ALERT: You could be missing out on lucrative 50% average gains a year if you're not following the...
To avoid missing out on these spectacular gains, let me show you three secret sweathog investing strategies that a small circle of tuned-in investors are quietly using to build their fortunes.
These stocks are sweating some hefty gains pretty quickly... 127% in 10 months... 62% in 16 months... 42% in six months... 16% in three months...
What are sweathogs? They're unnoticed stocks of companies that sweat assets and cash... and are stuffed with hidden wealth. Wealth you could be adding to your bank account right now.
Wall Street is too lazy to use these strategies to find the fast-rising sweathogs, but that shouldn't stop you from seeing double- and even triple-digit gains in the next year or two with these stocks.
Let's start with the three sweathog stocks I'll tell you about below... stocks that could soar 50% or more.
Dear Sharp-Eyed Friend,
You can't make stellar money buying what's on the cover of the popular financial magazines. It's what Wall Street does. So it's what everybody does.
And "everybody" is not rich.
But what if I could show you another approach... a better, more profitable approach? An approach that could have you earning 50% or more on your investments in a reasonably short period of time... say, in 12 months, perhaps less?
In the letter that follows, I'm going to show you exactly how you could start using this better approach for yourself.
In four short minutes, you'll be clued into not one, but three lucrative investing strategies only a handful of sharp-eyed investors use. As a result, you'll have the opportunity to become part of an elite corps that's buying certain financially sound stocks virtually untouched by the masses of investors.
Imagine finally watching your wealth take off by leaps and bounds in a way you've never seen prior investments perform.
The hidden stocks I'm talking about enjoy gains that wildly exceed their more well-known "on-the-cover" counterparts. It's why I affectionately call them my "sweathog" stocks - because they simply ooze riches from every pore.
For example...
Last year, I recommended a chicken company called Gold Kist right in the middle of the crazy, media-hyped bird flu scare. A true independent play, but...
Who the Heck Buys That?
You may be thinking, who on Earth would ever buy chicken stocks... even without the hysteria? Good question. But here's why I wanted to give chicken a deeper look...
Chicken is the most popular choice for dinner these days... passing pork in 1984 and beef in 1992. Demand for chicken is high. Fortunately for chicken farmers, chicken feed prices are low. Therefore production costs are low.
But the media are in a full-blown hissy fit over bird flu. You may remember some of the headlines from last year: Thailand confirms new case. Millions of chickens destroyed. Government stockpiles flu vaccine. Bird flu in Europe... and Canada. Is America next?
The onslaught of hyped-up stories slaughtered the poultry industry. Wall Street was deathly afraid of chicken stocks. The chicken industry was operating under a heavy dark cloud. Yet most Americans calmly continued to eat chicken. Chicken feed prices stayed low. So buying chicken stocks appeared to be a great independent move.
But which chicken stock? The more well-known company stock of Tyson Foods... or an unfamiliar company like Gold Kist, known to only a few market insiders?
Perhaps the easier play would have been to go with what you know. But that's not the way to find a sweathog and make the bonanza profit play. So I did some digging.
Because of Wall Street's irrational fear of bird flu, Gold Kist was selling cheaply, at what I estimated was close to a 50% discount to value. But even better, Gold Kist was sweating cash with strong cash flows and next to nil debt. These are two healthy indicators I like to look for when analyzing a stock. Wall Street pretty much ignores sweating cash flow.
Plus, the folks who run Gold Kist had dirt under their fingernails. They believed in their company.
With the company's robust financial condition with plenty of cash and few liabilities, strong insider buying, plus trading at less than half of the prices of big names like Tyson Foods and Sanderson Farms... and Wall Street declaring Gold Kist on its deathbed, it all added up to a buy recommendation. Looking for a A new idea. That's what people look for... a successful new idea. A new idea can make you money, change your life or secure your future. In this busy world, who has time for old, warmed-over ideas? I certainly don't, and I bet you don't, either. You'll find Chris Mayer brimming with new ideas, new ways of looking at things and new strategies to apply to investing. You'll find his three Secret Sweathog Strategies a refreshing new approach to the world of investing. Thanks to his 11 years as a vice president at the prestigious Riggs Bank in Washington, D.C., he really has a knack for picking profitable companies with a keen awareness of their value and their tangible assets that sweat. Most other analysts never get around to looking at the cash flow, assets and management teams of a company. They're content to stare at the financials and technical charts. But as Chris is fond of saying, "In the 11 years that I did bank deals, I never had anyone back out of a deal because the chart looked bad." It's this real-world business application of cash on hand and hidden wealth that Chris brings to the table. This fresh approach makes investing suddenly new and prosperous again. When he recommends a stock, it really is locked down pretty tight and ready to take off. He takes his reputation and his recommendations seriously. It's why he is so in demand on the financial lecture circuit. He's also serious about his promise that you'll see us log gains of "50% or else." When he first told me that he wanted to make such a bold guarantee, I have to admit I was a little skeptical. I even went so far as to say, "You're crazy!" But then he showed me the track record and my jaw dropped. A 50% average for the past two years, and 46% on all his open positions so far this year! After seeing these juicy picks, I knew it was an easy promise for Chris to make. So I gave him the green light. What's more, I told the folks in accounting not to worry, either. With a track record like Chris', no one is going to be asking for their money back. So if you wish to be 50% richer this time next year, please join Chris at Capital & Crisis. You'll be glad you did. 40% Gain in 7 Months!
Great New Idea?
Addison Wiggin
Publisher, Capital & Crisis
My independent instinct proved correct. If you'd been in on it, you could have ridden it for a 40% gain in just seven months!
Oh, and how did the more popular Tyson Foods do in the same seven-month period? Down a whopping 15%. Proving my point... popular does not mean profitable. While buying chicken was the right independent play for the market, you would have missed gigantic profits by buying the wrong chicken stock.
And that leads me right into my Secret Sweathog Strategy No. 1 for successful independent investing:
Be independent. Don't buy the popular stocks.
But before I tell you more about Strategy No. 1, PLUS the other two Sweathog Strategies to help you build the wealth you've been dreaming of, let me be polite and introduce myself.
My name is Chris Mayer. Maybe you've seen me on TV on Fox News' Forbes on Fox or CNBC's Closing Bell. Or perhaps you've heard me on top-notch radio programs such as NPR's To the Point, The Week in Review, The Afternoon Financial Report or the dozens of other radio shows I'm asked to do each year.
You could have also caught my numerous articles on the big Web sites, such as MoneyWeek.com, Tradersnation.com, Financialsense.com or TheStockAdvisors.com, just to name a few.
Even though I pop up pretty regularly to talk about stocks over the airwaves and in cyberspace, not to mention good old-fashioned print media, this is the first time I've revealed anywhere the three secret strategies successful independent investors just don't want anyone to know.
You may even have heard of Strategy No. 1. A few advisers use it, but only superficially. They're lucky to get 5% or 10% returns. Not colossal, but still better than most.
I would probably wager that you have never heard of Sweathog Strategies No. 2 and 3. As far as I know, only a handful of investors practice Strategy No. 2 for a significant increase in potential returns.
But I can assure you that no one but I is using Sweathog Strategy No. 3. And my proven track record clearly shows that implementing all three secret strategies at once can lead to amazing results... my recommendations to my readers have posted 50% average gains for 2006 and 2005. Currently, we have a 46% gain on all open positions in 2007!
Don't worry, though - as I promised, I'm about to share with you all three of my personal Secret Sweathog Strategies for successful independent investment recommendations.
You're probably wondering why - with stunning 50% gains - isn't everyone applying all three strategies to their investment choices. It's not that these strategies are particularly complex, or difficult to understand. In fact, they're downright simplistic. So what's the hang-up?
I can only conclude that the rest of Wall Street and other advisers don't want to sweat and dig to find stocks that line up with all three strategies. It can be time consuming, and it takes a rare breed of analyst who's willing to put in the effort. Most don't have it in them.
It's why I'm comfortable revealing all three of my strategies today - because almost no one will put in the work to find the hidden wealth of my 50% gainers using my three Secret Sweathog Strategies.
So Why Reveal All Now?
Simple.
It's a matter of quiet satisfaction to me that my Capital & Crisis readers have seen my recommendations post an average gain of 50% a year since 2005. These mind-boggling gains simply demolish the stock market's so-called "robust" performance gains of 13.6% in 2006 and pitiful 3.1% in 2005.
Plus, it's a matter of tremendous delight to my readers that they're seeing an average gain of 46% on all open positions of my sweathog stocks in the current Capital & Crisis portfolio. Don't take my word for how happy my readers are. Here are a few of the rave reviews from the only critics that matter - my readers.
Walked Away With $57,000
"I couldn't be more pleased. I love buying asset-rich companies where the downside is limited. I bought IPSU at $14 and sold at $34, walking away with $57,000." - John C.
Made the Most Money With You
"I consider Capital & Crisis to be my most reliable letter of about five letters I read. I like the pace of the trading with the emphasis on longer term. Most importantly, I've made the most money with you." - Gordon M.
40.3% Return on Gold Kist
"Your Gold Kist recommendation made sense to me. Strong financials, cheap price and people are not going to stop eating chicken. So in February, I bought shares at $14.03 and then bought more in May at $14.02, then sold them in August at $19.80. After commissions, I made a 40.3% return." - Timothy B.
It doesn't look like that record is drying up, either: We're well on our way to another market-trouncing year!!
With such a proven track record, now is the perfect opportunity to offer you the chance to enjoy these spectacular gains for yourself.
And to get you started on the road to building your own impressive portfolio of sweathog stocks, I'd like to share with you my three proprietary strategies to successful independent investing.
My strategies are unlike anything you've seen before. I take a whole new approach from other investment researchers. You see, my strategies are based on the hard-knock, real-life lessons I learned after a decade spent in the commercial banking business.
The One Profitable Real-World Advantage Other Analysts Lack
I didn't start out as your run-of-the-mill investment adviser. It's common knowledge that most advisers come into the business with no real-world experience. Oh sure, they've followed the stocks, and they've followed the markets. They're pretty good at reading technical charts. But they have no concrete experience dealing with individual businesses.
But I used to be a banker. More specifically, a commercial lender and a vice president at the prestigious "bank of presidents," the Riggs Bank, in Washington, D.C.
Every day, CEOs and CFOs of $500 million companies were in my office begging me to lend them money to expand their businesses. They were asking me for multimillion-dollar loans. I'd love to drop a few names, but of course, client confidentiality forbids me to do so.
But I had the sole power to determine their fate. So whatever I wanted to look at, they gladly gave to me. The inside numbers. The private books. The hidden papers they kept under lock and key. Their top-secret growth and marketing strategies. Nearly every document I looked at was stamped "Confidential."
And that was just round one. After I'd digested that huge pile of paper, I'd go out and "kick the tires." I had to get out there and understand the business from the ground up.
So I'd prowl around the company asking a million questions. If it were a widget factory, I'd ask, Who do they sell to? How does it get there? Where do they get the stuff to make the widget? How old is the stuff? When does it need to be replaced?
I asked about their suppliers, their customers, their competitors, their management teams, their employees, the benefits structure, questions as minute as the number of pencils used in a day... and on and on and on. That's why today I'm asking questions no other stock researcher has thought to ask.
By the end of my investigative process, these powerful business heads were rung out by my exhaustive, investigative process. Not me. My juices were still pumping. And I can honestly say that at the end of the day, I probably knew more about their company than the CEO. I had to - because it was my bank's money, and therefore my job was on the line.
And you know what? Nine times out of 10, I turned them down for a loan. They just weren't good enough for me to risk a dime on them. Sorry.
My Loans Never Lost a Dime!
And in the 11 years I was doing bank deals, I never lost money for the bank on the 10% of loans I did approve. Not one deal went sour.
But after over a decade of working for the bank, I wanted to take on the bigger challenge of actually making money in the general stock market. So I started looking for stocks to invest in based on what I knew about analyzing companies. I mean, if I thought a company was good enough to give a loan to, then why not consider buying a share of their business?
I applied that same laser intensity of my loan approval process to the investments I was considering. The results were nothing short of dazzling.
So I quit the bank a few years ago and started writing a private newsletter Capital & Crisis. Over the years of researching and analyzing stocks to recommend and taking advantage of my unique banker's eye, I developed these three independent investing strategies. They're the very heart and soul of my core investment philosophy.
The results: Should my readers have chosen to invest in my recommendations, they would have as much as 50% average annual returns to show for it.
It's time to share my secrets with you. They will change the way you think about investing. But more importantly, they will change the way you live your life.
Imagine the rewards, the pleasure and the security of being 50% richer... and then 50% richer the year after that, and so on... simply by applying these strategies to your investment decisions.
Let's start with Strategy No. 1, which I mentioned previously...
Secret Sweathog Strategy No. 1:
Be Independent - Don't Pick the Popular Stocks
Forget the Wall Street establishment entirely.
You can be sure if Wall Street is talking about a stock, it's in your best interest to ignore it. My simple mantra is: You never make money buying the easy stocks that Wall Street buys.
You see, brokers and advisers tend to recommend stocks when they are 100% sure they are going up. It's called momentum. They look for stocks that have been going up for a while, and hope they continue to go up. I would bet that 99% of advisers are incapable of thinking independently.
By investing in so-called "momentum" stocks, you're missing out on significant gains. These "popular" stocks have already seen their prices surge, and the rest of Wall Street is happy with the remaining measly returns. Not me.
With more than 5,000 stocks trading every day, there are plenty of big potential gainers to choose from... like Gold Kist instead of Tyson Foods.
Or if you don't want to invest in chicken, let's try life insurance. Like chicken, insurance is never popular or cool, so it doesn't grab Wall Street's eye. But back in April 2005, I recommended Presidential Life Corp.
"Who?" you might ask. It's certainly not famous or springing for expensive TV commercials to build name recognition like well-known Allstate does. Exactly.
Yet life insurance still remains a good business to invest in. It's not going away anytime soon.
But the moneymaking question is do you go with the more popular Allstate, or try a company that's completely unknown?
When I first considered Presidential Life, not one Wall Street analyst was covering it. It was trading for only about 8 times earnings and a nice, sweet divided yield of 2.5%. Presidential Life was a cheap, quiet way to buy into the steady insurance business.
But there was nothing ordinary about Presidential Life's meteoric rise to profits... 62% in one year. Wouldn't you have loved a piece of that action?
And how did well-known Allstate do in the same time frame? Down 2%.
Another example to reinforce Strategy No. 1: Popular = Money Loser. Unknown = Moneymaker. It's that simple.
Plus, in banker terminology... my unknown stocks sweat!
Unknown Stocks Trounce Time and again, Chris Mayer has seen the independent trend in a sector. But unlike most analysts, he doesn't go for the popular, well-known "safe" stocks. His picks are generally unknown, boring, deadly dull stocks. But the gains have been nothing short of fantastic! You'll find three more unknown stocks in Chris' latest report, Making Money on Sweathog Stocks. Hurry and order your free report today.
the Wall Street Populars
Sweathog Stocks Reduce Risk... Offer Bigger Gains
You're probably thinking... chicken, insurance... what's exciting about those? Not much... and that's my point.
You don't need exciting to make a ton of money. You just need stocks that sweat. These overlooked stocks are sweating so much cash, assets and profits that they're sweathogs! They're stocks rich in tangible, physical assets that support the stock price (covering our downside), and sweat cash - big time.
You may be wondering, "What's a tangible asset, and why is it so important?" Good question.
"Tangible" simply means a company has assets with real value in the marketplace. They're hard assets the company actually owns - cash, land, equipment. Gold Kist owned its chicken coops and had very little debt.
Tangible is not "goodwill" or "capitalized research and development" or "name" or "brand" or "reputation" or other intangibles the more popular stocks like to hang their hats on.
With tangible assets, you can touch it, feel it, sell it, smell it. You might be surprised to know that very few companies ever write down the value of their tangible assets.
They're not required to report them, like profits and earnings. What's more, most Wall Street analysts don't know how to look beyond a balance sheet to actually find the sweaty assets, let alone put a dollar figure on the assets.
But as a former commercial lender, it's simply second nature to me. You see, if you're a company hoping to get a loan, it's more important to me that you have lots of tangible assets that you can sell to repay the loan if something happens to your cash flow.
Wall Street, on the other hand, is more interested in a company's earnings projections, technical charts and overall market projections.
By paying close attention to tangible assets that sweat, you build in a healthy margin of safety to protect your money from any downturn. Because tangible assets are physical, useful things that don't disappear when the market heads south, unlike paper assets, which can lose money faster than you can say "wiped out."
Just take a look at this sweathog stock I recommended last summer... a small shipping company called Horizon Lines.
Top Advisers and Editors Line Savvy, Brilliant Serious Investment Profits Solid Investment Ideas Up 30% Order your FREE report, Making Money on Sweathog Stocks. Wouldn't you like to be 50% richer by this time next year?
It's Like Government-Mandated Profits
up to Recommend Chris Mayer
and Capital & Crisis
"You've got to love a guy who can pick great companies to invest in and writes articles like poetry. Chris Mayer is one of our top mentors, who writes the excellent investment newsletter Capital & Crisis. Here at CheckTheMarkets.com, we want to check the sanity and rationale of the markets too. That is why we pick the brains of savvy, brilliant investors and analysts like Chris."
- Marc Courtenay, CheckTheMarkets.com
"Chris Mayer, the editor of Capital & Crisis, is one smart stock picker. We are impressed at how thorough and careful he is with the analysis of a publicly traded company. Chris looks for VALUE - deep, underappreciated, intrinsic value. He patiently peruses the reports and the internal sources of information to find a company who has outstanding leadership and is on the verge of significant growth in earnings and revenue. Following Chris' advice has made us some serious investment profits."
- Marc Mentor, investingmentor.blogspot.com
"Chris Mayer is the best financial journalist you've never heard of... Mayer's elegant prose will make you wonder why you don't find this caliber of writing in the mainstream financial press. Mayer's essays are sharp intellectual discoveries... all this and solid investment ideas too."
- Marketmetaphysics.typepad.com
"Whenever someone wealthy and/or related to me finds out that I write for an independent financial publishing company, this question invariably erupts: 'So what should I invest in right now?' As you might imagine, I also hear that a lot at investment conferences. But SEC regulations virtually forbid me from answering the question. So what I usually say is: Legally, I can't tell you. But check out Chris Mayer's Capital & Crisis. He won't steer you wrong with analysis or stock recommendations. It's also a pretty fun read. He's up a clean 30% on his open positions."
- Greg Grillot, editor,
Whiskey & Gunpowder
It's a billion-dollar U.S. company with a 40% market share and was trading at what I estimated to be a 50% discount to net asset value. In other words, its hard tangible assets were worth twice as much as its total outstanding share value! A fact totally ignored by Wall Street.
In addition, Horizon Lines was operating under a little-known federal law called the Merchant Marine Act of 1920, commonly referred to as the Jones Act. It worked like this: American-built ships with American crews are the only ships allowed to transport goods from one U.S. port to another. From Honolulu to Los Angeles. From Los Angeles to Anchorage. From Boston to New Orleans. And so on.
In other words, no foreign ships are allowed. It's as if the U.S. government passed a law saying Horizon Lines has to make money. You see, there are only 43 U.S. ships that qualify under the Jones Act. And Horizon Lines owns 16 of them. In the face of extreme American protectionism and the threat of terrorism, I don't think that law is going to change anytime soon.
Besides, when was the last time you saw a shipping company on the cover of Newsweek or Time? Mainstream magazines love to promote the techie, gadgety products or the popular trendy companies. Would they fawn over a dull and boring shipping company? Not on your life.
Too obscure. Too dreary. No "gotcha" appeal.
Well, Horizon Lines certainly raked in some very appealing gains... 127% in 10 months! Thank you, Uncle Sam, for giving my readers the opportunity to double their money!
One of my readers, Patrick M., was certainly very happy with this dull and dreary stock. He wrote me back in November:
Up 57%
"Chris, Horizon Lines is up 57%! I really respect your choices and feel comfortable investing in them. You explain the valuations well, which adds to my comfort level. Keep up the good work!" - Patrick M.
Imagine how great Pat is feeling now that Horizon Lines has doubled his money! If you'd been with us, you could be twice as rich too!
It's a Fact: Dull, Obscure Stocks Secretly Trounce the S&P
Finding a company's tangible assets that sweat is just too time consuming and bothersome for most stock analysts, advisers and brokers. Heck, they'd have to pry their nose out of a technical chart and dig around to actually find an asset.
But not me. Assets are the first place I look. And I've found some pretty dull, obscure stocks that sweat off their assets like crazy, throwing off some spectacular profits. Here's another example:
Would you ever think to own a fertilizer company? I have to say a few of my readers were a little put off by that one too. But nothing smells as sweet as piles and piles of lovely money ripening in your bank account.
And that's exactly what you would have smelled if you had been with me when I recommended Agrium, a global supplier of fertilizer, in late 2005. This company has lots of cash on the books: Almost one-fifth of its market cap is in cash... almost $300 million in operating cash flow.
Good things tend to happen to shareholders of companies that spew out excess cash. And Agrium was no exception - 110% gains in two years!
Another sweathog, cash-spewing recommendation that might have had you scratching your head was a sugar company called Imperial Sugar Co. But after pocketing 120% gains in 21 months, you would have been laughing all the way to the bank, just like my readers.
And what could be duller or more obscure than utility companies? Yet you would have raked in a king's ransom if you had taken advantage of my sweathog utility picks. How about Companhia Paranaense, a Brazilian utility company that soared 118% in less than a year? Not bad.
One of my readers, Mike V., simply couldn't believe some of the companies I'd recommended. He said to me,
I'm a Believer... Good Work!
"Chris, I've been reading your recommendations for about a year. I must admit, at first I thought that some of your picks were sort of 'off the wall.' But after watching them for a year, I have become a believer. Good work!" - Mike V.
Chickens, insurance, fertilizer, sugar, utilities... definitely not the glamour stocks of Wall Street. Who cares? They are unpopular sweathogs and you could have made a fortune simply by following my Secret Sweathog Strategy No. 1.
It's a profitable strategy that works for my readers. Here's what Paul and Tom had to say:
Love the Assets That Sweat
"I have come to appreciate your investment philosophy, 'invest in assets that sweat at reasonable prices.' As a result, over time I will be shifting more of my capital allocation to Capital & Crisis recommendations." - Paul
I'm a Happy Investor!
"I like your concept of holding stocks that sweat. Over the past years, I've been an investment newsletter junkie. The most success I've experienced has been with your advice. I realize how well I retire is riding on your skills. To date, I am a happy investor having substantially more gains than losses resulting from your advice. I enjoy your entertaining dialogue that reflects a genuine knowledge of what you speak. Keep up the good work!" - Tom O.
I hope you're ready to kick your profit-making skills to the next level, like John, Pat, Tom and so many of my readers do every day. If so, then you'll want to discover Secret Sweathog Strategy No. 2.
Secret Sweathog Strategy No. 2:
Be Selective About Being Contrarian
The main definition of being a contrarian is to "go against the crowd." More often than not, this strategy pays off pretty well.
But to stubbornly go against the crowd all the time isn't very smart, either.
Sometimes the crowd is right, and you just get trampled.
Also, being contrarian doesn't mean that you simply invest in stocks everybody hates. For example, Wall Street hates auto companies, auto suppliers and newspaper stocks. In fact, Wall Street has hated these stocks for a long time.
But it doesn't mean that I'm going to rush out and load up on the stocks of General Motors, Ford and The New York Times. That would be foolish, even though it would be considered a classic contrarian move. Their stocks are sinking and the crowd is right!
You just can't go against the crowd for the sake of going against the crowd. You could lose your shirt.
Instead, the pearl of wisdom buried in Strategy No. 2 is: you have to know what the crowd is missing.
What tiny fact is the market overlooking, ignoring or ridiculing? And finding that out is where old-fashioned elbow grease comes into play. You have to bury yourself in research to figure out that little nugget that the market is too lazy to discover.
Your average stock adviser or broker is NOT going to do the kind of research it takes to see the big gains. It's just too difficult. Only a handful of the greats - Buffett, Lynch, Templeton, Greenblatt - are exceptional at finding the missing link that often leads to a boatload of profits.
And as a former commercial banker used to poring through stacks of detailed reports and asking a million questions, Strategy No. 2 is right up my alley.
Take my favorite water utility company that I recommended in July of last year. Wall Street was missing the hidden nugget behind this unconventional water company.
Here's what I mean...
Returns from the utility sector have historically been great - 18% a year. Yet no one talks about them. Despite the great track record, these stocks have largely flown under Wall Street's radar. (Unpopular: Strategy No. 1 in play.)
But I found a real undiscovered beauty in SJW Corp., a little water utility with roots back to the 19th century. SJW serves over a million people in six cities in California. It has an excellent service record and maintains a high-quality water system.
Yet Wall Street only saw it as a boring ho-hum water utility company. Wall Street totally missed its extensive land and real estate holdings - a nice spicy kicker to potential eagle-eyed investors.
Over the last three years, SJW Corp. has returned 10-12% on shareholders' equity, which is much higher than its peers. Plus, it's carrying the least amount of debt compared with the rest of the industry. I love that.
But what the rest of Wall Street missed and I discovered in my exhaustive research is SJW's wealth of land holdings.
Land Holdings at 19th-century Prices
Who would have thought a little utility company would be a real estate tycoon even Donald Trump would envy?
But that's exactly what it is.
SJW owns a bunch of real estate. It's got an 8-acre parking facility. It owns commercial real estate and undeveloped land. There are warehouse properties in Florida and Connecticut, retail property in Texas and 7,000 acres of watershed in the Santa Cruz Mountains, which includes about 1,000 acres of timberland.
The company acquired most of its land holdings in the 19th century. What's more, the cost basis in these holdings is absurdly low... meaning SJW has tons of equity in the properties.
So here is the brilliant way the company uses its real estate holdings: SJW is creating wealth beyond simply increasing the earnings of its businesses. I love companies that can create a lot of wealth in this unappreciated way - outside of usual earnings.
SJW's land and real estate holdings are like a bank SJW can dip into to buy water assets. It doesn't have to raise debt and it doesn't have to sell more stock. Plus, it can sell land to raise money.
So SJW has lots of land it owns at low cost. But if it sold a piece of this land outright, it would owe a punishing amount of taxes on the sale, around 42% of the proceeds. So instead, the company does a 1031 exchange.
This allows SJW to roll the proceeds, tax-free, into a similar investment. SJW sells its land and buys water assets - as well as income-producing property around the country, such as a parking facility. That's how you get a utility owning a real estate portfolio.
Last year, SJW sold 5.5 acres to Adobe Systems for $25 million. That's about $5 million per acre! Plus, that was more than the company's water utility business netted in all of 2005!
56% in 9 Months!
Who knows exactly what SJW could eventually reap from its collection of land and properties? I think we know enough to say that SJW could reap a lot.
Yet Wall Street is completely missing the boat. In fact, Wall Street values SJW simply as a water utility company, overlooking its massive land holdings and the profits on its sales!
Most Wall Street analysts don't bother to roll up their sleeves and commit to the hard sleuthing it takes to uncover a potential sweathog's hidden assets. They're happy to enjoy their inferior returns. But my readers aren't, and neither should you.
As I said earlier, utilities have enjoyed an 18% annual gain for 10 years. But since adding this invisible beauty to the C&C portfolio last July, the stock has shot up 56% in nine months.
That's five times better than the entire utility sector! A true sweathog gain.
As you'll see, my readers pay far less for analysis, and they have as great or even better chances to make money.
Of course, most advisers and their investors would be ecstatic with 18% returns in their portfolios. But by simply combining Strategies No. 1 and 2, we've achieved three times the gain!
Why Settle for Less?
Using my three Secret Sweathog Strategies, we're averaging 50% a year on solid, less risky investments! So why bother settling for less?
You've seen how Strategies No. 1 and 2 can greatly increase your chance for profits in the years ahead. In fact, you could probably stop right here, use those two strategies and enjoy a much better-than-average investment experience.
But I think you're more sophisticated and ready to take your investing skills and your bank account to a much higher level. If that's the case, please continue reading this letter. Because next, I want to share with you the one strategy that nobody knows or applies... except me.
It's a strategy I learned the hard way... in the trenches of approving millions of dollars in loans for real-world companies.
It's the one strategy that separates the investing pretenders content with single-digit returns... from the truly wealthy. Which side do you wish to be on?