While investors are shoring up resolutions on how to approach investing in the year 2017, at GeoInvesting we thought it to be a good idea to reflect on the 2016 performance of one aspect of our business — our Call to Action (CTA or CTAs). We have been questioned multiple times on the method we use to gauge our success when conveying what we deem to be actionable ideas.
We use peak return for multiple reasons:
- Everyone implements their own sell disciplines. Ours is one of either taking profits as a stock goes up, adding to our position as a stock goes up based on valuation, adding to our position if a stock is unjustly punished, or simply executing a news-driven trade.
- We don’t overburden our members with alerts, realizing that they will make their decisions based on their own risk tolerance and return expectations. Having said that, we are transparent on issuing call to action updates.
- We are a research boutique dedicated to providing investors with the tools to make their own investment decisions. We are not advisors. GeoInvesting does not manage investors’ portfolios.
- It helps us to focus more on the value of our research, spending an enormous amount on all the techniques to filter our investment universe down to the most undervalued stocks. If you only knew!
Quality Over Quantity
Even though we find an abundance of ideas, we believe in quality over quantity. We limit our calls to action to the most notable CTAs since the over-proliferation of idea flow can lead to the dilution of its value. Is every investment wildly successful? No, but that comes with the territory and anyone that claims that they can lead you to a “path to riches” is fooling you. We can name a few, but we’ll refrain. We focus more on a path to enlightenment and insights, and rewards often follow.
Notable 2016 Call to Action Alerts
Now that we got that out of the way, we are very proud of the research that we made available to our members in 2016. Calls to Action came in multiple forms in 2016:
- Email Alerts
- Premium Tweets
- Buy on Pullback Mock Portfolios
- RFTs (Reasons for Tracking)
Tying them all together to get an overall picture of our approach is important. First, let’s take at some of the more notable Calls to Action that we conveyed in 2016.
Golden Enterprises Inc. (NASDAQ:GLDC) — Email Alert, 100%
On April 4, 2016, we believed we found an interesting information arbitrage opportunity in snack food company GLDC that we believed could qualify as a potential growth + value proposition. On July 19, 2016, the company’s Board of Directors agreed to sell the company to snack food company Utz Quality Foods, Inc. for $12/share in cash, a 100% premium over our Call to Action sent to Premium members in early June of 2016. You can read our full follow up on How Information Arbitrage Gleaned a 100% ROI.
NV5 Global Inc. (NASDAQ:NVEE) — Email Alert, 94%; Mock Portfolio, 54%; Buy on Pullback, 5.5%
It’s no doubt that NVEE was one of 2016’s stars.
After having had one successful run with this infrastructure company when we locked in a 60% gain between Dec. 15 2014 and May 19, 2015, we leveraged our continued attention directed toward the company by executing three more successful CTAs. The first CTA in 2016, conveyed at $19.00 in a February 19, 2016 email, had us looking at the company again based on our financial modeling of a recent acquisition showing strong growth ahead for the company. We also added the company to our first Buy on Pullback mock portfolio on the same day. We held our main position until October but closed out the mock folio in May.
Our last CTA at $25.90, issued via a premium tweet on June 27, 2016, took advantage of a pullback in shares:
Although NVEE did not give us the luxury of adding even more shares after our tweet, we were still more than happy with the outcome.
Limbach Holdings Inc. (NASDAQ:LMB) — Email Alert, 68.5%
On the heels of two Seeking Alpha articles that were released on another infrastructure play, LMB, we followed up with our own research on August 25, 2016 when the stock was trading at $8.80. We issued our CTA based on interviews with company management, the company’s clear competitive advantages, a unique approach to the markets it serves, its big name/diverse/reputable customer base, and the fact that we thought the stock could push higher in the coming months.
We are still long LMB.
Evans & Sutherland (OOTC:ESCC) — Email Alert/Buy on Pullback, 146%
We saw the pullback of ESCC shares to $0.59 after its “weak” Q2 2016 earnings release as major buying opportunity. ESCC is viewed by investors to be in the “boring” business in the dome theatre products and services. However, industry leaders in the space do not think so. Considering omissions of bullish verbiage from its press release that were included and elaborated upon in the corresponding SEC filing, this investment was a no-brainer to us. This coupled with billionaire Peter Kellogg buying shares on the open market galvanized our continued confidence in the company. To see our extended note on the situation, you can go here where we stated that “Double dipping isn’t always a bad thing.” Our full history with ESCC can be found at this case study.
We are still long ESCC.
Electromed Inc. (AMEX:ELMD) — Email Alert/RFT, 69.5%
We were at first unable to get a hold of management after our initial interest in the company at $3.69. That fortunately did not stop us from writing about the company in an RFT on February 19, 2016. We eventually got a hold of management, only strengthening our belief that our short-term trade decision in the stock was the right one to have made.
Call to Action Honorable Mentions
- Cartesian Inc. (NASDAQ:CRTN), 66%
- BG Staffing Inc. (AMEX:BGSF), 63%
- Pioneer Power Solutions Inc. (NASDAQ:PPSI), 39%
- Baozun Inc. (NMS:BZUN), 35%
- Blue Bird Corporation (NASDAQ:BLBD), 29%
- Buy on Pullback Mock Portfolio 1.0, 36%
- Buy on Pullback Mock Portfolio 2.0, 31%
By the way, our “Buy on Pullback” Mock Portfolio 3.0 is still playing out and can be seen with a premium membership to GeoInvesting 😉
Aggregate Average Return for 46 Call to Action Alerts
Our aggregate, average return on our 2016 CTAs was 32% for 46 call to action alerts. Again, we take pride in the research that ultimately ends up substantiating our calls to action. While some are intended to be long term holds, and other are short term trades, on the whole we believe that our performance speaks to our dedication to provide an elite service.
Having said that, we were not perfect in all our sell decisions. You have bumps along the way, the same way that you may reap rewards with decisions to add to CTA positions as stated at the beginning of this update. It’s up to you. In the future, we will talk about some of our failures, how we have learned from them and how our pain can lead to your gain.
We are here to make your research easier and reduce the time it takes for you to find a winning investment, and we promise to keep our oath to do just that in 2017. We are glad that you crossed paths with GeoInvesting and we’ll see you soon. Let’s start the new year with a bang!