Can you really “‘Backdoor’ Fortune 500 Accounts?”

What's The Wealth Advisory promoting as "a radical way for folks to legally tap the accounts of America’s top companies to pull out millions in profits each month?"

By Travis Johnson, Stock Gumshoe, June 13, 2017

These kinds of ads always include some huge numbers that sound really, really impressive… here’s a little bit of the intro from the latest ad for Briton Ryle’s The Wealth Advisory:

“*Jim T. collected $23,500 last month from ‘backdooring’ Google’s Account

*Ron J. ‘backdoored’ $15,804 from Facebook’s Account

*Aaron K. pocketed $6,817 last month from ‘backdooring’ Wal-Mart’s Account

***This has nothing to do with options, bonds, or offshore bank accounts…”

So what are they talking about? Some way to make income from these big companies, apparently. Here’s a bit more from the ad:

“… while you’ve been buying actual shares in America’s biggest companies like Facebook, Wal-Mart, Target, and Amazon…

“A group of savvy folks have been ‘backdooring’ these massive, cash-rich companies… pulling millions of dollars out of their corporate accounts…

“And funneling them directly into their own personal accounts each month.

“All without buying a single share of these companies’ stocks.”

Sounds impressive, right?

So what’s the story? You’re not buying these stocks, and you’re not buying options or bonds… so where the heck does that income come from?

More from Ryle:

“It literally takes less than five minutes to execute the ‘backdoor’ transaction. And once you do, you’ll be set up to receive this growing stream of cash for as long as you please.”

Sounds both mysterious and easy, right? Just the sort of thing you’d happily pay $49 for (that’s the current “on sale” price for The Wealth Advisory)?

Well, you go ahead and subscribe if you want — but first, let’s figure out what this “backdoor” thing is so you can get a little perspective first. You don’t want to go into this actually believing that there’s a massive pile of cash headed your way — that will just lead to disappointment and, perhaps, risky behavior. Understand the concept, think for yourself a bit, then you can go subscribe if you feel like it — or invest in the ideas, if you’re so moved.

“The Wal-Mart ‘Backdoor’ Turns Every $1 into $18

“Wal-Mart rakes in an incredible $485 billion in annual revenues….

“Shares of Wal-Mart are pretty expensive now, too. A $10,000 investment in Wal-Mart stock would have turned into $18,000 profits over the last decade.

“But if you ‘backdoored’ Wal-Mart by making this secret transaction, you could have turned every $10,000 into $180,000 profits over the same time span….

“And here’s the best part… that figure doesn’t even include the monthly ‘backdoor’ distributions you could have been receiving.”

Hmmm… that sounds pretty similar to some past pitches this same newsletter has made, but the numbers don’t add up very precisely. Do we get any other clues?

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There are some specific people who’ve gotten these “backdoor payments”, we’re told:

“48-year-old Ray Kerr from Arizona got “backdoor” payments of $4,969 a month last year.

“Jerry Stevens from Ontario, Canada received a payout of $1,638 just last month.

“66-year-old Frank Pettit has been collecting “backdoor” payouts for years… and these days he’s getting $18,220 a month.”

And apparently these payments have never been canceled or cut, here’s one final clue from the ad:

“The size of these monthly distributions you could’ve funneled into your account have never gone down in value.

“And they’ve never shrunk. Not even during the 2008/2009 financial crisis.”

Well, as I said, the numbers don’t add up precisely — but they do match exactly what this same newsletter was using to hint at a recommendation to buy SmartREIT shares back in 2015 and SmartREIT’s predecessor, Calloway REIT, as far back as 2012.

And I do mean “match” — down to the precise $1 to $18 returns (though that is a very stale number, it refers to the gains since the 2001 launch of the REIT, so it encompasses much more than a decade — the source of that quote is this 2011 Globe and Mail article about $1 in 2002 turning into $18 in 2011 as Calloway and SmartCentres built up Walmart’s Canadian store presence).

So the overwhelming likelihood is that this is, again, teasing what The Wealth Advisory has over the years pitched as “Wal-Lord” starting back in 2012 or so and “Wal(01)k” a couple years ago.

The basic idea, if you haven’t yet connected the dots, is that being a landlord to Walmart is sort of like getting “backdoor income” from Walmart. Kinda.

And SmartREIT is indeed pretty closely tied to Walmart, at least in Canada. The actual name of the company, if you’re looking up the stock, is Smart Real Estate Investment Trust (SRU-UN in Toronto, CWYUF OTC in the US), and it’s also not terribly huge, at least compared to Walmart — it has a market cap of about C$5 billion. Like many other Canadian REITs, they do pay their dividend monthly (quarterly is more standard in the US, though it doesn’t really make much difference), and they’ve been steadily growing that dividend over the years.

I haven’t looked in detail at SmartREIT’s balance sheet or operations, but the story is fairly appealing — they are expanding quite a bit in the areas where it makes the most sense, near hot urban centers with urban-styel mixed use developments, or in areas where they can “intensify” by adding to existing developments (mostly, though not exclusively, Walmart-anchored open-concept shopping centers). The dividend offers a yield of a little over 5% at the current p