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:

In the September 24, 2023 edition of the Geowire Weekly, we provided insights into Buy On Pullback (BOP) Portfolio 11, which was launched the next day, September 25.

So far, we are pleased with its performance.

At the end of November 2023, the 7-stock BOP 11 demonstrated an average current return of 8.15%, beating the S&P 500 by 1.93%. The average peak return is 21.99%

At this point, it looks like BOP 11 is following in the footsteps of the track record of our impressive historical BOP performances, where 9 out of the previous 10 performed nicely, returning an average of 43.41%.

This week, we’re highlighting clips from the Skull Session Interviews we just had with the management of two companies whose stocks just got more timely. The first is a stock in our pipeline that we have been following since 2020. It is listed in our Run2One Model Portfolio, a selection of stocks trading below $1.00 that we anticipate will surge beyond the $1.00 mark due to their current undervaluation and the potential for substantial revenue and net income growth. I find it ridiculous that this profitable company with high recurring revenue and a low customer abandonment rate is trading at an absurdly low valuation.

Last Wednesday, Bryan McLaren, the CEO of $ZDPY, joined us for a Skull Session Management Interview. For those of you who haven’t been following this stock, ZDPY is a strategic real estate development firm focused on the legalized cannabis sector.

The company helps cannabis operators secure properties that can be used as a cannabis site, whether it’s a retail dispensary, a cultivation site, or a manufacturing kitchen. The company operates via 2 segments:

We just held our last Live Member Open Forum on November 8, 2023., in which we discussed our ongoing website enhancements. I dug more into 6 of the 12 earnings reports we covered throughout October 2023, along with model portfolio moves and noteworthy market news.

On November 2, 2023, I hosted a Skull Session Fireside Chat with the CFO of a company we’ve previously mentioned that we believe can rise 500%. Our Fireside Chat sessions are a way to introduce new companies entering our coverage universe to you. The most positive takeaway from the chat was that it appeared that analysts’ future revenue and earnings per share estimates are way too conservative, putting our 500% return potential in play over the next two or three years.