GEO Investing

Now that we are heading into 2023 Q4 earnings reporting season, we thought it to be a good idea to tabulate the last several months of company financial performances that we compiled for our Monthly Forums, going back to August 2023.

As you know, we curate the most notable earnings releases from our Model Portfolio stocks, and generally from across our large universe of microcap coverage. Some mornings can get a bit hectic.

For those of you that use GeoInvesting for idea generation, we’ve created a page for you to be able to search, sort and filter for various criteria related

CXDO has risen 186% since our November 10, 2023 post-Q3 earnings Skull Session Briefing with the company’s COO, Doug Gaylor.

After this past Thursday’s follow up briefing with him, we think it is a good time to highlight some of the clips from our Twitter Space discussion with 20-yr Telecom Expert Joe Hamblin, as some of Doug’s and Joe’s views intersect.

The talk with Hamblin, intended for us to keep learning about what companies like CXDO have to do to keep growing, actually occurred one day prior to November’s event with Doug and CXDO’s strong third quarter earnings release.

A few weeks ago I was dusting off the shelves of some of our research files at GEO, when I came across a quote I saved from an article discussing the $1.2 trillion Bipartisan Infrastructure Bill that went into law on November 15, 2021. The planned spending is quite extensive:

“California ($44.558 billion), Texas ($35.440 billion), New York ($26.922 billion), Florida ($19.098 billion) and Illinois ($17.814 billion) will get the biggest allocations.”

It served to remind me of one of our screens we created but eventually removed from GeoInvesting: The Infrastructure Screen.

As we go into another election year, there are certainly going to be some circumstances that will affect the financial markets, but will we be able to predict how? What will the fed position be on monetary policy? How about interest rates…will they lower them three times, as predicted by Wall Street? Will energy prices rise or fall? What will the CDC say about any new strains of Covid? What mundane things will Presidential candidates say that will sway the market one way or the other.

I hope all of you enjoyed your transition into the New Year. Like I do every year, I’ll be pondering a few investing resolutions. The 2022 reset probably forced many of you to ask yourselves,

“What could I have done better to adjust to changes in the investing environment – decisions regarding sell discipline all the way to what type of stocks to hold and new ones to buy?”

While in that same frame of mind, when I reflect on the impact the great recession of 2008 had on the way I had been accustomed to investing, three things stand out.

First, holding a diversified portfolio of microcap value-themed stocks became challenging.

Before I get into a reflection on the book Damsel In Distressed: My Life In the Golden Age of Hedge Funds, by Dominique Mielle, I’d like to point you to a few tweets I recently posted that I’ll parlay into the theme of today’s topic – capitalizing on market inefficiencies and how Mielle’s history of being an early investor in distressed asset classes rhymes perfectly with the edge that microcaps provides.

On December 16, I quickly commented on the aversion that people have towards microcaps, which is quite astonishing to me given that the quality gets swept into the melee of bad karma brought upon by the junk that gave the space a bad name in the first place:

Every year, on some level in our research or education, we remind you that companies have a somewhat wide latitude on how they are permitted to make adjustments to generally accepted accounting principles (GAAP) earnings per share (EPS) to report non-GAAP or “adjusted” earnings per share (EPS).

In an article we wrote in August 2016, “To GAAP or Non-GAAP, That is the Question,” we dove into this topic to highlight conservative and aggressive ways companies can make adjustments to GAAP EPS.

In the end, when analyzing EPS, we should strive to calculate a number that is most representative of a company’s everyday operations and its run-rate earnings power. This is accomplished by eliminating impacts to earnings per share that are one time in nature or generally non-recurring, as well as making adjustments to some non-cash gains/charges.

We were lucky to catch $LAKE’s CFO, Roger Shannon, on extremely short notice for a very early morning Management Briefing Skull Session on Thursday, December 7. We threw the invite out to Shannon because we were very impressed with the company’s strong Q3 2023 financial results just released the day before. We highlighted a key piece of commentary that would serve as a launching pad for a few subjects that we hoped he would touch upon: