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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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Looking at Power Generation and EV Charging Through The Eyes of Pioneer Power Management [GeoWire Weekly No. 79]

When a microcap company CEO jokes that he and his executive colleagues, across the course of their careers at various ventures, have collectively sold $1 billion worth of products and services, it’s normal to want to hear the rest of what he/she has to say about the things they have up their sleeves.

Such was the case with Nathan Mazurek, the CEO, President and Chairman of the Board at Pioneer Power Solutions, Inc. (NASDAQ:PPSI), when he joined us for a Fireside Chat on April 4, 2023. PPSI engages in the design, manufacture, integration, refurbishment, service and distribution of electric power systems, distributed energy resources, power generation equipment and mobile EV charging solutions for applications in the utility, industrial and commercial markets.

Before we get into a few of the details of our conversation with the CEO of PPSI, we want to make it clear that even though we had a prior instance of success investing in the stock, it’s been several years since we have followed the company in great depth and are just getting acclimated with the company’s new business model. Our current opinion is that PPSI is definitely worth keeping a close eye on due to a huge acceleration in revenue growth (and revenue growth guidance for 2023 of 50%), but we need to be convinced that the company has reached a point where it can operate profitably on a consistent basis.

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GeoWire Monthly, Vol. 3, Issue No. 3, March 2023

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. 

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Top Tier Microcap Companies to Present in Las Vegas, Maj Soueidan to Moderate [GeoWire Weekly No. 77]

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…

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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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Turnarounds as a Type of Special Situation Investment [GeoWire Weekly No. 73]

As far back as I can remember, I put an outsized focus on special situation stock investing because I knew that in some instances, the rewards I could reap from certain outlier circumstances would be worth the research. And it just made investing more fun than a standard value investing approach.

I originally used a written list that laid out a framework for what I was looking for on a daily basis across press releases and Security Exchange Commission (SEC) filings at SEC.gov. Yes, written… Remember I am old!

Later, when I started Geoinvesting, each member of my team had a physical printout of the list so it could be readily visible as an outsized 8.5 x 11 inch post-it note.

Regardless of what position one held at Geo, I made sure that each team member was exposed to the our research process to some degree, with the aid of checklists, even if the list became pinned underneath a paperweight, taped to one of the many whiteboards I had floating on each wall when we used to work in “offices”, or handed back and forth between my colleagues if one went missing prior to a new printout.

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