GEO Investing

In light of the volatile market conditions we are facing, we have been focusing on topics such as:

Recession Resistant Stocks.
Company Turnarounds.
Boring but Slow Growing Companies.
Microcaps with Big Cap Revenue.

For this Monthly GeoWire issue, as a followup to our short prelude on on Chapter 11 exits, we are once again focusing on successful Chapter 11 exits – companies that have weathered their own respective storms through debt and bankruptcy filings and have not only emerged successfully, but performed remarkably well since then, both in terms of performance and stock price. 

I am no stranger to investing in and studying Chapter 11 companies.  Before I launched  GeoInvesting in 2007, I invested in stocks after they emerged from Chapter 11.

My journey in this genre of special situations started with Storage Technology (STK) in 1990. As a matter of fact, this was my first foray into special situation investing.

A few years later, I bought shares of paging companies MetroCall and NII Holdings, two companies that were casualties of the dot com and related telecom bubble. They both ended up turning into multi baggers.

Before Monster Beverage Corporation (NASDAQ:MNST) was the energy drink we all know today, it went through a Chapter 11 bankruptcy under the name Hansen Natural Foods (HANS). I captured a tiny piece of its Multibagger history, as I discuss later. 

I recently had a conversation with Bobby Kraft from Planet Microcap where we discussed what a Tier One Microcap is and announced the Planet Microcap Showcase in Las Vegas that will be taking place from April 25 to 27, 2023. I made it clear to Bobby that if he wanted me to attend this year he would have to carve out a Top Tier Track. We came to an agreement. 

On Wednesday, April 26, I will be moderating presentations by the management teams of Top Tier Microcap or those possibly on their way to meeting the requirements indicative of top tier companies

We plan to give  each company the floor for 10-15 minutes, followed by a Q&A for a live audience. 

The management teams from the following companies within our coverage universe will be presenting…

I was reflecting on a past GeoWire Weekly post from November 2022 where I addressed some factors that made Ufp Technologies, Inc. (NASDAQ:UFPT) a standout case study in what can happen when company management values maintaining the integrity of capital structure while growing revenue and EPS organically and through acquisitions – UFPT, a designer and custom manufacturer of components, subassemblies, products and packaging utilizing highly specialized foams, films, and plastics primarily for the medical market, made eight acquisitions since 1993.

The company relied on its strong balance sheet to minimally increase its share count as EPS trended higher from 2004, when its bottom line went positive, to 2022, the first time its adjusted EPS broke $3 per share.

In this Weekly Wrapup, we’re taking a break from our usual subject matter to bring you some material on the Silicon Valley Bank failure debacle to help you understand some different perspectives related to the developing story.

“Silicon Valley Bank structured its loans with the understanding that startups do not earn revenue immediately, managing risk based on their business model. The bank’s main strategy was collecting deposits from businesses financed through venture capital.”

In the end, this event is just another unwinding of the 15 year speculative bubble that will give more credence to stock picking taking precedence over a buy anything strategy. We continue to be very bullish on buying traditional boring growth plus value microcap stock set-ups.

Yesterday night, financial regulators declared that depositors of Silicon Valley Bank, which failed on Friday, will be able to access their full deposits beginning on March 13th. They also unveiled new measures to ensure that deposit withdrawals can be backed up throughout the banking system, in response to concerns about contagion following SVB’s unexpected collapse last week.

I no longer avoid investing in Canada based companies. When you screen for stocks to buy, you might have a desired set of criteria on a quantitative, qualitative and geographical basis.

If you isolate your screen to Canada, natural resource companies will dominate your list. If you love to invest in these types of companies, many of which are in the early stages of development and specialize in mineral and oil exploration and extraction, you’d be in luck.

Canada is one of the most resource-rich countries in the world as the global leader in potash production and a top five global producer of diamonds, gemstones, gold, indium, niobium, platinum group metals, titanium concentrate and uranium. Canada is also the world’s fourth-largest primary aluminum producer, and has the third-largest oil deposits after Venezuela and Saudi Arabia.