GeoInvesting March 2018 Highlights
What We’re Tracking
Stocks we monitor very closely
We have recently been watching an early-stage turnaround story in a high-growth industry, where the company is only trading at about 6x our forward EPS estimates. Our recent interview with the company’s new management team has significantly increased our bullish stance on the stock and, despite the stock being up about 40% from when we first started covering it, we believe there could be continued short term appreciation and potential long term multi-bagger upside.
In March we told our members that we had taken a speculative long position in this company based on the company’s debt restructuring initiatives. These initiatives are leading to improved operating performance and have positioned the company for enhanced profitability.
We have also added this company to our “Run to One” mock portfolio and “Special Situations” mock portfolio.
To read our new coverage, complete with our reasons for optimism as well as risks associated with this stock’s comeback, please consider taking a 7-day test drive of GeoInvesting.
Learn With Us
Education to help you become a better investor
I recently came across this video on YouTube, highlighting Professor Andrew Lo’s presentation titled: “Adaptive Markets: Financial Evolution at the Speed of Thought.” If you have ever let emotion impact or threaten your investment decisions, or have an opinion on the Efficient Market Hypothesis, you will find this video enlightening.
I wrote about this video a couple of months ago, talking about the efficient market hypothesis and trying to determine if Mr. Lo’s postulations are accurate. I also promised, at that time, a deeper dive look into this presentation, which I wanted to share this month.
This follow up takes a deeper dive into Professor’s Lo presentation and how it can be applied to the current state of the microcap universe. Understanding behavior with investment decisions can improve your ability — regardless of whether you’re an active or passive investor.
Please take a moment to read my updated follow up article, located on my blog at GeoInvesting.com.
~Maj Soueidan, Co-founder GeoInvesting
Studs & Duds
The reality of investing – Our best and worst picks
Stud: Bluelinx Holdings Inc. (NYSE:BXC)
BXC is a company we started following in 2016 at $8 based on the company’s restructuring plan that saved it from Chapter 11. The stock now trades for over $35. Bluelinx Holdings Inc. is a leading distributor of building and industrial products in the US. BXC has been part of our “Buy on Pullback” Mock Portfolio 3.0 since October 2016. On October 19, 2017, we also added BXC to our “Buy on Pullback” Mock Portfolio 6.0 on a selloff that was based on the company’s non-dilutive financing. Most recently, BXC was added to our Favorite Stock List on December 4, 2017 and highlighted by Maj as one of the 4 stocks in his latest March 7, 2018 article, “Insiders Are Betting Big On These 4 Stocks, and So Am I”. The article highlighted how a combination of insider buying and information arbitrage provided solid clues on the strength of investments in companies, including BXC. We continue to be long BXC and you can read our full case study on BXC here.
Dud: Fog Cutter Capital (OOTC:FCCG)
While FCCG is off its highs, the stock is still up from when we passed on the idea to members at around $1. While the stock now trades at about $2.20, we are still disappointed in its performance. We now believe, based on the value of FAT, that FCCG should be worth approximately $3.90/share. The company owns 80% of FAT and has been on our radar because it seems undervalued relative to it is worth relative to its ownership stake in FAT. Despite FCCG’s underperformance of late and being off recent highs above $4, FAT has declared a dividend that is due to be paid in April. We are eagerly anticipating FCCG’s receipt of this dividend, as well as awaiting management’s plans for the use of cash. We are hoping the company will disburse this dividend directly to FCCG shareholders, but there is risk that they may not.
A Final Note
This month’s message from Geo Co-founder Maj Soueidan
GeoInvesting, at its inception, started as a long focused microcap investing company. Through the course of our long investments in China and overseas, we started to employ investigators to perform on-the-ground due diligence both in the US and in Asia, in order to assure us that the research we were performing was accurate. While working to try and “protect our portfolio” by doing research on companies that we owned, we made a stunning realization: many companies in China were pulling the wool over investor’s eyes and simply committing egregious fraud. It was these revelations that led GeoInvesting down the path to the narrative that plays out in The China Hustle, a documentary released in late March of this year that profiles our efforts to combat fraud in China.
While we still try to offer “portfolio protection” services and continue to dabble in short ideas as opportunities present themselves, Geo was, and remains, an outfit for identifying and investing in microcap growth opportunities and undervalued names.
We hope that you get a chance to view the movie, but we also want to remind both our members and our prospective members that our company has always had a strong foothold in long focused microcap investing and, while we will continue to offer portfolio protection and timely short ideas, our primary focus continues to be building value through smaller companies experience inflection points in their growth cycles.
P.S. Please feel free to reach out to me any time at email@example.com or follow me at Twitter, @majgeoinvesting, if you have any questions, or just want to talk. You can also reach me on my mobile at 267-246-3263.