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WHAT YOU MISSED FROM GEOINVESTING THIS MONTH

SEPTEMBER 2021, ISSUE 01 (Download here)

STUDS VS. DUDS

Stud

Semler Scientific, Inc. (NASDAQ:SMLR) is a perfect case study in “Why Microcaps.” The stock was first shared with GeoInvesting premium members when a research contributor published his bullish thesis on November 30, 2015. The company develops, manufactures, and markets patented products that assist healthcare providers to evaluate and treat patients with chronic diseases in the United States.

Three years later, we wrote about the company and provided our bullish thesis. We also added the company to one of our model portfolios in April of 2018 when the stock was trading at $8.30. The stock is now trading at $131.99, generates annual revenue of around $60 million, is solidly profitable and about to uplist to the NASDAQ from the OTC. Due to our penchant for identifying multibagger medical device stocks (8 so far), we are taking a look at a few more that have recently entered our research pipeline.

Dud

We began our most recent coverage on Energy Focus, Inc. (NASDAQ:EFOI) in December 2019 when we connected with the restructuring initiatives of the newly appointed CEO, James Tu. The company is a leading manufacturer and supplier of high tech LED lighting solutions to commercial customers and the U.S. Navy. Ironically, Mr. Tu was the CEO of EFOI during 2015  when the company operations were solid and when we had a good run with stock, logging a 70.5% return. However, his vision for EFOI was not fully aligned with the Board, so he parted ways with the company in 2016.

In 2019, the Board asked him to rejoin the company as the CEO in the midst of poor stock performance and a deterioration of the business that  was flirting with bankruptcy. As an aside, Mr. Tu has put a significant amount of personal capital into the company since he accepted the offer.

Then, as luck would have it, COVID-19 hit and all the company’s commercial projects were put on hold. Now, as it waits for its legacy growth to rebound and in hopes of revising growth, EFOI is currently attempting to launch a line of UV-based disinfectant products designed to combat COVID on indoor surfaces.

After the start of our research, EFOI had an initial run from $2.23 to $9.53, but in recent days sits in the $3 range.  Had COVID-19 not arrived, we think the stock would have held its multi-bagger status. This is a great case study that shows the unpredictability of investing. Surprises and circumstances beyond your control can quickly turn a stud into a dud.

MONTHLY HIGHLIGHT

Millennium Investment & Acquisition Company Inc. (MILC) President Jared Schrader was our guest on September 16, 2021, to engage in a fireside chat that includes our normal format of conversation and Q&A. View the chat here.

We added MILC to our Select Long Model Portfolio at $3.90 on September 9, 2021. Less than a month later, it reached a high of $8.50 in intraday trading on October 1, representing a 118% climb.

Below is a brief summary of coverage and introduction to MILC. 

MILC has been operating as a non-diversified, closed-end investment company. However, the company is in the process of terminating this designation.

The company’s main focus will be on operating cannabis cultivation facilities through lease agreements on land owned by high flying Power REIT (MD) (NYSE AMEX:PW).

As we have stated before, we are becoming really excited about this company’s new cannabis focused business direction. On September 10, 2021 shares jumped on a press release stating that the company entered into a long term lease agreement with Power REIT for a 556,146 square foot greenhouse cultivation facility. The Michigan cannabis market is the second largest market in the United States, second only to California. The company also has agreements with PW in Colorado and Oklahoma.

MILC’s investor presentation shows fiscal 2022 and 2023 revenue and annual profit projections. The company expects sales of $14.4 million and $54.7 million with annual profits of $6.2 and $35.0 million, respectively. This works out to EPS of $0.56 and $4.40, respectively. Other notable considerations are that the company has only 10.9 million shares outstanding and it is our belief that it won’t need to raise significant capital to fund its near-term goals.

2021 RETURNS INSIDE OF GEOINVESTING

So far in 2021, we have issued 13 closing Calls to Action on companies tenured on our Select Long Disclosures List for varying periods of time.

Through the end of September 2021, the average return per closing CTA was 113.41%, a number that was significantly elevated by INTZ and CLPT.

There are 17 Calls to Action initiated and still open in 2021. While we cannot show you the premium table, our current average return per stock is 30.71%, compared to year-to-date numbers of about 12% for the DOW, 16% for the S&P and 13% for the NASDAQ.

2021 Returns as of 10-1-2021

OTHER MARKET-WIDE MICRCAP STATS

Notable Trailing 1-Month Microcap Movers, 9/1/2021 to 10/1/2021

market-wide over 050 to 1 per share september return
market-wide over 1 per share september return

*Note: We have not vetted any of the stocks in the 2 tables above (except MILC, of course). The returns shown are for informational purposes only to showcase the performance potential of microcap stocks.

WHAT YOU MISSED THIS MONTH

Weekly Wrap Up Highlights, Education and More

This month, as we approached September 28, 2021, the date that SEC Rule 15c2-11 (Rule 211) went into effect, we regularly discussed how the rule would impact dark stocks on the OTC market, as well as investor appetite for microcap stocks in general

Over the month of September we shared multiple resources with our members to help them better understand Rule 211 and what it meant for their portfolios. On Friday the 22nd, Maj put out a PodClip in response to several member questions who expressed concerns about stocks in Geo’s select longs. We encourage you to listen to it or read the transcript as well as checking out these other articles posted to our members on the same topic: 

We also shared a video of a round table discussion Maj participated in with Robert Kraft of SNN Network where Maj and his peers engaged in a thoughtful discussion on Rule 211. For us at GeoInvesting, this is probably one of the most relevant things to come out of the OTC environment in recent memory, this is because of our investment strategy which partly revolves around hunting for Tier One Quality micro cap OTC stocks. As an investor, being ahead of the game is a key factor to successfully riding gains from the illiquidity that most people avoid, to improvements in liquidity, a factor that many use to legitimize an investment, especially if fortified by a wealth of research supporting a bullish case.

*About our Weekly Wrap Ups

Every week we send what we like to call a “Weekly Wrap Up” that highlights topics discussed during the week that our members may have missed, as well as more thoroughly touching upon upcoming events, companies or research happening at GeoInvesting. This value-add underscores the deep dive research and timely information on microcap stocks that we aim to provide to our premium subscribers.