An earlier version of this article was published on January 30, 2019 — at the time, this was teased as an “inconspicuous $20 stock” that would create one-stock millionaires beginning on February 15. Now, a very similar ad with slight updates is circulating promising “one stock millionaire” status from an “unheard-of tech stock” that can “set you up for life” — with a new made-up deadline, this time it’s only “if you act before November 4th.” So we’ll dig in again, see if anything has changed and update things as needed, and get you your answers.
Here’s what the original headline was on this story, FWIW:
“Yastine says ‘This Inconspicuous $20 Stock Could Create America’s Next Wave of Millionaires … Beginning February 15th”
So, since the ad’s still running and hasn’t changed much, we’re re-posting this article from January with some mild updates… he’s still teasing the same company.
There’s no beating around the bush with this one — Jeff Yastine is telling us he has found the…
“One Stock That Could Make You Millions
“The company I’m going to discuss today is one of the most powerful yet unknown technology providers on the planet….
“… its revenue is projected to double within the next 60 months.
“That alone should grab the attention of any investor who wants the chance to become a One Stock Millionaire”
All that from a $47 newsletter… what could go wrong, right? Heck, they even say on the order form that this subscription is somehow a $995 value! (Though do be careful, that $47 for Total Wealth Insider seems to include trials to a second letter, and your subscription will automatically renew to both for a total of $194/year.)
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Anyway, we’d like to ID that “Inconspicuous $20 stock” for you so you can think for yourself, do your own research, and not be committed to a subscription based on a hype-y presentation. So let’s get started… here’s the intro promise of the presentation, which Yastine gave on a stage to some sort of group of Banyan Hill subscribers:
“Think of what it would be like to turn $10,000 into $100,000 … then as the stock keeps shooting upward, watching that $100,000 turn into $1 million.
“The secret of course is buying the right stock at the right time—before everyone else hears about it.
“That’s why I’m here today.
“I’m here to tell you about that one stock….”
And here’s the wording on the actual order form:
“I’m going to show you the best way to hit the million-dollar mark with just ONE stock.
“You are just one click away from discovering the $20 stock that could turn every $10,000 into as much $1,000,000.
“This company is set to dominate both the broadband and the 5G wireless markets across an ENTIRE continent.
“Insiders are buying up shares hand over fist.
“And, for the moment at least, very few people outside of Wall Street are even aware this opportunity exists.
“This is it. This is your best chance to turn $10,000 into a million-dollar windfall.”
That “insiders are buying” part is specified here:
“They have virtually an unlimited audience. And insiders have scooped up more than $20.6 million worth of shares in the last 18 months.”
And, of course, this windfall of wealth is coming your way “beginning
February 15th November 4″ — mostly, I assume, because the Banyan Hill copywriters know full well that ads without deadlines don’t spur people to subscribe as quickly.
So what does the company do? Here are some clues:
“Millions of people across 20 nations depend on their technology each and every day to shop online, download movies, store family photos on the cloud, post on social media, and much, much more.”
And we’re told that their technology is used by all the biggies — Amazon, Netflix, Walmart, Facebook, Disney, Google, IBM, Microsoft, etc.
We’re also told that “its revenue is projected to double within the next 60 months” — which is an awfully specific and useless forecast… no one, of course, has much visibility in what any market is going to be like in FIVE YEARS.
Insiders have bought “over $4.3 million worth in the last two months”
(yes, that clue is the same as it was in January — so presumably it’s not “the last two months” anymore).
“… shares of this company never had an Initial Public Offering.
“Other than company insiders and a handful of major players on Wall Street, few are aware their shares have even gone public.
“They began trading on the NASDAQ with zero—and I mean ZERO fanfare.”
OK, that’s interesting. What else?
“I believe this company will make an announcement on
February 15November 4 that will put it front and center on Wall Street’s radar.”
Yastine says that there are three big things he looks for in stocks…
First is an “unlimited audience” for the product… and this one apparently has that potential, with 6.5 million monthly users but on their way to more than 600 million in 2040 (who’s making projections like that, I don’t know).
And he drops a new clue…
“With operations run out of Denver, Colorado, they’ve already become a broadband technology provider in more than 20 countries.
“And they are now positioning themselves to dominate an ENTIRE continent (… of 639 million people)”
Apparently they also have experience doing just that… he says…
“Within 12 years time their parent company completely dominated the broadband market in Europe….
“Now they’ve spun off this entirely new company —headed by some of their most senior executives—in order to do it again.”
OK, so we’ve got some kind of spinoff, and the folks behind the parent company apparently posted 995% gains for investors at some point.
Second is that “insider ownership” bit… the biggest insider is a “rainmaker,” apparently, and Yastine says that “in the last 18 months he has purchased $16.3 million worth of stock in his new company.”
And unlike most teases about “insider buying,” these guys are apparently buying:
“They didn’t exercise options to get the shares.
“And they didn’t receive them as bonuses or compensation.
“They have been buying shares hand-over-fist on the open market … with money out of their own pockets.”
And the third thing Yastine says he looks for is a “profit accelerator” — which I guess most investors would call a “catalyst,” some future event that is likely to cause a stock to rise in price, a restructuring or new management team or new product release or big earnings date or expansion plans or something like that.
And apparently for this stock, the “profit accelerator” has something to do with 5G:
“Well, for the past 18 months this company has been working on not just one but two projects that will allow it to dominate 5G in all its markets.
“They’re already poised to dominate broadband across an entire continent.
“Now they’re expected to control the flow of 5G wireless data for a quarter of the globe as well.”
OK, so the hints about this “rainmaker” who has made more money than pretty much anyone else in recent decades are clearly pointing at telecom/cable magnate John Malone, who has so many spinoffs and tracking stocks that it’s almost impossible to keep track of them all.
So, one gathers, we’re being teased here about one of his more recent spins… some company that is aiming to dominate internet access on some continent that isn’t Europe. Which means, dear readers, that Yastine is hinting at… Liberty Latin America (LILA for the common shares, LILAK for the more liquid non-voting shares, super-voting shares get 10 votes each and trade OTC at LILAB).
Liberty Latin America is a telecom company that provides fixed-line telephony (declining in Latin America just like it is elsewhere), video and broadband internet service, primarily under their VTR and C&W brands, much like AT&T or Comcast in the US, and they also have 3.5 million mobile subscribers, most of whom are still being upgraded to 4G. 5G is not really on the radar yet for Liberty Latin America, that’s an expensive upgrade, but presumably it will be at some point.
And yes, the CEO and CFO and a director did combine to buy about $4.3 million worth of shares fairly recently, though the presentation that Yastine initially gave must have been a while ago because the buys were in August last year. So pencil that in under “last twelve months,” not “last two months.”
On the positive side, those insiders last bought at average prices a little over $18, so if you want the common stock it’s cheaper than that now at about $16. Most of the insider “acquisitions” are a result of stock grants, not purchases — in 2018 the executives were given a total of almost 24 million shares and options, which today would be worth almost $400 million… so we shouldn’t overreact too much to those smaller insider buys, though they have continued to varying extents over the past year (not nearly in the million-dollar range, but steady).
And yes, John Malone owns a gajillion shares of this one, too — and has bought and sold tons of them. Barron’s did a nice profile of John Malone and his dozen or so major companies (Liberty Braves, Discover, Liberty Broadband, Lions Gate, etc.) back in November, and that’s worth reading if you want to try to get a handle on his strategy and thinking. They note that Malone had 25.5% voting control of Liberty Latin America, in case you’re curious, and I don’t think he’s sold any so that’s probably still the case.
It’s hard to understand the web of Malone companies, but it’s also hard to complain about his peformance — not every one of the companies has done well, but shareholders who have followed him in general have very likely done well in most of the Liberty stocks. He is a big fan of using cheap money to lever up equity, giving himself and other shareholders a better return, and that might be a risk if money stops being cheap — but it’s not an immediate risk for Liberty Latin America, at least, their maturities begin to hit several years in the future and they pay only about 6% interest, with fixed rates.
Liberty Latin America seems to mostly be a play on Puerto Rico’s recovery at this point, levered by the value of their big subsea fiber-optic network in the caribbean that bolsters their mobile subscriptions, and by the continuing upgrading of customers to 4G service in PR, Costa Rica, Panama and elsewhere, and make investments in places like Chile. They are facing the same cord-cutting and phone-cutting trends as we see in the US and elsewhere, but their broadband business and business telecom services seem to be doing well and it may be that Liberty LatAm will have an easier time growing and doing acquisitions in Latin America than it did in Europe, where the competition is much stronger and more entrenched and the antitrust sentiment is robust.
So I have no idea how it will work out, of course, I have not looked at LILA before, but aside from the fact that I don’t think it will be a meaningful 5G story in the next year or two it does look interesting as Puerto Rico continues to recover… and betting against John Malone has usually been silly, even if you can’t quite understand his complex web of financial engineering. Maybe a few years of rising rates will finally put a dent in his empire, and LILA is still quite concentrated in a few major markets, mostly in the Caribbean, so there’s absolutely the risk that a weak economy (or another natural disaster) could hurt them, but it might be worth considering if you like the Malone strategy of rolling up controlling stakes in telecom companies.
And as far as that date goes… the February 15 date was when they were expected to report their earnings, which were fine but not hugely impactful (and they actually came out on February 20). The November 4 date is a few days before they are expected to release earnings next (November 8 is the day that’s penciled in right now).
I don’t know any reason to expect a big change on that date, but they could always announce something or surprise one way or another (earnings guesses are all over the map, but analysts see the company growing revenue at about 4% a year and EBITDA at about 5% — Liberty trades at an EV/EBITDA ratio of about 15 now, much higher than companies like Comcast (9) or Millicom (7), and higher than the 12 multiple earlier this year, but perhaps not wildly out of line if they can get their acquisition game going and grow faster than that).
The biggest news earlier this year was that they called off their attempted takeover of parts of Millicom, which would have given them a much bigger business in South America to complement Liberty’s strength in the Caribbean… so it might be that Yastine was counting on that deal to help Liberty grow more quickly, I don’t know. Liberty would presumably be a little bit challenged to grow with major acquisitions without selling more stock, since they already carry a pretty hefty debt burden, but that hasn’t stopped Malone companies before.
And yes, EBITDA is a made-up thing… but it’s pretty widely followed for debt-heavy “steady cash flow” companies like cable providers, and it was popularized (perhaps even invented) by, you guessed it, John Malone. He used it to explain and justify the decisions and valuations he made when building prior cable empires and growing cash flow without paying taxes– particularly TCI in the 1970s and 80s. That focus on cash flow growth (rather than income, which is taxable) became his hallmark, and it certainly served him (and his investors) well, even if it probably introduced a very damaging concept that has been abused by other companies in other sectors.
And that’s about all I can tell you after a few minutes of research — but yes, that $20 investment (now about $16) that Yastine thinks will turn your $10,000 into a million bucks must be Liberty Latin America… and I would be delighted to know what you think of it. Any longtime Malone followers out there who have favorites in his stable of stocks? Think LILA is well priced after a slow year, or too levered or growth-challenged? Let us know with a comment below.