All About Insiders, Spinoffs...and Fiji

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The Daily Reckoning | Thursday, October 4, 2012 Not reporting from one place your globetrotting editor has never been... 3 important investment ideas you’ll want to keep an eye on... Plus, Chris Mayer on investment opportunities in one of most beautiful places on earth, and plenty more... ------------------------------------------------------ External Advertisement Could this video change the way you vote on November 6th? It doesn’t matter if you’re a Democrat or Republican... Pro Obama or otherwise... The video (linked below) will likely evoke a strong reaction, no matter what your opinion is of our sitting President. What does it show? Click here for more information.   Quote of the Day... “Travel is fatal to prejudice, bigotry, and narrow-mindedness.” — Mark Twain “The world is a book and those who do not travel read only one page.” — St. Augustine Joel Bowman, not checking in from Fiji...   Joel Bowman Surfed the peeling barrels of Indonesia’s Uluwatu? Check. Scuba dived the tropical waters just off Viet Nam’s Nha Trang coast? Check. Hiked the jungle trails of Malaysia’s Kinabalu National Park on the mysterious island of Borneo? Check. Traipsed Thailand’s picturesque Phi Phi Island chain? Yep. Fed the sharks on Australia’s Great Barrier Reef? Uh huh. Wiped out on O’ahu’s Banzai Pipeline? Umm...yeah. Your Aussie-born editor has seen a reasonable share of the vast collection of Pacific adventure destinations. But, as anyone who has visited one or more of the above locales...and the million more surrounding them...well knows, it’s simply never enough. What about the white sands of Vanuatu? The swaying palms of New Caledonia? Sunset cocktails in the Solomon Islands? And who can forget the whatever-it-is-one-does in Wallis and Futuna? There’s plenty to see and do in this world, to be sure...but toward the top of every Pacific adventurer’s list is the Oceanic subregion of Melanesia...and towards the top of that list, the island nation of Fiji. In today’s guest essay, Agora Financial’s own global investor, Chris Mayer, talks opportunity in Fiji...and some other investment stuff that’s also pretty important. Please enjoy...   Planning on buying a smart phone, tablet, or HD TV? You may want to wait... Industry insiders at some major electronics companies know something you might not... And if you did know this was happening, you probably wouldn’t want to buy a smart phone... tablet... or HD TV for at least two more months. Find out why in this special presentation. The Daily Reckoning Presents All About Insiders, Spinoffs...and Fiji   Chris Mayer Longtime readers of my investment letter, Mayer’s Special Situations, are well aware of my affinity for investing alongside insiders. The simplest thing any investor can do to improve their investment results is to invest only in companies where insiders own a good slug of the company right alongside you. Having skin in the game makes a world of difference. Periodically, I come across empirical evidence that confirms these views: studies that put some meat on the idea with numbers culled from experience. The Financial Times recently reported on a study by Credit Suisse on family-run firms: Listed companies in which families are big or controlling shareholders have been better stock market performers than their nonfamily-owned peers over the past five years... A study of family businesses by Credit Suisse offers several reasons why they have outperformed the wider stock market by 8% since 2007. They tend to operate in robust, cash-generating sectors, such as consumer or luxury goods or health care (rather than banking or utilities, say, two sectors poleaxed in the global crisis). They often focus on the long term — 40% are ready to wait 10 years for returns on their investments. They also often invest during downturns. There is some wisdom here, especially among those last lines. Can you wait 10 years for a return on your investment? I think the answer is probably no. Do you invest during downturns? Maybe you do. But most investors tend to sell near bottoms and put their money back in when the smoke has cleared — and the market has already made a big move up. Well, if you can’t do it, at least you can invest with firms that do these things. Chris Mayer’s Capital & Crisis Presents... How to Fend Off Government Attacks On Your Wealth... If you’re concerned about the security of your wealth in the face of government incompetence, this report is a must read. In it, you’ll discover the safest way to earn 42% gains, year after year. This is not an hour-long video or a “talking head” piece. It’s just a simple, straight-forward look at how you can earn solid gains in uncertain times. Click here now to review it for yourself. Next topic: Spinoffs In addition to investing with insiders, longtime readers of this letter know that I love spinoffs. Spinoffs happen when a parent company “spins off” a division as a separately traded company, which it gives to shareholders. These things have a history of doing well, and I have recommended several such investments to the subscribers of Mayer’s Special Situations, including Madison Square Garden (NASDAQ:MSG), which is up more than 80% over the last 12 months. Barron’s mentioned a lazier way to play spinoffs over the weekend: The Bloomberg Spinoff Index is up more than 30% so far this year and the Guggenheim Spin-Off exchange-traded fund has climbed 19%. As noted in a favorable item on companies cut loose by their parent here March 5, the ETF is a bit flawed because it doesn’t pick up spinoffs until they have been independently trading for six months, after which they’ve often been discovered and bid up. I’m not a big fan of ETFs generally speaking. They are just too blunt-tipped for me. I prefer to sharp shoot individual stocks. But you may think differently. If so, CSD is another interesting way to pick up some of that spinoff outperformance. Barron’s also briefly covered a new spinoff, Hyster-Yale Materials Handing, which will trade under the ticker HY. I’ll be giving this a deeper look soon. Every year brings a fresh crop of spinoffs. Sometimes we have a lot to choose from; sometimes there is only a handful. Either way, never ignore spinoffs. They are some of the fattest fish in the barrel. Last topic: Fiji When you think of seductive island destinations, Fiji could be very high on your list. But when think of compelling emerging market opportunities, Fiji is probably nowhere on your list. That’s understandable, but I think the island nation deserves a fresh look, investment-wise. Fiji is an island nation out in the great blue waves of the South Pacific Ocean. It’s about 1,100 miles from New Zealand...and about a million miles from anywhere else. I’ve accepted an invitation to speak at a conference in Fiji in November put on by Mark Wallace and Chris Tell at Capitalist Exploits. I had a great conversation with these two like-minded global travelers and investors. Their enthusiasm for Fiji was infectious, I have to say. The gist is that there was a coup in 2006. The military dictatorship promises elections in 2014. Tens of thousands of people fled Fiji. Investment dried up. Asset prices collapsed. Crisis creates opportunity, as we know, and so it seems is the case here. For instance, Mark and Chris point out how cheap it is to buy property in Fiji. You can get oceanfront property for $10,000 an acre — even less. There are no property taxes. The place is business friendly. It is also easy to set up residency and get a second passport — a thing on the minds of some of my American friends these days. Mark and Chris call Fiji their “favorite place in the world.” It has sunshine all year long. There is plenty of water. And food security can come from your own garden and fishing on the beach. The cost of living is super cheap. A slipper lobster and fresh bunches of veggies for dinner will set you back about $10. Mark and Chris report new 3G towers work impeccably well, and also have backup power. I can’t really do the thesis justice in this quick note here. There is, as always, much more to the story. Capitalist Exploits has prepared a 34-page special report on Fiji. I am arranging to have this report available to my readers for free. I’ll have more on that soon. Regards, Chris Mayer for The Daily Reckoning Editor’s Note: Chris’s readers are always benefitting from his unique brand of boots-on-ground knowledge. And his wealth of global contacts is simply astounding. The “special report” he mentions above is just one example of his tireless commitment to finding the world’s best opportunities for his readers. You owe it to yourself to be one of them. If you’re interested, click here now for all the info on how to do just that. --------------------------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com   Downside: After the Returns Stop Diminishing, Part II Downside: After the Returns Stop Diminishing Too Much of a Good Thing, Part III A Risk-Negative Feeling Casts Its Net Over The Markets Optimism For Spanish Banks US Postal Service to Default... Again! The Daily Reckoning: Now in its 11th year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. 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