Sleuthifying Curzio’s “How to Make 3 Times Your Money on Patent Royalties”

What's Phase 1 Investor's "black box" pick that owns "The Most Valuable Patent in America?"

By Travis Johnson, Stock Gumshoe, December 3, 2013

OK, so this one’s a bit tricky. And not just because the clues are a bit limited. Don’t worry, we’ll still find an answer for you … but a caveat or two first …

Frank Curzio edits Phase 1 Investor, which is Stansberry’s “big ticket” newsletter that typically covers small tech, biotech and natural resources stocks — the kinds of small cap companies that can sometimes generate 90% losses or 500% gains very quickly. And it’s $5,000 for a subscription, so they’re obviously not getting an overwhelming number of buyers — but they do tease the stocks they pick in occasional “presentation” ads and we usually cover them when they do, and the stock very often goes up as a result.

Why? Well, because they’re getting hundreds of thousands of people excited about it, since they have access to the largest mailing lists in the investing world, but most of the folks who see the ad and get excited by the prospects of this “secret” stock won’t want to (or can’t) pay $3,000 (that’s what they usually offer as the “on sale” price) to find the stock. And rightly so — subscribe if you want to, it may be a fine letter, but never subscribe just to learn the name of a “secret” stock.

And so a certain (admittedly very small) number of those folks who saw the exciting ad will start searching far and wide for free information about this secret, and an (even smaller) group of them will find their way to the friendly shores of Stock Gumshoe and learn, after we sniff through the clues, just what the stock is. Or find it out on their own.

That last group, the folks who learn about it for free, is probably still teensy in the grand scheme of things … but it’s likely substantially larger and less-informed (about this stock) than the folks who actually shell out $3,000 as new subscribers this week to read Frank Curzio’s special report on the stock. (I haven’t asked them what the subscriber base is for Phase 1, I’m just guessing, but I know folks who read Curzio’s piece will be better informed than my readers because I’m just trying to give you the name, ticker, and some basic info so you can research it for yourself.)

And if even a small portion of that group, the folks who learn about the stock for free, are jazzed up enough by the promo language in the ad that they feel like they have to buy the stock immediately, it can jerk the share price up even if nothing’s happening with the company. And presumably, the folks who actually subscribe to Phase 1 have already bought their shares so they can see a little appreciation from this.

Which means that even though Curzio is probably being honest when he says he’s trying to keep it under wraps, there’s probably some delight in having this stock be more widely known after his subscribers have had a chance to buy.

So is that enough of a wet blanket for you? Sorry, I like to try to counteract the hype and optimism of the ad before I even tell you what they’re pitching — sobriety, patience and caution are often good qualities (and hard to come by for me personally). Ready to learn about the stock?

Curzio asks you to sign a “confidentiality agreement” that says you won’t share information about the idea if you choose to participate. I didn’t choose to subscribe and participate, thankfully, so I don’t even have to worry that I’m violating this dubious “agreement”. Imagine my relief. Here’s how they introduce the idea:

“Stansberry Research’s Newest BLACK BOX Opportunity

“A stock with such potential (100% to 200% gains), we can tell you almost nothing about it… and we’re asking readers to observe a strict confidentiality agreement through Jan. 1.”

I hate to admit it, but I was a little disappointed to see that — I guess I see so many promises of 1,500% gains and 10,000% gains that the boring old 100% or 200% just seems so humdrum now.

And the other thing that made me want to dig into this — other than the challenge of identifying a stock with very few clues — is that Curzio is again talking royalties. And I love me some royalties.

There are lots of ways to earn royalties … you can write something popular, invent something, own a valuable trademark or own property where oil or gold is found, etc. You can also buy and sell royalties, so there are a fair number of companies, mostly in biotech, natural resources, and technology, who own and invest in royalty-producing or possible royalty-producing assets.

The beauty of these kinds of companies is that they have low operational costs — they aren’t in business, really, they just take a cut of a business, so a few accountants and bookkeepers and lawye