If you want individual corporate bond recommendations that have beaten the most popular corporate bond ETFs 76% of the time and to pay a fee relatively small to the returns historically generated, then Bondsavvy could be for you. We believe Bondsavvy is the only US investment newsletter focused exclusively on individual corporate bonds.
This fixed income blog post compares Bondsavvy to Stansberry Credit Opportunities, a competing investment newsletter published by Stansberry Research that previously recommended bonds but now recommends mostly preferred stocks and 'hybrid' securities.
Why Choose Bondsavvy over Stansberry Credit Opportunities
Figure 1 lists ten reasons to subscribe to Bondsavvy rather than the Stansberry Credit Opportunities investment newsletter. Later in this fixed income blog post, we discuss the key differences among Bondsavvy, Stansberry Credit Opportunities, and another investment newsletter known as the Forbes Lehmann Income Securities Investor. Later, we review the details of each of the ten reasons investors should choose Bondsavvy over Stansberry Research.
Figure 1: Ten Reasons to Subscribe to Bondsavvy over Stansberry Credit Opportunities
1. Bondsavvy publicly discloses investment performance for all its bond recommendations, whereas Stansberry Credit Opportunities does not.
2. In two known occasions where Bondsavvy and Stansberry Research recommended buys and sells of the same bond, Bondsavvy issued sell recommendations at prices a combined 109 points higher than Stansberry Credit Opportunities.
3. Bondsavvy offers subscribers more choice, with a recommended list of 37 individual corporate bonds. Stansberry Credit Opportunities has a portfolio of 10-15 securities, a large portion of which are not bonds.
4. Bondsavvy updates its 35+ buy/hold recommendations each quarter and provides supplemental updates as needed. Stansberry does not appear to update each recommendation on a regular basis.
5. Bondsavvy exclusively recommends individual corporate bonds. In spite of its name, Stansberry Credit Opportunities rarely recommends new bonds, favoring preferred stock and other equity securities.
6. Stansberry Research misleads investors by labeling distressed bonds and its preferred stock and 'hybrid' recommendations as "Very Conservative."
7. Bondsavvy has worked to mitigate the market impact of its corporate bond recommendations, with good results so far.
8. Bondsavvy subscribers get more and pay less than subscribers of Stansberry Credit Opportunities.
9. Bondsavvy subscriber reviews average 4.9/5.0 compared to 2.5/5.0 for Stansberry Credit Opportunities reviews.
10. Stansberry Research is continually bearish on corporate bonds, regularly predicting "The Coming Credit Collapse."
Bondsavvy Reviews vs. Stansberry Credit Opportunities Reviews
This fixed income blog post provides our perspective on the advantages of Bondsavvy vs. Stansberry Credit
Opportunities. In addition to our analysis, an investor who subscribes to both Bondsavvy and Stansberry Credit
Opportunities wrote the following on the Bondsavvy reviews page:
|"I searched long and hard for a service to help me with
corporate bond investing. I have been VERY pleased with Bondsavvy. Overall, the recommendations have
been good. The educational component is outstanding. And Steve is VERY responsive to
subscriber needs and questions. FWIW....I am also a
subscriber to Stansberry's bond newsletter. This product is head and shoulders above
-- Eric S., Michigan, February 10, 2021
Bondsavvy vs. Stansberry Credit Opportunities
While there are several investing for income newsletters, investors should not be led to believe that "income" means bonds. For example, the Forbes Lehmann Income Securities Investor peddles common stocks, preferred stocks, closed-end funds, MLPs, etc. In the sample Income Securities Investor newsletter for March 2021, it did not have a single new individual bond recommendation.
Figure 2 provides a brief comparison among Bondsavvy, Stansberry Credit Opportunities, and the Forbes Lehmann Income
Securities Investor newsletter. After the table, we discuss the ten reasons investors should choose Bondsavvy over Stansberry Credit
Figure 2: Comparison of Bondsavvy to Competing Investment Newsletters
Stansberry Credit Opportunities
Income Securities Investor
|Focus||Investment grade and high yield corporate bonds||Distressed corporate bonds, preferred stocks, and tangible equity units||Common stocks, preferred stocks, MLPs, closed end funds, bonds|
|Investment Returns||Available on Bondsavvy's corporate bond returns page
Through December 31, 2021, 76% of our bond picks have beaten the leading corporate bond ETFs
|No published investment returns of individual recommendations||No published investment returns|
||Written newsletter||Written newsletter|
||Monthly written newsletter||Monthly written newsletter|
|Cost||$625 for one year
$1,000 for two years
|$3,000 for one year||$195 for one year|
TEN REASONS TO SUBSCRIBE TO BONDSAVVY VS. STANSBERRY CREDIT OPPORTUNITIES
Stansberry Research does not disclose investment returns for all of its recommendations. Bondsavvy does.
Bondsavvy's corporate bond returns page shows the investment returns for the 82 corporate bond recommendations Bondsavvy made since the first edition of The Bondcast on September 26, 2017 through May 2021. We disclose the names and CUSIPs of all exited recommendations and investment returns details for current buy/hold recommendations. This provides full transparency to prospective investors so they can see the types of individual corporate bonds we have previously recommended and the returns the recommendations have achieved.
Through December 31, 2021, 76% of Bondsavvy's investment recommendations have beaten iShares LQD and HYG, the leading corporate bond ETFs. Thirty-seven percent (37%) of Bondsavvy's recommendations have beaten the iShares corporate bond ETFs by at least ten percentage points.
In addition to showing our investment returns, we provide prospective subscribers with two free sample editions of The Bondcast, where investors can see the investment analysis that accompanies new Bondsavvy corporate bond recommendations.
Stansberry Credit Opportunities provides no detailed investment returns data
In reviewing its website, Stansberry Research does not provide one example of a previous recommendation and its return. Nada. It shows an alleged annualized return, but the time period is not clear, and we don't know how it's calculated. Since it annualizes its returns, it could have a few past recommendations with mega returns and a bunch of duds. We also don't know the amount of defaults across the investment newsletter's previous recommendations. With Stansberry Research, investors are left in the dark.
Bondsavvy issued sell recommendations at prices a combined 109 points higher than Stansberry Research for the two known recommendations we have in common.
In reviewing the Stansberry Credit Opportunities website, we are aware of two bonds where we both recommended buying and then later selling the same bond:
- Tupperware 4.75% 6/1/21 (CUSIP 899896AC8)
- Monitronics 9.125% 4/1/20 bond (CUSIP 609453AG0)
While neither of these bond picks will make the Bondsavvy Hall of Fame, we exited the Tupperware '21 bond approximately 59 points higher than Stansberry Research and the Monitronics '20 bond approximately 50 points higher than Stansberry Research. Below are case studies on the Tupperware and Monitronics bond recommendations:
Tupperware '21 Case Study
Both Bondsavvy and Stansberry Research recommended the Tupperware 4.75% 6/1/21 bond (CUSIP 899896AC8). We recommended the Tupperware bonds December 12, 2019 at 99.35 and sold them December 3, 2020 at 101.96 for a total return of 7.30% compared to a 4.40% return for the iShares HYG corporate bond ETF. Per Figure 3, Stansberry Credit Opportunities issued a 'sell' of the Tupperware '21 bonds on May 28, 2020, at which time the bonds were trading at 43.00.
Figure 3: Tupperware '21 Bonds -- Comparison of Bondsavvy vs. Stansberry Research Sell Recommendations
Pricing data provided by FINRA market data.
During 2020, we issued six updates on the Tupperware bonds. While the first part of 2020 was ugly for the company, it did start to improve performance and, on November 2, 2020, it received a financing commitment so it could redeem the 4.75% '21 bonds.
Monitronics '20 Case Study
Both Bondsavvy and Stansberry Research recommended purchasing the Monitronics 9.125% 4/1/20 bond (CUSIP 609453AG0) in late September 2017. There were terms in the company's bank agreements that required Monitronics to refinance the '20 bonds well in advance of the April 1, 2020 maturity date. This shot clock and the company's weak performance put downward pressure on the bonds, as shown in Figure 4.
After another quarter of weak performance and in the midst of attempted tender activity for the bonds, Bondsavvy recommended selling the bonds on September 14, 2018 at a price of 74.84, registering a total return of -7.13%, our fourth-worst return across the 49 bonds we have sold through December 31, 2021. Stansberry Research advised subscribers to keep holding the bonds until December 27, 2018, when it finally issued a sell on the Monitronics bond, as shown in Figure 4. At this time, the bonds were trading at approximately 25.00, approximately 50 points lower than the Bondsavvy sell recommendation.
Figure 4: Monitronics '20 Bonds -- Comparison of Bondsavvy vs. Stansberry Research Sell Recommendations
Pricing data provided by FINRA market data.
From our reading of the Stansberry Research website, it does not appear that it provides quarterly updates on all of
its bond recommendations but rather provides updates on an ad hoc basis: often times, when it's too
Stansberry Credit Opportunities only recommends 10-15 securities, many of which are not bonds. Bondsavvy offers subscribers more choice, with a current recommended list of 48 individual corporate bonds.
We believe it's important for investors to own both investment grade and high yield corporate bonds, as opportunities arise in different types of bonds over time. Bond investors should not be one-trick ponies. Some of Bondsavvy's highest investment returns have been from investment grade corporate bonds we recommended purchasing at significant discounts to par value.
But Stansberry Credit Opportunities only recommends a small portfolio of 10-15 securities, which includes preferred stocks, convertible preferreds, tangible equity units, and a few high yield bonds. Bondsavvy's recommended list currently includes 37 individual corporate bonds across both investment grade and high yields bond ratings.
Bondsavvy seeks to serve investors with a variety of risk appetites. While we take the universe of approximately 9,000 tradeable corporate bonds down to fewer than 40, our list provides variety across credit quality, industry sector, and maturity dates. As we write this fixed income blog post, we recommend corporate bonds across 11 industry groups.
Presumably, Stansberry Credit Opportunities recommends bonds that can be bought via online bond trading platforms such as Fidelity and E*TRADE. If it focuses on "distressed" corporate bonds, it's currently a very small universe, with heavy industry concentration. Based on a Fidelity bond search we conducted September 1, 2021, only 12 high yield corporate bonds had offer prices lower than 80.00. Four of these bonds were issued by movie theater chains and eight were issued by companies in the energy sector.
Stansberry Research does not appear to update each recommendation on a regular basis. Bondsavvy updates its 35+ buy/hold recommendations each quarter and provides supplemental updates as needed.
For Bondsavvy, our work only begins when we make an initial buy recommendation during The Bondcast. Once we make a new bond recommendation, we update our buy/sell/hold ratings every quarter based on each bond issuer's financial performance and the updated pricing of our recommended bonds. We update these recommendations during The Super Bondcast, a quarterly webcast series exclusively available to Bondsavvy's subscribers, which follows quarterly earnings releases. As part of our bond recommendation updates, we post updated bond prices, YTMs, credit spreads, and leverage ratios in our subscriber dashboard area.
In addition to our regularly scheduled quarterly updates, Bondsavvy may provide additional updates, especially during times of market unrest. For example, during 2020, Bondsavvy provided subscribers with 30 email updates on its bond recommendations in addition to our regularly scheduled subscriber webcasts.
Important to monitor all bonds on our recommended list
A key part of our fixed income investment strategy is selling bonds before maturity to maximize capital appreciation and total investment return. Carefully monitoring the quarterly financial performance of each Bondsavvy-recommended issuer enables us to determine the level of possible upside -- or downside -- in our recommended corporate bonds.
Stansberry Credit Opportunities rarely recommends new bonds, favoring preferred stock and other equity securities. Bondsavvy exclusively recommends individual corporate bonds.
Bondsavvy believes in full transparency. It starts with disclosing the investment returns of each bond recommendation on the public portion of the Bondsavvy website and in our subscriber area. We believe more individual investors need exposure to individual corporate bonds given the advantages of bonds vs. bond funds and bonds vs. stocks. We founded Bondsavvy to empower investors to benefit from the income, growth, and capital preservation individual corporate bonds can provide. It's the primary mission of our company.
The name "Stansberry Credit Opportunities" is misleading and does not accurately represent what the newsletter sells. In reviewing the Stansberry Research website, of the nine recommendations it describes for 2021, six were for 'hybrid' securities (typically something like a tangible equity unit...Google it), two were for preferred stock, and one recommendation was for a bond. The word "credit" implies debt. That the substantial majority of Stansberry Credit Opportunities' 2021 recommendations were for equity securities speaks to Stansberry Research's lack of credibility and transparency.
Stansberry Research misleads investors by labeling distressed bonds and its preferred stock and 'hybrid' recommendations as "Very Conservative."
Investment service providers, including Bondsavvy and Stansberry Research, must provide prospective subscribers with an accurate assessment of the risks associated with their recommendations. Bondsavvy does this by disclosing the investment returns of its bond recommendations on its corporate bond returns page, where investors can see the range of investment returns we have achieved.
Our recommendations include corporate bonds with bond ratings below investment grade. We also recommend investment grade corporate bonds with, generally speaking, over 10 years to maturity. While these investments are safer than stocks, they can be volatile. "Very conservative" investments, in our eyes, are savings accounts and investments in short-dated investment grade corporate bonds.
It is, therefore, inexplicable that Stansberry Research misleads prospective investors by labeling its strategy as "Very Conservative" on its website, as shown in Figure 5. Distressed corporate bonds, Stansberry Credit Opportunities' alleged focus, are the most risky part of the corporate bond market. These investments are anything but conservative. In addition, based on our review of the Stansberry Research website, the company seems to have recommended a fair number of bonds that have later defaulted.
Further, Stansberry Credit Opportunities now recommends preferred stocks, convertible preferred stocks, and, on May 19, 2021, the tangible equity units of a pet pharmaceutical company. These investments, along with the company's distressed debt investments are all high-risk investments. Stansberry Research labeling this strategy as "Very Conservative" is very misleading in our book.
Figure 5: Snapshot of Stansberry Credit Opportunities Risk Assessment
Source: Stansberry Research
Bondsavvy has worked to mitigate the market impact of its corporate bond recommendations, with good results so far.
A key Bondsavvy goal is for our subscribers to be able to buy and sell corporate bonds at or near the prices at which we recommend them. During 2021, we took several actions to limit the market impact our recommendations have on the prices of our recommended bonds. We carefully monitor the prices at which corporate bond trades are executed in the days following our recommendation dates.
Across 87 previous corporate bond recommendations, we have seen a material market impact on two recommended bonds, both of which we recommended December 17, 2020. As we took actions during 2021 to limit our market impact, we have been pleased to see limited market impact so far this year.
To illustrate, our recent fixed income blog post previews the best bonds we recommended on September 9, 2021 and the corporate bond trading activity for the four trading days leading up to our pick date and the four trading days immediately following our pick date. We chart each customer buy trade and calculate the average price at which customer buy trades were executed the day following our recommendation date.
Bondsavvy founder Steve Shaw knows the inner workings of how corporate bonds trade online from his experience leading Tradeweb direct and as a senior executive at BondDesk Group, two leading online bond trading systems. He has presented the state of the US corporate bond market for individual investors to the US Securities & Exchange Commission.
Limiting market impact
will always be top of mind at Bondsavvy, and Steve Shaw's corporate bond market experience equips him well to
address this issue.
Stansberry Credit Opportunities' fees are expensive for what you get. Bondsavvy subscribers get more and pay less.
Bondsavvy's goal is for our subscription fee to be a small portion of the investment returns our recommendations generate. For subscribers purchasing 10 bonds of every Bondsavvy recommendation through the May 2021 edition of The Bondcast, they have earned $63 in returns for every $1 paid in Bondsavvy subscription fees through October 29, 20211.
We also want our fee to be a small portion of the dollar amount a subscriber invests in individual corporate bonds. Investment returns will vary over time, and keeping subscription fees at a reasonable level helps subscribers maximize returns over the long term. As of this writing, Bondsavvy's one- and two-year fees were $625 and $1000, respectively.
In reviewing the Stansberry Research website, it appears the Stansberry Credit Opportunities newsletter has issued one or two corporate bond recommendations for all of 2021. At a $3000 annual subscription fee, subscribers are paying either $1500 or $3000 for each recommended bond. Ouch. Stansberry Research appeared to issue 8-10 additional recommendations of either preferred stock, convertible preferred stock, tangible equity units, and other equity instruments. We would hate to be the person who paid $3000 thinking he was going to get bond recommendations and, instead, received a bunch of risky equity recommendations.
While we do not have investment returns data across all of Stansberry Research's corporate bond recommendations, given its poor relative performance in the two bond picks we had in common (See Reason #2), it's doubtful it is producing compelling investment returns across the few corporate bond recommendations it has made.
Stansberry Credit Opportunities reviews average 2.5 out of 5.0. Bondsavvy subscriber reviews average 4.9 out of 5.0.
The jury is in, and subscribers strongly prefer Bondsavvy to the Stansberry Credit Opportunities investment newsletter. Prospective subscribers can view the Bondsavvy reviews page to see what our subscribers think of the Bondsavvy investment service. We believe they provide a good flavor for the experience our subscribers receive.
Stansberry Credit Opportunities only posts about two subscriber reviews on its site. More Stansberry Credit Opportunities reviews are available on the Stock Gumshoe website. Many of the reviews voice similar concerns to those mentioned in this fixed income blog post, including that the marketing misrepresents the service and there are a large number of defaults relative to the newsletter's small number of investment recommendations.
Stansberry Credit Opportunities is continually bearish on corporate bonds, regularly predicting "The Coming Credit Collapse."
After reviewing the Stansberry Research website, we believe we have found why the company no longer recommends corporate bonds: they don't believe in them. Investment websites are filled with experts and market gurus falling over themselves to predict the next disaster. While these provocative titles stir panic and may sell subscriptions, they are typically a disservice to investors.
Below is a list of recently published Stansberry Research newsletters proclaiming the pending fall of the corporate bond market:
December 17, 2021: "Your Complete Guide to the Coming Credit
December 15, 2021: "Get Ready for the 'Mother of All Crashes' in 2022
January 20, 2021: "Don't Let the Calm Fool You" where Stansberry Research lays out its "strategy for surviving the next credit collapse"
April 24, 2020: "Mike DiBiase on the Corporate Debt Bubble"
April 15, 2020: "The Corporate Debt Bubble Is Popping"
November 21, 2018: "Preparing for the 'Volcano' to Erupt" where Stansberry Research explains "that massive pressure is building beneath the surface of the corporate bond market."
Bondsavvy's perspective on this is straightforward. There will be times when individual corporate bonds outperform other asset classes and times when they underperform. Over the long term, however, we believe individual corporate bonds will outperform bond funds and, in certain periods, stocks.
We have been able to outperform the leading bond funds by identifying individual corporate bonds that offer strong yields and potential returns relative to their risk. As of our last bond update on December 3, 2021, 27 of 37 recommended bonds were issued by companies that had leverage ratios of 3.0x or lower as of the most recent financial reporting period. All of our bond issuers had leverage ratios less than 4.0x.
Many market pundits have cited a so-called BBB bond bubble. There are many bond issuers that are, admittedly, IGINO (investment grade in name only) and have financials that don't support their lofty bond ratings. Our job is stay away from those bonds and others with high risks of default.
We do not believe in blanket statements such as the ones regularly made by Stansberry Research. The astute bond investor can find opportunities across a variety of market conditions.
Steve Shaw founded Bondsavvy so more individual investors could benefit from the income, growth, and principal protection individual corporate bonds can provide. Very few investors own individual corporate bonds, and Steve founded Bondsavvy to change this.
Through his work at Tradeweb and BondDesk Group, Steve saw firsthand how technology had made corporate bond investing fair for individual investors. As Steve presented the US corporate bond market for individual investors to the US SEC in 2018, the corporate bond market has over 100 dealers that provide live bid-ask quotes for approximately 9,000 individual corporate bonds each day. Bid-ask spreads are reasonably narrow, and, often times, someone buying 10 bonds can get a price as good -- or even better -- than a large bond fund purchasing millions of the same bond.
We believe owning individual corporate bonds direct positions investors to maximize returns, limit fees, and know
exactly what is in their portfolios. Selecting among the 9,000 available individual corporate bonds can be a
daunting task for many investors, which is why Bondsavvy recommends a highly curated list of individual corporate
bonds investors can use to decide which bonds are right for them.
1Read our investment returns calculation page to see assumptions used in this calculation and relevant footnotes.