It’s like the Stansberry folks know what appeals to your friendly neighborhood Stock Gumshoe… and they just can’t get enough of our coverage. Every time I turn around lately they’re teasing and promoting a different kind of “royalty” company.
And I loves me some royalties.
Royalty companies are pretty well understood by most investors — they’re generally passive firms that own a technology, patent, piece of land, trademark or something else of unique value, and they get paid by someone else who uses it. It could be a drug that the original developer keeps a 1% sales royalty on, or a gold mine that a financier helped to build and in return got a 2% net smelter return royalty, a patent that a chip designer gets a few cents for each time a microchip is sold with that design, a trademark owner who gets paid a few cents each time a hamburger is sold under their brand name… you get the idea. These companies are most common in natural resources, where land-based royalties are common (ie, if we can drill on your ranch you get a 10% cut of the oil profits), but they exist in many industries in varying forms.
And the Stansberry folks, over the years, have probably pushed this idea more aggressively than anyone else — often comparing them to book royalties in saying that you could profit from the “secret” that fattened the bank accounts of the Obamas, the Clintons or the Bushes. We even looked at a different “Next Great Royalty Company” that was teased by Dan Ferris a few weeks ago (Ferris edits Extreme Value, another Stansberry newsletter).
But this time, the tease is from Dr. David Eifrig, who runs Stansberry’s Retirement Millionaire letter — his letter is often full of discount-hunting strategies and unconventional ideas that I’d call “money-making hobbies” (he may be best known to Gumshoe readers for his “five magic words” spiel about how to get “free” silver from your bank), but he does also make investment recommendations… and this time he’s got his own “next great royalty business.”
He would, of course, prefer that you sign up for his Retirement Millionaire and get his special report on the next great royalty… but in enticing you to subscribe, and in making it sound real and exciting, he throws out enough clues that we can ID the stock for you for a better price (more free-ish, as we like to say). Then you can relax, take your time giving it a look-see, and then decide without any pressure whether it’s a stock you like… or even whether you want to subscribe to his newsletter. Heck, maybe you’ll love it — but don’t subscribe just to learn this “secret.” It won’t be secret for long.
Here’s how Eifrig teases us about this idea:
“Every time the royalty ‘business model’ crosses over into a new industry, early investors have a chance to lock in astonishing gains…
“And it’s happening in one VERY exciting industry, if you move quickly…
“You don’t have to be a songwriter… an author… a celebrity… or even do any real work to profit from royalties…
“You don’t have to own any land or natural resources either… which is exactly why the opportunity I want to tell you about is so original.
“You see, from time to time… the royalty ‘business model’ crosses over into new markets and becomes available to everyday people like you and me.
“And history has shown that investors who recognize these opportunities early on can make an absolute fortune.”
Sounds exciting, no? He compares it to past successful royalty investments with star power and cachet, like the Mills Music Trust (MMTRS) that owns the copyright on thousands of old songs (mostly hits from the 20s and 30s, though the biggest earners are a couple Christmas songs) and earns royalties on them that are passed through to unitholders (Paul McCartney was the largest shareholder of the trust, don’t know if he still is — it’s still publicly held, though almost never trades these days and distributions were low for a while due to a dispute with EMI), and to the big windfall payments being earned by landowners who sit above the oil and gas riches in the Marcellus Shale and similar areas. And he mentions other big publicly traded companies that resource investors are very aware of, like Franco-Nevada (FNV) and Royal Gold (RGLD) — royalty companies that have also been teased dozens of times by newsletters, including Eifrig’s Stansberry colleague Matt Badiali just a few weeks ago when he pitched them as “gold banks.”
So what is this next royalty opportunity? Apparently, it’s part of a huge market:
“Now, the royalty business model has crossed over into another market—one that’s more valuable that the music and gold mining industries COMBINED.
“For instance, over half of all Americans (58% to be exact) own this industry’s product. In fact, nearly one-third of Americans say they cannot live without it.
“22% of the world’s population own one.
“Altogether, this market grossed more than $337 BILLION in 2013… and is projected to grow to $442 BILLION in four years.”
Sounds like a big deal, no? Don’t worry, he doesn’t leave us to guess what the market is, he provides some more clues:
“The industry I’m talking about is the highly lucrative global smartphone market….
“What if I told you I’ve found a company that gets paid a huge royalty virtually every time a smartphone gets sold anywhere on the planet?Are you getting our free Daily Update
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