Regal Assets Analytics

GEO Investing

Because our next Fireside Chat is with Credit Risk Monitors (OTC:CRMZ), a countercyclical company operating in the credit risk monitoring industry, we thought it would be appropriate to once again draw your attention to a pitch session with Quim Abril, President and Portfolio Manager at Draco Global Fund, during which he presented his bullish take on the company.

As a precursor to the feature with CRMZ, we’d like to focus on 3 clips that will give you a quick bird’s eye view of why Quim is following the company and, in case you missed it, where he thinks the stock could go given a couple of scenarios.

We had a second opportunity to sit down with Cipher Pharmaceuticals Inc (OOTC:CPHRF) (CPH.TO) CEO Craig Mull and CFO Bryan Jacobs on May 18, 2023.

Recall that after having taken a deeper look in 2022 into the the valuation of the company versus its peers and some of the traits it possessed that made the company a stock that we thought warranted a live event with management, we successfully hosted a Fireside Chat with the company in November 2022.

In May 18’s Management Morning Briefing, we aimed to gain a deeper understanding of Cipher Pharmaceuticals’ prospects and how they align with our findings and past discussions.

When a stock of yours is doing well, one of the hardest things you will face is deciding if you should make a decision to take short-term profits, especially if you strongly believe the stock has much more potential in the long run. But it gets even worse. Sometimes we make decisions to hold onto stocks longer than their expiration dates because of the “what if it goes up” thoughts that creep into our minds

You want to hold it, but on the same token, you are not being fair to yourself when your discipline promotes a making-money strategy. 

Now, I could have just as well started this post…one of the hardest decisions you’ll have to contemplate as an investor is to let a stock with great potential sit in your portfolio for a very long time. You have faith, after your hours of due diligence, that it will give you great annualized returns in 5, 10 or 20 years, but what if it doesn’t happen on your timeline?  Would the capital that would have been made available with a more swing-style trade be better deployed in another investment? And should you even preoccupy yourself with these thoughts?

Last week, we said that we’d be addressing some of the most common shortcomings that plague investors, and provided a cursory overview of one aspect of the investment process that is often overlooked – deep research. We’ll continue with the “investor oversights and failures” theme as we move through May and June, investigating additional facets that are pain points that must be addressed to become successful.

As we continue to ruminate over the next topic, the short term versus long term investing dilemma, we thought that a good prelude to that would be to take a look at some investment scenarios that fit in with that discussion. We’ve covered the topic before, but there is much more to expound upon on the subject that might help us reach some conclusions on the best approach investors should take, or maybe even a blended approach

Personally, in the first part of my full time investing career, much of my focus was in trying to find great companies in the meat of their growth cycles, holding them through that growth cycle and then selling them when the cycles were coming to an end. It was a great formula that worked fantastically for me.

Investing mistakes are common. They are made every day by thousands of investors looking to make a quick buck on YouTube hearsay, a Twitter tip, a Reddit forum discussion or “TikTok guru” just out of college. This leads to poor choices, leaving them vulnerable to misinformation, biases, and market volatility. It ultimately jeopardizes their financial goals.

Basically, when it comes down to it, there are many corners of the internet that prey on the inexperience of new investors, or the apathy of those who don’t see the value of proper due diligence (DD) to confirm, for themselves, if a certain stock is a legitimate investment, or just one that fits within their investment style.

Failure to perform proper DD and document findings is one of the foremost failures that investors face. Unfortunately, it is not the only mistake that is often made. Others include focusing too much on short-term gains, poor portfolio risk management, lack of buy and sell discipline and emotional biases.  Over the coming weeks, we’ll address some of these specifically, but today we are going to stick with the research theme since that is the one that in most cases kickstarts the whole process of finding the right stocks.

Last week, we held our April 2023 Live Member Open Forum. It was a bit longer, but to be honest, we can’t get away from having 1 longer-running forum every quarter –  justifiably so –  because earnings season typically raises the intensity with which we operate and increases the volume of stories we have to process.

The forum this time around was also made a bit richer because of a guest pitch by a regular research and stock idea contributor/GeoInvesting member, so we didn’t mind the added tape.

We invite Geoinvesting subscribers to publish their stock pitches  to help you build your research pipeline. At times, we add some of the stocks to our model portfolios. Our research contributors have produced cumulative peak returns of 36,050% over 78 pitches  (22 with over 300% returns) since 2015, when we began accepting applications to submit ideas. If you are interested in submitting an idea to be published on Geoinvesting or want to help us to get through our own idea flow generation process, please contact us.

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.

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.