GEO Investing

No Lack of Opportunity For This Asset Liquidation and Charge-off Loan Platform Business [GeoWire Weekly No. 80]

The past couple of weeks were active with live Fireside Chat and Management Morning Briefing style interviews with companies that we are watching closely, have written some detailed content on (think RFTs), and/or fill spots on our Model Portfolios.

We will continue to strongly suggest that you attend these meetings or at least view the replays, as they offer so much more information than you would glean from earnings conference calls and related press releases and SEC filings. They are an extremely valuable and integral part of our due diligence. WIthout them, it’d be much more difficult and time consuming to profile the companies given the sometimes limited information available on public platforms. It’s a no brainer.

The one we held on April 11, 2023 with a company involved in the asset liquidation and charge-off loan platform businesses, Heritage Global Inc. (OTC:HGBL), was particularly timely given the combination of our focus on bankruptcy special situations of late and the case of distressed company $NMCI that caught peoples’ attention when it rallied over 200% when it filed for bankruptcy protection that same day.

When NCMI disclosed this news, it put a spotlight on how some companies can potentially emerge from bankruptcy, sometimes cleaner & stronger than ever. Clear success is not a done deal for the company, as there are still many unknowns on how clean it will come out on the other side.

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Research Process: EPS Grows Faster than Outstanding Share Count [GeoWire Weekly No. 76]

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.

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As Silicon Valley Bank Failure Story Unfolds, We Are Staying Focused On What We Do Best [GeoWire Weekly No. 75]

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.

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Investing In Canadian Stocks Is Not So Bad After All [GeoWire Weekly No. 74]

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.

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GeoWire Monthly, Vol. 3, Issue No. 2, February 2023

Having been through 3 bear and 2 bull markets, our history is rich.

We’ve accomplished quite a bit on both sides of the equation, recently experiencing the brighter side of things from March 23, 2020 (Covid trough) to January 3, 2022 before a microcap winter for many, including us.

During this period of nearly 21 months, we posted an average 134.96% rise in holdings that were initiated after December 31, 2016 and closed and/or still open by the time the bull market ended (a total of 67 unique model portfolio stocks).  Yes, while it’s true that the 2020 Covid bull run was a great outlier period when it was hard to lose money, we still managed to beat the S&P by 20%. Furthermore, the stats we highlight later will show that we had above-average returns well before this 2016 to 2021 timeframe. As an initial example, in each of the last 10 years going back to 2012 through the year 2021, we’ve logged at least 7 stocks per annum that have gone on to at least double during our holding period.

When 2022 came along, it created another challenging period for investors. Last year put into perspective just how unpredictable and frustrating investing can be, especially when you are dealing with a group of stocks that investors might tend to ignore or abandon, lending to thin trading and extended periods of price stagnation or decline. When some of 2021’s duds turned into 2022 duds, we knew we were in for a disappointing ride. But a little later, we’ll get into the strategies we are employing that are perfect for the next bull market, which we feel is right around the corner. Our goal is to even better the performance we logged in the prior bull markets.

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