After interviewing the CEO, we learned that the company’s data center product is an enclosure designed to protect power systems. This caught our attention because power is one of the biggest growth areas in the data center market. The global data center power market is expected to grow from approximately $22.46 billion in 2023 to $41.3 billion by 2029, with a compound annual growth rate (CAGR) of 10.6% during this period.
The following is a developing story we alerted our premium members to on 8/23/2024 when the target stock in this update was trading at around $4 per share.
Just when I thought I would swear off investing in any U.S. listed China based stock (due to the painful years-long Origin Agritech Limited (NASDAQ:SEED) journey), along comes another one.
Before you say anything, DON’T SHOOT THE MESSENGER.
This company, trading on the NASDAQ, is a Chinese software company with a focus on AI technology, particularly a conversational AI platform. The company has licensed its technology to major telecom firms in China, sports annual revenue of about $59 million and is backed by Chinese conglomerate, Alibaba.
While the target company is losing money and has a debt burden, fortunes could be dramatically changing soon.
This past week, we were able to pass along replays of the interviews I had with the management teams of three companies – $LAKE (replay), $CREX (replay) and $BKTI (replay) – that I agreed to go on record with at Semco Capital’s 4th Annual CEO Networking Event to help give them a platform to answer questions about their businesses. It certainly was a change of pace from the usual Zoom-style meetings that we hold with company execs, so there was an added level of anticipation and excitement at the prospect of in-person meetings with both the executives and peers alike.
Thomas Birnie, a part-time investor and GeoInvesting contributor, presented a case study on $NFLX as a multi-bagger investment opportunity, focusing on the period around 2011-2012. During this time, Netflix’s stock experienced a significant decline, losing about 75% of its market value. Birnie emphasized that this was partly due to the company splitting its DVD rental service from its streaming service, leading to margin compression and a drop in investor confidence.
A lot happened at GeoInvesting this past week, but arguably the big news of the week was the 55.7% move $TSSI made in reaction to the company’s second quarter 2024 results published on August 14. The delayed price reaction in the morning did not capture the essence of the bullish developments transpiring at the company. Those developments were communicated in the related earnings conference call that began at 9 AM Eastern time. It’s going to go down as a classic case study in information arbitrage.
Sam McColgan’s investment strategy centers around four key principles: Momentum, Monopoly, Margin of Safety, and Management. He looks for stocks with strong price and fundamental momentum, ensuring quicker price realization. He targets companies with a monopoly in their niche or those that are best in class, securing a competitive edge. Sam emphasizes the importance of a margin of safety, focusing on undervalued stocks to minimize downside risk. Finally, he prioritizes investing in companies with high-integrity and competent management teams, believing that strong leadership is crucial for long-term success.
While small caps experienced a significant rally in July, a good amount of those gains have vanished, with a sharp decline accelerating after July 31. Concurrently, large-cap companies have continued substantial drops that began in July as small caps took centerstage for a few seconds.
Recession fears have resurfaced among market commentators, echoing concerns that were prevalent but largely unfounded over the past decade. Despite this, our focus remains steadfast on long-term fundamentals, unaffected by the prevailing market sentiment.
During market downturns or panics, our advantage as fundamental investors is magnified. These periods allow us to identify quality companies with great earnings or high-probability turnaround companies that are overlooked due to their microcap status. That is why in our next Monthly Open Forum slated for early next week, we are announcing that Buy on Pullback Portfolio #12 is on deck and ready to be constructed, with candidates being part of that conversation.