Gumshoe readers wanna know: What’s a “Liberty Voucher?”
And you can see why — inspired by the success of the ads that tease us about “Freedom Checks” or “Trump Bonus Checks”, this one from Nilus Mattive is all about getting your attention with the idea that those who don’t have enough cash flow to retire comfortably can “claim” lots of income.
Here’s the intro to the latest ad for Nilus Mattive’s Rich Life Letter, which is the latest intro-level retirement/income-focused newsletter from Agora Financial — Mattive has been around for a while, he was previously the headliner for the now-defunct Income Superstars letter over at Weiss.
“Act by May 30 to maximize your share of approximately $626 billion paid out to Americans who own this strange type of certificate.
“Make sure you claim your…
“American ‘Liberty Vouchers’
“So you have the chance to collect a check for as much as $3,465, $12,909 or even $42,489… starting today!”
With all the ads along these lines, the income is real — but it’s pitched as a “save your retirement” idea, and I always get a lot of questions from folks who really just need more money to get through each month, and you don’t get income without investment. They tend to see the big bold $12,909 income part and don’t think about the math or the small print that indicates you would have to invest a quarter of a million dollars in these kinds of stocks to get income like $12,000 per year, let alone per month.
So yes, although the investments are real, that’s what they are… investments. Such ads almost always use the word “claim” to keep you reading hoping that you’ll be able to get something for free (you deserve it, after all — you’re a good person and a patriot and you brush your teeth regularly)… but the word is really “buy.”
And he takes advantage of the sentiment that the rest of the world is out to get us, by painting this as a way to “liberate” your money from other countries…
“‘Liberty Vouchers’ are a special type of certificate that allow Americans to claim a share of “liberated” income brought back home to the United States in the form of regular income checks.
“I call them ‘Liberty Vouchers’ because they allow Americans to liberate their hard-earned money from countries that take advantage of our goodwill….
“… if you’re tired of seeing your tax dollars go overseas to help countries that hate the USA…
“Who burn our flag…
“And lay siege to our embassies…
“When they should pay us for protecting their behinds…
“Then ‘Liberty Vouchers’ are the perfect opportunity to get even.
“Because each ‘Liberty Voucher’ liberates money from these ungrateful countries…
“And dumps it straight into your bank account.”
The sad news, of course, is that you don’t “claim” a “Liberty Voucher” … you buy a “Liberty Voucher.”
And, of course, the patriotic and official-sounding name and the rousing “they should pay us” language is aimed squarely at those who are a little bit older and perhaps already a little grumpy about the fact that schoolchildren no longer recite the Pledge of Allegiance, or about the treatment of military veterans, or scared about Social Security, or generally feeling like the rug’s getting pulled out from under them. It’s not a coincidence that people in their 60s are also the target market for investment newsletters — for many Americans, that’s when the ugly truth of limited retirement savings hits home… and when those who do have a decent savings set aside begin to worry about how to manage it.
That’s not meant as judgement of those potential customers, but, as hit home for those who read the “Russian Ads” that are the target of so much attention on Facebook, people, including you and I, are a lot easier to manipulate and herd with language and images than we like to think.
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Copywriting at its best is emotional and manipulative, and it works.
I don’t know Nilus Mattive and haven’t spoken to him, but perhaps he even feels a bit bad about manipulating patriotic feelings and giving this impression of a “Liberty Voucher” you can somehow “claim”, but resigns himself to the fact that this is the way they’ve found that gets the most attention. As so many editors and publishers have told me “off the record,” they don’t love these kinds of ads, either, but feel like they have to sell people something shiny that’s bad for them in order to get them to read the good and responsible and thoughtful advice and commentary that their editors (hopefully) publish on a regular basis.
So that’s my opening screed — as with almost all such ads, please always keep in mind the core tenets of generating income in the financial markets. These are little-known secrets, but I’ll share them with you for free today!:
- There’s no such thing as a free lunch
- It takes money to make money.
You can moderate those a bit — diversification and intelligent oversight can make the lunch a little cheaper than list price, perhaps… and you can start out with less money if you also have time to let your money compound and grow… but there’s never a free check just waiting for you to “stake your claim.”
Unless, of course, there is an actual lost account you had somewhere — like that $200 you had withheld in a 401(k) when you worked at Starbucks for a while 18 years ago and didn’t bother to roll it over, because you were on your way to spend a month surfing in Baja with your guru. That kind of “unclaimed” money is real and worth looking for (start here), though it’s often in much smaller amounts and sometimes isn’t worth the paperwork… you never know… but it is actually your money, that’s more of a “lost and found” situation.
But that’s not what Mattive is teasing with “Liberty Checks,” and it’s not what could “save your retirement,” according to his ads… what he’s talking about as “Liberty Vouchers” are American Depositary Receipts (ADRs). And to his credit, he does actually say that lower down in the ad.
So what’s an ADR? It’s essentially just a way for a foreign company to be easily traded on one of the major US stock exchanges without actually being formally US-listed. ADRs are traded just like stocks, and they represent the stock just the way the shares on the company’s home exchange do, but instead of a direct relationship there’s one extra step in the custody chain — a bank holds the foreign shares on deposit and issues an ADR that represents ownership of those shares. Often, for large companies, the company itself sponsors that ADR relationship, but sometimes it’s more informal.
For US investors, owning an ADR is functionally identical to owning shares in a US company — it’s just that you don’t have to use an international brokerage account (though those are easier to access now, too), and you don’t have to do currency exchange (also easier now).
And, as is the key point of Nilus Mattive’s ad, you receive dividends just like all the other shareholders do (and you’ll receive those dividends in US$).
So it’s not technically the same as owning a share of stock and receiving dividends — but functionally, and for our purposes, it’s identical. You buy shares when you want to, receive dividends if they pay them, and sell them when you want to. They are sometimes not very liquid — meaning that there’s not a lot of trading volume, which can lead to the ADR shares trading at a price that’s not exactly reflective of the real value of the shares on the home exchange… but for any large multinational company that trades in Europe or any major market in North or South America, any price difference between the home country and the US ADR should be very minor most of the time. (That’s because if the company is big enough and has enough ADRs trading to generate a market, brokers and institutional traders can arbitrage away any real difference in the value by selling the ADR and buying on the foreign exchange, or vice versa… but that’s much easier to do, and less risky, when the markets are open at the same time — so gaps in value are more likely in Australia and Asia, whose markets are never open at the same time as NY markets).
So what kind of money are we talking about? Well, Nilus makes us believe it’s massive:
“Americans who collect what I call “Liberty Vouchers” will receive their share of over $626 billion this year…”
And as is always the case with these kinds of ads, we get lots of individual pictures and happy stories about people who are collecting big “voucher” cash… like $3,465.33 for Jerry Richardson in Delaware, $12,909,83 for Jill Lawlor in Palm Beach or $13,676.78 for 61-year-old Aaron Rice in Dallas.
I’m sure those stories are all real, the lawyers won’t let copywriters make these up — but copywriters often pull them either from personal finance magazine stories of successful individual investors, or from the corporate filings (I haven’t checked these specific ones, but that’s how you can often track them down)… and, of course, they don’t mention how many shares those folks have bought, or for how long they’ve held them.
And yes, different companies around the world have different dividend strategies, and some countries have more of a tradition of higher dividend payouts than others — so sometimes ADRs represent companies that pay out higher dividends than do similar companies in the US, though usually the distinctions aren’t dramatic.
And, of course, the money isn’t necessarily being “liberated” from some mysterious foreign land — often these companies do a huge portion of their business in the US, the world’s largest market. When you buy a “Japanese” car from Toyota or a six-pack of Budweiser from “Belgian” beermaker Anheuser-Busch/Inbev, the odds are pretty good that most (if not all) of the employees who had a hand in making and selling the product you bought work in the United States.
So… what are the actual “Liberty Vouchers” that Mattive is pitching? The clues are pretty thin, but let’s see what we can find for you…
The first example given is AstraZeneca (AZN), perhaps because lots of folks have heard of that British pharmaceutical company… and because Donald Trump mentioned that he owns shares on one of his financial disclosure forms, though we’re also told that “Everyday American” Steve Bellin owns these AstraZeneca “Liberty Vouchers,” too and “was entitled to a check for $11,765” because of those shares.
AstraZeneca has paid dividends that tally up to $1.40 per share per year over the past few years, and like many European companies they pay their dividends in semiannual and unequal payments instead of the regular quarterly dividends that are more typical in the US (shareholders have recently been receiving 95 cents in March and 45 cents in September). So if you recently were entitled to a check for $11,765, assuming that’s the March dividend, that would mean you own 12,384 shares of AZN. At today’s price of $36 per ADR, that’s almost $450,000 worth of AZN shares… a decent chunk of change in a world when the average “Everyday American” Baby Boomer reportedly has something in the $100-200,000 range saved for retirement.
So keep that in mind when thinking about the size of the “Vouchers” that might be received from ADR investing — dividends may sometimes be a bit larger than payouts from similar US companies, but not usually wildly so. AstraZeneca has a dividend yield of 3.84%, a bit higher than the average for big pharma (the ETF yields about 2%), but similar to Pfizer’s 3.79%.
But he doesn’t specifically say that this particular one is a must-buy… so what’s the story? Other clues about the ones he likes?
“For example, we identified one ‘Liberty Voucher’ that poaches money from beverages sold around the world…
“And pays back to regular folks all over the U.S.
“In fact, this ‘Liberty Voucher’ paid out over $2 billion in 2017…”
That’s probably (can’t be sure, with just the limited clues) Diageo (DEO), the maker of Johnnie Walker and Guinness, among many other delicious beverages. Diageo owns powerful brands, and has proven adept at thoroughly exploiting those brands (there are now a dozen or more Johnnie Walker products, up from three, and they’re similarly extending many of their labels), and there is certainly a proven global appetite for premium branded liquors.
I don’t know how the future will go, but I do like Diageo, despite never having owned the shares — it’s not cheap, but that’s one of the stocks I’ll be watching if we get a severe market downturn, I expect their brands to have staying power. Right now, DEO trades at about 20X next year’s earnings, is expected to grow those earnings by roughly 10% a year, and pays a dividend of just under 2.5%.
“Consider the second ‘Liberty Voucher’ we identified during our research.
“It should double the size of its payouts this year.
“And that’s no small chunk of change…
“Because this ‘Liberty Voucher’ paid out over $1.72 billion last year.”
I don’t know many large companies that are boosting their dividends quite that dramatically, but we can throw out a guess — perhaps Mattive is hinting at Banco Bilbao Vizcaya Argentaria (BBVA), the large multinational bank. They are expected to pay a dramatically higher dividend this year, giving them, according to YCharts, a forward yield of about 9%. That’s probably not accurate, but BBVA is likely to raise the dividend and has already done so with the first payment this year.
I haven’t looked into BBVA any more closely than that — their big markets are Spain, Mexico, the US and Turkey, along with several countries in South America, and all seem to have been doing well recently if you go by their latest quarterly report here, though I assume that currency fluctuations probably have a substantial impact, and of course interest rates are likely to have a substantial impact on their profitability in each of their larger markets. Interesting idea, particularly due to the strength of their Mexican business, but I don’t know enough to know what the risks are. It trades just under book value, which is a good sign, and with a trailing PE ratio of about 13.
“The third ‘Liberty Voucher’ we identified paid out a stunning $6.03 billion last year.
“Even if you collected a tiny 0.001% of that amount…
“You’d have a healthy $60,282 to play with over the next 12 months.”
That puts you in pretty rarefied air, whether you’re buying US-based companies or trading in ADRs… no one matches exactly to that clue in my systems, but the most likely candidates are:
Novartis (NVS) — paid $6.5 billion in dividends in 2017, 3.8% yield
BP (BP) — paid $6.15 billion, 5.17% yield
and Taiwan Semiconductor (TSM) — paid $5.97 billion, 2.9% yield.
Go a little bigger and you could get Nestle, a longtime dividend investing favorite with a 3.28% yield, or smaller for Toyota Motor (2.7% yield). They all reflect their industries — Toyota is cheap, Nestle is expensive, BP is priced for oil’s climb more than for their recent earnings, they’re all solid companies and all well over $150 billion in market cap… so, again to use their numbers and buy “a tiny .001%” of the smallest of these companies, BP, would cost you $1.5 million (unless I mixed up my math a bit).
And that’s about all that is hinted at for us… except for one more clue:
“You Must Act by May 30 to Claim Your ‘Liberty Voucher’
“Because on that date, one of these strange certificates I’m recommending locks in an income-gushing payment…
“And I don’t want you to miss out on a single cent of that income.”
That, again, could be lots of folks — if you can act by May 30 to get this “voucher,” then that means the stock is probably trading ex-dividend on May 31… that applies to dozens of stocks, including several that aren’t US-based, but two decent candidates that pay above average dividends are Nokia (NOK), once known primarily for its dominant mobile phone business and now a telecommunication network equipment company, trading at about 16X next year’s earnings estimate and paying a dividend yield of 3.5% (the dividend is paid annually, so if you miss May 30 you’ll have to wait a year)… and Transalta (TAC), an Alberta, Canada electricity producer… Transalta had had a rough few years with the decline in value of its coal mines and coal plants, and it’s quite small now, but it does still pay a bit of a dividend and things have perhaps started to get less bad.
I’d throw out Nokia as my guess for this one, though that is just a guess.
And with that, dear readers, I’ll turn it back to you — think there’s something magical about buying ADRs and getting those dividend payments? Have any favorite “Liberty Voucher” investments you’d like to suggest we look at, or any that are mentioned above that you like or loathe? Let us know with a comment below. Thanks for reading!