GEO Investing

Call(s) to Action: On June 26, 2014, Penny Stock Realist (“PSR”) published a short thesis report on WSTI. This author believes shares of WSTI are worth “somewhere near $0”. PSR talking points included:

  • A very overly bullish $1 million financed hard mailer promotional piece is being mailed to peoples’ homes.
  • 15 Million Free Trading Shares that could be dumped into the promotion.
  • A couple of stocks promoted by The Wall Street Revelator have been halted by the SEC.

We agree with PSR’s thesis and believe shares of WSTI are headed for a dramatic fall that already seems to have been set in motion. We were perplexed that investors initially bid the stock up after PSR’s report, especially after it was correctly pointed out that some stocks that had been the recipient of past pump campaigns by The Wall Street Revelator invited trading halts. While PSR provided a good summary of why it believed WSTI is just another pump and dump (“PnD”), we will discuss a few additional issues.

Please see the entire article here. (p/w GEO2014)

Here are the other stories that the GeoTeam is following today… (Please see full disclosures at bottom)

  • ChinaHybrids
    • CNET ($0.82) –  Announced that its subsidiary has signed 55 new custojmers in the Q2 2014.
    • HOLI ($24.49) –  Signed two contracts to provide the ground-based high-speed rail signaling system and equipments to Guiyang- Guangzhou high-speed rail valued at $19 million
  • U.S. News
    • WCRSD ($3.20) –  Effected a 1 for 20 reverse split and is actively pursuing acquisition opportunities, reduced share count to roughly 3 million shares outstanding.  Will become more proactive in contacting the company.
  • GeoBargains/GeoBargains on the Radar
    • GeoSpecial VSR ($3.25) –  Announced acquisition of J.M. Waller Associates for $13 million.  Acquisition is expected to be accretive to earnings and provide over $30 million in annualized revenue. Could be shot in the arm to get investors excited about the stock once again.
    • GeoBargain on the radar TIK ($5.44) reported strong Q4 2014 results.  Q4 revenue of $4.5 million vs $1.9 million and non GAAP EPS of $0.15 vs a loss of $0.36 in the prior year.   The company expects Q1 2015 revenue growth to be flat but expects the rest of the year to show growth. We are still waiting for the company to show investors it can consistently grow revenue and earnings on a quarter basis.

For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.

Disclosure: Long WCRSD; Short WSTI Other Long Positions; Other Short Positions; Pump & Dump Positions (Password GEO2014)

Summary of general highlights:

On the Asian Front…

Chinanet Online Holdings (NASDAQ:CNET) ($0.82) – a leading B2B (business to business) Internet technology company focusing on providing online-to-offline (“O2O”) sales channel expansion services for small and medium-sized enterprises (“SMEs”) and entrepreneurial management and networking services for entrepreneurs in the People’s Republic of China, today announced that its subsidiary has signed fifty five new customers in the second quarter of 2014.

Hollysys Automation (NASDAQ:HOLI) ($24.49) – a leading provider of automation and control technologies and applications in China announced that it:

“signed two contracts to provide the ground-based high-speed rail signaling system and equipments to Guiyang- Guangzhou high-speed rail line (“Guiguang Line”) Guizhou section and Baiyun- Longli north high-speed rail line, valued at RMB 117.12 million or approximately USD $19.03 million in total, with designed running speed of 250 km/h for both lines. These two lines are expected to be operated by the end of 2014 and mid of 2015 respectively.”

Hollysys’ management commented,

“We are pleased of these two contract wins to supply the ground-based signaling equipments to Guiguang Line Guiyang section and Baiyun- Longli north line, which lays the foundation for Hollysys to further penetrate China’s southwest railway market. In the future, Hollysys will continue to work closely with the China Railway Corporation and national railway authorities, leveraging its strong R&D capability, effective management, and high-quality products and service, make more contribution to China’s railway construction and explore the vast rail and subway opportunities both in China and abroad, and create value for our shareholders.”

On the U.S. Front…


Versar (AMEX:VSR) ($3.25) – GeoSpecial VSR is a publicly held international professional services firm supporting government and industry in national defense/homeland defense programs, environmental health and safety and infrastructure revitalization. VSR today  announced that it has acquired J.M. Waller Associates, Inc., a Service Disabled Veteran Owned Small Business (SDVOSB) with more than $30 million in annual revenues. The acquisition price of $13 million will be satisfied with cash and a seller note. J.M. Waller acquisition is expected to be accretive to earnings in year one and adds contracted backlog of over $25 million.

Quotes from management:

“The acquisition of J.M. Waller is a great strategic fit for Versar, and will immediately strengthen not only our environmental services and professional services businesses, but also our engineering and construction management services. Our cultures are similar and J.M. Waller’s technical capabilities strongly complement those of Versar. In particular, the addition of J.M. Waller’s facilities expertise and customer base will allow us to expand our reach in terms of clients, technical capabilities and geography.”

Tel Instrument Electronic (AMEX:TIK) ($5.44) – GeoBargain on the Radar TIK designs and manufactures avionics test and measurement instruments for commercial air transport, general aviation, and government/military aerospace and defense markets worldwide. TIK reported strong fourth quarter 2014 results:

  • Fourth quarter 2014 revenues were $4.5 million compared to $1.9 in the prior year period.
  • Non-GAAP earnings for the fourth quarter 2014 were $0.15 vs. a loss of $0.36 in the prior year.
  • The Company also announced the receipt of full rate production approval for the U.S. Army TS-4530A KITS with deliveries of about $400k per month to begin in July 2014.

Quotes from management:

“We are pleased to have made solid progress this last year, with strong revenue growth, a return to modest profitability, and an improved balance sheet. Completing the CRAFT ship in place units this summer will allow us to increase CRAFT shipments including some of the higher priced new orders. While first quarter FY 15 revenues will approximate the year ago levels, we are anticipating further improvements in revenue and profitability for FY 2015 due to the two new programs coming online next month.”

In Other U.S. News…

Western Capital Resource (OOTC:WCRSD) ($3.20) – WCRS provides retail financial services and retail cellular phone sales to individuals primarily in the Midwestern United States.   WCRS board of directors approved a 1 for 20 reverse stock split, this will reduce the number of issued and outstanding shares of Western Capital common stock to approximately 3.0 million shares.  The company also announced it is actively pursuing acquisition opportunities.   We have discussed WCRS a number of times over the last two years, for recap of some of our prior notes please go here.

For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.


The GeoTeam