GEO Investing

The end of this post includes a free link to our deep dive, investigatory report on a company where, as part of a reverse merger transaction, the CEO is buying the company’s main asset for only $1.5 million, despite the company having a backlog of $19 million and targeting an industry that’s about to experience accelerated growth tailwinds. As part of that research, we also interviewed an expert in the industry.

It’s been an interesting 15 years for GeoInvesting. Those who have grown with us probably know our history pretty intimately. They know that we began as a research firm offering free bullish biased research on quality microcaps and high probability turnarounds. They know that for a period of time our research included intense investigatory due diligence, rooting out fraud in the universe of China-Based companies listed on U.S. exchanges, as well as on U.S. Pump and Dump schemes.

As a matter of fact, we’ve even had a Netflix documentary released about us, The China Hustle, in which we were the main protagonists being profiled as among the first to spearhead the campaign to “out” scores of companies who bilked investors out of hundreds of millions of dollars. Yes, we even got death threats…for being the messenger.

So, while we founded Geo based on a journey to find the best microcaps, a fork in the road led us on a path to become even better at what we do because deep on-the-ground due diligence requires a specific set of skills and unique kind of tenacity to try and convince the crowd that what we were doing was for the ultimate health of a properly functioning market.

We used a similar approach to exposing the Pump and Dumps, or those companies that promise unrealistic pie-in-the-sky, revolutionary and purportedly disruptive products and services designed to make you rich through their stock.

Investing in the equities representing these concepts most assuredly ended in a rug pull on unsuspecting investors once the stock prices got inflated by 100’s, if not 1000’s of percent, only to have enriched the bad actors at the core of the schemes.

In the end, over 13 China-based companies either got delisted or went to near $0 based on our findings, although our report count was at least double. Many of the companies avoided the wrath of the courts by going private or voluntary delisted at unreasonable prices, escaping justice by simply going back to China, where they would not be held accountable for their malfeasance. But not after they raised billions of dollars in our capital markets.

All in all, we always stayed close to our roots with microcaps, but started to approach ALL investing with a much more critical eye – you could say from that point on there was a tinge of portfolio protection laced within our research, no matter how bullish we were – caveats that accompanied our literature, and scrutinizing the ‘Risk Factors’ section of SEC filings became a mainstay of our research process.

So, we haven’t totally abandoned the opportunities for the deeper dives when the right circumstances present themselves. You could call it ‘Portfolio Protection Light’, borrowing from the asset-heavy due diligence business plan that engulfed us for several years. Heck, an old tri-fold of ours showcasing the nature of our on-the-ground due diligence and document analysis says it all, so you can just imagine how far we went.

Unparalleled inspection of filings
GeoInvesting investigations due diligence runs deep

While our short selling days based on our fraud investigations are generally behind us, we still  revisit basic portfolio protection and obvious layups in activism from time to time, which is part of the reason for this email. We not only wanted to showcase our qualifications, but also let you know that we won’t shy away from making it known when we feel that something doesn’t seem quite right.

For example, last week’s free report on Wavedancer (WAVD) showcases how detailed we can go, and how our awareness can lead to discoveries that the majority of the market might not pick up on. It’s the beginning of our view that an activist might feel compelled to get involved.

In essence, we’d like to reiterate what we put out on Twitter when we laid out our discontent with the direction the CEO of WAVD was going with the acquisition of some company assets.

  WAVD modernizes databases/IT infrastructures that were built on outdated COBOL code and has mainly focused on selling its services to U.S. government agencies. The stock previously traded under the symbol IAIC and under the name Information Analysis (founded in 1979). 

We are baffled by the recent events. 

  1. Why are they doing a reverse merger with a company that has significant capital needs and minimal revenue?

  2. Why is the CEO, Jamie Benoit, trying to buy the modernization business for just 0.2x sales and 0.08x current long-term backlog?

  3. Why did the company only include these details in the reverse merger proxy filing and not also include them in the reverse merger press release?

  4. Why did management’s outlook on the modernization business, discussed in the reverse merger proxy, suddenly sour after they continually talked about the great growth opportunity of this industry, even as of its third-quarter 2023 SEC filing?

  5. Why hasn’t management disclosed that the source it used to paint a positive picture in 2021, in terms of the billions of lines of COBOL code that could be modernized, has quadrupled this stat?

We’d love for you to read the rest of this report, for free, to get the full picture of our gripes and what steps we think the Board of the company can take as alternatives to the CEOs intentions.

Please note that we have no position, long or short, in WAVD. But per our terms and conditions, we may establish any type of position in the future.

Also please note that we are not part of a group or are having conversations with a group to acquire a 5% position in the stock. If you are interested in reaching out to us to talk more about WAVD, don’t hesitate to reach out to us by calling us at our toll-free number (800) 891-1526 or emailing us here.

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About GeoInvesting

Geoinvesting is a research platform founded in 2007 to publish premium research on microcap stocks that meet a certain set of criteria that we have proven leads to superior returns. Empirical evidence proves that investing in microcap stocks beats the returns of larger cap stocks by 8.24% per year. Even Warren Buffett and Peter Lynch have said that if they were to invest in one type of stock, it would be microcaps.

We provide our subscribers with an even bigger edge by combining the microcap investing edge with our own tested strategies to find the best stocks that are undervalued relative to their growth prospects or other positive catalysts. For example, our Model Portfolio that comes with a GeoInvesting Premium Subscription, and includes stocks the crowd is ignoring, has produced 9 out of 10 winning portfolios with an average return of 43.41%.

Our approach is based on qualitative and quantitative factors that finds stocks a point where they are going through significant changes that the market has yet to identify. This opportunity is only available in the Microcap world, an area ignored by institutions, Wall Street and the financial media.

Over the last 15 years, we have also built a expert Microcap investor network who contribute ideas to our subscriber base.