GeoInvesting May 2018 Highlights
What We’re Tracking
Stocks we monitor very closely
Usually, in this section of the newsletter, we only note one stock that we’re watching. This month, it is a whole group of stocks that we have conveniently combined into “Maj’s Favorite’s” – a model portfolio that we have recently implemented.
As our premium members already know, we separate our interest in certain companies using model portfolios for organizational purposes and to make it easier for subscribers and premium members to find what they’re looking for. One of our most recent portfolios, “Maj’s Favorite’s”, has been dedicated to companies of the highest level of conviction. Many of these companies had recent earnings that impressed us, but their stocks didn’t respond accordingly, either due to lack of liquidity or the fact that nobody has noticed their earnings yet. These are exactly the types of information arbitrage situations that we look for. For our premium members’ convenience, we have consolidated all of these names to one list you can view here.
Learn With Us
Education to help you become a better investor
As part of our commitment to continuing our own education and trying to find the best ideas out there, we continually attend the highest profile microcap conferences. From there, we consolidate our data, give the best ideas to our premium members and continue to make ourselves a well-known and prominent name in the microcap space.
Most recently, GeoInvesting co-founder Maj Soueidan attended the LD Micro MicroCap Conference in LA. Maj was pleasantly surprised with the amount of promising companies he was able to meet and he considered this conference one of the better microcap conferences he has been to in recent memory. Maj had a chance to meet with 21 companies, 4 or 5 of which have enticed us to research them further. As a result of the LD Micro conference, we will be performing research on these 4 or 5 companies and disseminate that research to our premium members as soon as possible.
Studs & Duds
The reality of investing – Our best and worst picks now and in the past
Stud: T2 Biosystems, Inc. (NASDAQ:TTOO)
At GeoInvesting, we have a very tightly knit relationship with our contributors and our premium members. Most of the time we spend disseminating our analysts’ thoughts to our premium members, but occasionally our community contributes ideas to us, as well. Such was the case when Geo contributor Mr. Bio noted to us that TTOO had a promising method for detecting sepsis earlier than competitors and that the company was likely simply waiting on an imminent FDA approval.
On May 17, 2018 we published our Reasons for Tracking (RFT) on TTOO. We stated that “Getting this RFT note out as quickly as possible was our first goal as we believe an FDA decision on the company’s T2Bacteria could be imminent.” We had a speculative swing trade long position in the company that we disclosed at the same time. 11 days after our note, the company announced that it received market clearance from the U.S. Food and Drug Administration for its test and the stock was up more than 10% as a result. The stock continues to hit new highs, giving those who stayed in the trade an extra portfolio boost.
Though swing trading is not at the core of what GeoInvesting does, we implement it occasionally. You can view our swing trades here.
Dud: $VSCP – Revisiting a Dud Masked as a Stud
Just two months after our January 28, 2016 RFT on VirtualScopics, Inc. (NASDAQ:VSCP), a leading provider of clinical trial imaging solutions, the company signed a definitive agreement to be acquired by BioTelemetry, Inc., the leading wireless medical technology company focused on the delivery of health information to improve quality of life and reduce cost of care, for less than we thought the company was worth. While there were still several questions up in the air at the time of our publication, it’s now obvious that management’s confidence in the future of the company resonated well with BioTelemetry, Inc.
The takeover price of $4.05 was under the current share price at the time it was consummated. However, we issued our Reasons for Tracking note with the stock at $3.05, meaning the buyout offer represented 32.8% upside from our initial note. Regardless, while we were able to point out the stock at $3.05, we felt it had more intrinsic value going forward and that the $4.05 offer shortchanged shareholders. Therefore, we consider VSCP a “dud”.
A Final Note
This month’s message from Geo Co-founder Maj Soueidan
One of the things fellow investors ask me the most is how can we perform research on microcap stocks, many of which are illiquid, and not crowd ourselves or our premium members into our trades? I’m also often asked how it is that I can personally respond to many of our premium members’ inquiries as they are brought to the company’s attention. After all, we don’t have a customer service department per se; rather, I handle a lot of inquiries personally.
The answer to both of these questions is that we keep our premium membership base from growing too aggressively or too quickly. We understand that liquidity is an issue in our field and we also have a personal commitment to our premium members – many with whom our relationships extend beyond the business world. Some of our premium members have grown to be close friends over the years and it is important to me that this personal touch continues going forward.
As a result of both of our commitments to these concerns, and the recent popularity that the company has experience as a result of the movie The China Hustle, we are strongly considering capping our premium membership base. Current and existing premium members, and those who join in the near future will be guaranteed their premium membership spot, but as our base expands and our company and research become more prominent and more popular globally, we realize that this may be a reality that we will have to face. While obviously, it is not the very best option for the P&L of our business, it helps us commit to the core principles that I am dedicated to: personal attention for premium members and making sure that our ideas remain actionable.
P.S. Please feel free to reach out to me any time at firstname.lastname@example.org 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. I hope that you are having a great start to the summer.