…

“… through the right channels, ANYONE can tap Standard Oil’s Last Great Royalty Stream. But few know how.

“Even fewer know an investment like this comes with a special tax benefit.

“Rockefeller’s secret royalty stream enjoys special tax advantages found buried on Page 3,706 of the government tax code.”

Oh man oh man oh man oh man… this is good stuff! Where do I sign up for my river of wealth?

“Imagine for a minute an account that pays a full 40 to 50 times more than the average savings account… and also increases its interest payments every single year without fail.

“Imagine an account that pays you large lump sums on specific dates each year.

“And one that offers a special tax-advantaged status.”

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Oh, I’m imagining it all right. And I’m imagining my Maserati, too, and a nice little seaside mansion… and there’s the chef, preparing fresh lobsters for me. Oh, just one little taste? I shouldn’t… OK, fine… you spoil me Chef, you cheeky rascal.

Hmmm? Oh, right, back to our teaser pitch. So how does one get on the “Path to Rockefeller’s Riches?”

OK, first… buy up every single channel of the supply chain, from drilling land to refineries to pipelines to barrels. Get rid of your competitors. Charge what you want. Simple, right? Much like my favorite Steve Martin routine, “How to be a millionaire and never pay taxes” … step one is, of course, “get a million dollars.”

There’s a long spiel about Rockefeller and the incredible wealth he amassed — he would have been several times wealthier than Bill Gates or Warren Buffett if you adjust for inflation, and Lichtenfeld says that at one point his net worth was 1.5% of the GDP of the United States. By way of comparison, in case you’re curious, you’d have to add together the fortunes of Bill Gates, Warren Buffett and Larry Ellison to get to 1% of US GDP today. Of course, if it weren’t for the Antitrust Act and the Supreme Court, his family or foundation might still effectively control 90% of oil and gasoline production in the United States, and his fortune could be multitudes larger.

Does that mean anything? Not really. You’re not angling to be the next Rockefeller, and if you were you wouldn’t be starting out by buying a few shares in a publicly traded company (if you really want to be him, start out with a hardscrabble existence, a righteous mother, a con man father, take some accounting classes, and start building your own small businesses and partnerships… and never stop looking for an angle to trade up on everything you own or control)…

… but is there a remnant of the old Rockefeller fortune that can still work for us and perhaps generate some above-average returns? We are simple folk, that will have to be enough.

Let’s see what the investment idea hiding under this history lesson might be — the basic idea is that the breakup of Standard Oil a little over 100 years ago created some of the richest companies in the world, like ConocoPhillips, Chevron and ExxonMobil, but that there’s also a “secret” fourth company we can add to that list that is way more enticing…

“… there’s a fourth company that, much to John D. Rockefeller’s delight, continued Standard Oil’s tradition of controlling all stages of production… and paying out massive amounts of income to shareholders.

“In the archives we’ve studied, we found that this fourth company has actually paid out MORE per share than Exxon Mobil every single year that we have data.

“It’s not BP, Marathon Petroleum, Pennzoil or any popular company you think he may have owned…

“But this hidden Rockefeller gem – Standard Oil’s Last Great Royalty Stream – has NEVER decreased payments.”

So that’s what we’re looking for today — what’s the “hidden Rockefeller gem?” What are we told about this one?

More from the ad:

“A Rising Juggernaut…

“The company I’m talking about here has changed names several times over the course of 129 years, and I can’t reveal the modern name yet, for reasons you’ll soon understand.

“What I can tell you is that Rockefeller founded this comp