WHAT YOU MISSED FROM GEOINVESTING LAST MONTH
February 2023, Volume 3, Issue No. 2
Revisiting Geo’s Past Stats and Emphasizing Strategies to Maximize Investing Performance
In last month’s regularly scheduled installment of our Monthly GeoWire, Volume 3, Issue #1, published on January 11, we promised a Part 2 follow-up that was slated to be published one week later, with some more perspectives on 2022 at GeoInvesting, with a few snapshots prior to 2022 to highlight our strengths. Well, once we got into it, we ended up taking a deeper dive into some of GeoInvesting’s history since its inception and put together a more comprehensive report for the month of February, which trumped our previous idea of back to back monthly issues spanning 2 weeks.
To briefly reference last month’s subject matter, we cited how the talk of a recession inspired us to make room for a recession proof stock to our Top 5 Faves Model Portfolio accessible at our pro portal. This new idea is in-line with our decision to create two new Model Portfolios, one with a “Recession Proof” theme and the other with a “Recession Resistant” theme. We discussed this new Recession Proof idea and these two new Model Portfolios in an article we published a few weeks ago.
Don’t worry, we’ll be getting back to the normal Monthly GeoWire format next month where we break down videos featuring our peers, investor greats and at times, relevant clips from our discussions with company management. In March, we’ll cover the process of how publicly traded companies can be affected by Chapter 11 bankruptcy, as well as case studies from our coverage universe, and how you can profit from investing in companies going through bankruptcy.
This Part 2 of our year end wrap-up takes a look back at some of GeoInvesting’s multidisciplinary exploits over the years, all while navigating a few large swings in market sentiment during a fundamentally 13-yr bull market. Like many others, we caught the prevailing winds during the Covid bull run in 2020/2021, but it’s not about being a one-trick pony. Other stats scattered across the last decade are highlighted to show this, and that quality microcaps are not an aberration. Also, some of our recurring themes of 2022 are reviewed – GARP, BigCapMicro and InfoArb – all of which will be mainstays in 2023 as we develop new ideas and use solid case studies to prove that history is destined to repeat itself. Our overarching goals are to rebound from a tough 2023 where many stocks in our coverage universe pulled back, continue our record of outperformance by taking advantage of these pullbacks in select names, and introduce new stock ideas that are perfect for the new market environment. Finally, we also thought a mention of our research contributors was in order.
We’ve seen and experienced a lot over the last 15 years of GeoInvesting’s existence. To put it into perspective, having been founded in 2007 (red box below) should give you an idea of how daunting it was for a fledgling company to stare down the barrel of 2008’s gun, but still come out alive and kicking in 2009, albeit a bit bruised. The good news is bear markets always end, and bull markets typically have longer runs. The key question becomes, do you have the emotional intelligence and conviction in your research to stick through bear markets?
Recent Bear Markets (S&P Baseline)
Recent Bull Markets (S&P Baseline)
So, 3 bear and 2 bull markets later, our history is rich.
We’ve accomplished quite a bit on both sides of the equation, recently experiencing the brighter side of things from March 23, 2020 (Covid trough) to January 3, 2022 before a microcap winter for many, including us.
During this period of nearly 21 months, we posted an average 134.96% rise in holdings that were initiated after December 31, 2016 and closed and/or still open by the time the bull market ended (a total of 67 unique model portfolio stocks). Yes, while it’s true that the 2020 Covid bull run was a great outlier period when it was hard to lose money, we still managed to beat the S&P by 20%. Furthermore, the stats we highlight later will show that we had above-average returns well before this 2016 to 2021 timeframe. As an initial example, in each of the last 10 years going back to 2012 through the year 2021, we’ve logged at least 7 stocks per annum that have gone on to at least double during our holding period.
When 2022 came along, it created another challenging period for investors. Last year put into perspective just how unpredictable and frustrating investing can be, especially when you are dealing with a group of stocks that investors might tend to ignore or abandon, lending to thin trading and extended periods of price stagnation or decline. When some of 2021’s duds turned into 2022 duds, we knew we were in for a disappointing ride. But a little later, we’ll get into the strategies we are employing that are perfect for the next bull market, which we feel is right around the corner. Our goal is to even better the performance we logged in the prior bull markets.
The following is by no means a complete assessment of who we are, but it tells a story about our ability to shift our shape to help us succeed.
Since 2009, GeoInvesting has posted a multibagger hit rate of over 30%, or over 200 stocks, which covers stocks that we labeled as GeoBargains and GeoSpecials in the early days and, since 2016, those that were included in our model portfolios we created to improve the experience of our subscribers
Our long standing Growth + Value style of investing and the 10 tenets by which we live to pinpoint the best Tier One Quality microcaps and high probability turnarounds enabled us to achieve this.
We predict that the carnage that led to the decimation of lesser quality stocks in 2022 will lead to higher quality growth + value stocks (GARP) to leading the next Bull Market we are about to enter- one in which we foresee will open the door for traditional GARP stocks to outperform the broader market as they did during his first 20 years of my career (starting in the mid 1980’s) – Before 2008 changed the playing field.
Pump and Dumps Exposed
In 2012, we wrote our inaugural Pump & Dump report on Raystream (Old symbol RAYS), which, as predicted, became a stock that went on to become worthless and delisted. Pump & Dumps (PnDs), as the moniker implies, are companies whose stocks are artificially buoyed by professionally crafted and misleading promotional campaigns touting dubious, pie-in-the-sky business ventures that trick investors into buying into farce.
Over the next several years we exposed, through reports, synopses and research briefs, 22 more PnDs, bringing our in-depth analysis total to 23 before we largely settled back into our roots of finding bullish stock ideas. However, not only was it worth bringing these frauds down, but it sharpened our chops in a way to enable us to conduct differential risk analysis on ANY stock of interest. In other words, we are not blind bulls.
China Fraud Exposed
At first hesitant to admit that some of our bullish coverage on U.S. based China Listed stocks was based on lies, we came to the realization via our own on-the-ground due diligence that there was indeed rampant fraud. In the end, between 2010 and 2014 (when the bulk of our investigations occurred), we identified more than a dozen Asia-based companies that bilked 100’s of millions of dollars from U.S. investors.
Our reports made the rounds to all major media outlets, and the companies we exposed either got delisted by the exchanges or self-delisted by way of privatization to avoid further regulator and investor scrutiny.
Ultimately, our company was featured as one of the main protagonists in the movie, The China Hustle, which chronicled the fight against criminal behavior in U.S. markets by foreign perpetrators.
Read more about our take on the evolution of China based frauds here.
Medical Device Trend Harnessed
Medical Device Trend Harnessed
Between 2013 to 2020, we focused heavily on identifying medical device companies with recurring revenue models that were about to reach growth inflection points.
Investing in medical device companies with predictable business models gave us the opportunity to gain exposure to the hot healthcare sector without dealing with the unpredictability and risk that comes with traditional biotechs.
Right before the start of the last bull market in 2020, we published an article giving accolades to a slew of medical device stocks that, as of 2021, sported a startling 10-stock average return of 932%. so we made (and are still making) it a point to continue with the identification of these potential gems.
SOME NOTABLE STATS
We’d like to visit a few stats that might make the case for microcaps a bit more lucid for anyone who thinks that you can’t find suitable ideas in this niche of investing or that quality does not exist in this universe. With around 10,000 microcap companies trading in North America, the opportunities are nearly boundless.
As noted in the Multibagger vignette above, GeoInvesting started identifying our top stock ideas as GeoBargains and GeoSpecials. In 2014, we retired those monikers as we shifted to a model portfolio approach. In all, at their peaks, nearly one third of all Model Portfolios holdings and early ‘Bargain’ and ‘Special’ designations, a combined over 200 stocks, attained the rank of “multibagger.”
The Elusive 10 Bagger
Below are 10 standouts of over 20 documented through the years that attained over 1000% at some point after they were added to our coverage universe. Obviously, we are not saying that we held ALL these stocks until they reached extreme multibagger status, but we were glad to capture gains in the ones we did (starred below).
|7/13/2013||Celsius Holdings, Inc. (NASDAQ:CELH)||31352%|
|6/6//2017||*Zynex, Inc. (NASDAQ:ZYXI)||7421%|
|3/14/2012||Epam Systems, Inc. (NYSE:EPAM)||4328%|
|3/11/2020||*Retractable Technologies, Inc. (NYSE:RVP)||1342%|
|12/2/2016||*Pharmchem Inc (OOTC:PCHM)||1350%|
|11/27/2018||*Fitlife Brands Inc (OOTC:FTLF)||1195%|
|5/22/2018||*Intrusion Inc. (NASDAQ:INTZ)||1953%|
|6/2/2014||*Koru Medical Systems, Inc. (NASDAQ:KRMD)||4969%|
|4/8/2009||Medifast Inc (NYSE:MED)||6545%|
|3/15/2010||Charter Communications, Inc. (NASDAQ:CHTR)||2385%|
Another notable stat we like to track is the acquisition of companies that are or once were in our Model Portfolios or bucket of coverage as ideas to track. During our research, we always look at the takeover angle when it presents itself, and it often comes about as information arbitrage, much like it did for the last company that just announced that it is slated to be acquired for a 75% premium over the price prior to the announcement. We’ll have more on that later.
Acquisition premiums over the initiation of coverage for some of our Model Portfolio stocks and GeoBargins/Specials have given us some good returns. In fact, over 60 stock ideas we brought to our GeoInvesting were acquired. A few historical examples come to light:
|Identified||Stock||Acquisition Premium Over Identified Price|
|2/27/2014||Evans & Sutherland Computer Cor (OOTC:ESCC)||752.85%|
|3/28/2012||Goldfield Corporation (the) (AMEX:GV)||644.68%|
|6/13/2014||Avanir Pharmaceuticals Inc. (NASDAQ:AVNR)||276.88%|
|4/30/2015||Orbotech Ltd. (NASDAQ:ORBK)||265.38%|
|6/7/2016||Golden Enterprises Inc. (NASDAQ:GLDC)||101%|
|10/1/2014||Ocean Bio-chem, Inc. (NASDAQ:OBCI)||223%|
|8/12/2021||Ccom Group Inc (OTC:CCOM)||78.6%|
|12/8/2010||Us Home Systems (NASDAQ:USHS)||191%|
For our team, and for probably many other investors, 2022 was a humbling experience. In all honesty, it’s not the worst thing to have happened to us, since as we said, we adapt. We used our humility to get us back on course in finding a few names that performed nicely in the face of market-wide adversity.
2022 forced us to stay laser-focused on our idea generation that adhered to our Tier One Quality checklist, as evidenced by a few big wins, among the carnage, in our coverage universe and the broad market.
In 2022, Richardson Electronics, Ltd. (NASDAQ:RELL) saw a peak return of 89.7% during its tenure on or Select Long Model Portfolio. Canterbury Park Holding Corp. (NASDAQ:CPHC) climbed 70% after we posted our research report, and Rcm Technologies (NASDAQ:RCMT) peaked at a solid 89.69%.
New Pitches for 2023
As we continue to add more stocks to our coverage universe and adjust our Model Portfolios in accordance with new market trends we predict they will significantly outperform the market, in-line with our long-term track record.
We added 10 stocks to our Model Portfolios in 2022, and so far 1 in 2023. We are highly bullish on several of them and believe that 5 have the ability to at least double in price in the near-term.
Soon, we will have a special offer for you that will allow you to gain access to that group of 5 stocks. You can also opt-in here to stay informed of when this becomes available.
One of these companies pays a huge dividend, is about to experience a large acceleration in earnings per share growth, is buying back stock, and insiders are purchasing stock in the open market for the first time in a while. It’s the perfect stock for the new market environment we are currently in, where investors demand earnings and cash flow from companies.
Another company struggled to consistently grow for years and has historically been known as a boring, high expense, print advertising and mailing company. That is not the case anymore. The company has cleaned up its balance sheet and simplited its capital structure by taking advantage of its rising cash flow to buy out investors holding dilutive securities.
They are approaching $20 million in free cash flow, they recently purchased a profitable company which is very strategic to the business and is a value-add to their existing customer base. The increased growth profile of the company and de-risking of the overall business should lead to a large expansion of the company’s valuation multiples.
Finally, we worked with MS Microcaps, Maj’s newest venture, throughout the year as a research contributor, and we would like to highlight one of their closed trades from 2022 to give you an insider look at how their new product, the “Active Portfolio (AP)” works.
Their portfolio is a mixture of short, medium, and long-term strategies. The AP navigates the volatility and takes advantage of spikes in the share prices in our shorter term investments while waiting for the longer-term positions to play out. This also includes reducing exposure to longer term positions when they rise and adding exposure when they fall.
One of their recent AP holdings, Ceco Environmental Corp. (NASDAQ:CECO), is a great case study about how MSM uses its short term InfoArb strategies to grow their Active Portfolio. It should be noted that:
- Their InfoArb strategy focuses heavily on delayed reaction to positive news flow, which opens opportunities for us to allocate a small amount of the AP’s capital to the Active Portfolio prior to a price increase.
- When stock prices fall due to investor overreaction on misunderstood news, their AP can benefit by gaining exposure to the stock before the bounce as smart investors eventually start buying.
In the case of CECO:
- They identified the InfoArb quickly and added CECO (old symbol CECE) to the Active Portfolio.
- CECO was removed from the Active Portfolio after the InfoArb was exploited
THEMES GOING INTO 2023
As we move into 2023, we can already see some big themes we will be following throughout the year.
As discussed in last week’s GeoWire edition, pinpointing recession proof and recession resistant stocks will be at the forefront of our research model. We opened two new model portfolios at the close of last year, to serve as a starting point for us to organize and prioritize our Microcap coverage universe:
- Our Recession Proof Model Portfolio: which currently includes 10 stocks that have traits that should ensure their stability in a recessionary environment.
- Our Recession Resistant Model Portfolio: which currently includes 7 companies that possess traits that offer at least some insulation from a recession.
GARP (Growth At Reasonable Price)
Another trend that we believe will carry into 2023, that was a large focus for us in 2022 is GARP, or Growth at a Reasonable Price.
The concept of GARP essentially revolves around the search for companies that show consistent growth, whose stocks are not priced at pie-in-the-sky valuations (no room for disappointment) or at extremely low valuations (since this may incorporate hidden risks).
You don’t have to be a growth or a value investor. You can be a growth AND value investor by looking for companies with good growth prospects that are undervalued or reasonably valued. It’s really that simple.
Bigcap Microcaps (BigCapMicros)
Our next big trend will be “BigCapMicros,” or companies with (or on their way to) big cap revenues, trading as microcaps. We covered this trend much more in depth in our most recent Saturday email, “On the Hunt for BigCapMicros – Microcaps with Big Cap Appeal.,” As we explained in the broadest sense, a BigCapMicro is a microcap stock with meaningful revenue of at least $50 to $150 million. We used to have this criteria set at $500 million to $1 billion, but lowered the threshold to expand our hunting ground and find bullish setups earlier.
In our current open Model Portfolios at GeoInvesting, 13 stocks satisfy the requirement of BigCapMicro.
You might be surprised to know that many of these companies generate north of $1.0 billion in revenue. These are real companies that debunk negative stereotypes labeling all microcaps as low quality, low revenue-generating companies.
Reinforcing the concepts above, they were touched upon at the beginning of our January 2023 Live Member Open Forum Commentary
“I think all of you understand that I’ve really been pushing this GARP (growth at a reasonable price) mantra for a while. Value investing is back and we like to combine growth and value together.
“…2022 [basically reset] the market to where it hasn’t been for the last 15 years or so, to really a hyper focus on companies that are undervalued on traditional measures of valuation, not just price to sales, but also on cash flow and earnings measures, and have some kind of staying power.
On that theme, we think that the sweet spot, at least for now, is going to be in the BigCapMicro theme.
The BigCapMicro theme is really how I began my full-time investing journey over 30 years ago, before I went full blown into smaller and nano cap companies.
I was investing in companies that made a good deal of revenue, at least 50 million or 100 million in revenue. Sometimes even, into the half a billion-dollar range, but were trading as nano caps or micro caps.
There’s this expectation, or this belief from a lot of people, when you talk to them that a nano cap company is a development stage or fraudulent company or has nothing going on.
And that’s not necessarily the case. So, we think that area of emphasis is going to be where a good batch of money goes in the nano cap space where companies have been around for a long time that people will trust.
And we’re really ramping up that effort.
We’re really going to put a good deal of focus on looking at these higher quality names in BigCapMicro. And I think you’ve already seen that through some of our recent write ups and Fireside Chats. We have a good deal of a backlog/pipeline of these stocks we’re looking at.”
Information Arbitrage (InfoArb)
Finally, we’ll continue to focus on what we like to call “InfoArb” at GeoInvesting.
When markets are down, great news and positive company developments can get lost in the mayhem, making it a great time to read conference call transcripts, press releases and SEC filings for information arbitrage that investors are ignoring due to complacency, naivety, or flat out fear of doing anything at all.
Information Arbitrage allows you to:
- Focus on finding information that investors haven’t found or properly dissected yet, an opportunity abundantly available in the microcap universe.
- Make investment decisions based on information early, before the crowd.
- Increase your confidence in investment decisions.
- Realize superior investment returns.
GeoInvesting’s knack for finding high-quality InfoArb microcap stock ideas has proven the microcap critics wrong. It’s these same InfoArb-driven ideas that have been made available to premium subscribers for years.
To refresh your memory, an Information Arbitrage exists when:
“a disconnect between stock prices and available public information on a company is noticeable and monetarily worth pursuing. Sometimes, the mispricing of micro-caps can be substantial. This strategy has “paid dividends” for many investors. Part of the reason the “InfoArb” opportunity exists is that investors often incorrectly label ALL microcap stocks as pump & dump schemes promoting companies with no revenues and profits.”
Last year, we covered Smart Employee Benefits Inc (OTC:SEBFF) (SEB.V) a SaaS company focused on delivering administrative human resources and benefits solutions to corporations, and while reviewing their Q2 Conference Call we discovered some hidden InfoArb that highly suggested that the company was putting itself up for sale, and that they already had a deal in the making.
We alerted our Premium Members of what we found:
“While it is unclear exactly what the CEO’s comments may infer, it seems very likely to us that the company is possibly contemplating selling the company, going private and/or entering a joint venture/partnership.”
On January 14th, 2023 they announced they had indeed entered an agreement to be acquired by Co-operators Financial Services Limited for CAD 0.30 cash per share ($0.224 in USD), and our hunch was correct.
On April 30, 2021 we added SEBFF to our Select Long model portfolios at $0.12. At the acquisition price of $0.224 U.S, it equated to a 83% return.
|Date||Geo’s Coverage on SEBFF (SEB.V)|
|Oct. 21, 2020||Geoinvesting Research Contributor Thomas Birnie pitched the company to our community.|
|Apr 30, 2021||Hosted a virtual presentation with the company’s CEO and added the company to its Run to One Model Portfolio. Key takeaways included recurring revenue, a deep customer base, and an upcoming reverse split.|
|Aug 2, 2021||Released a bullish research report on the company after it announced its Q2 2021 reports. Overall opinion was that we believe the stock will be worth multiples over its current price once investors understand that most of the company’s revenue is recurring and tied to long-term contracts|
|Aug 23, 2021||Hosted a virtual panel with the CEO and COO.|
|Nov 2, 2021||Released research on the company after it released its Q3 2021 results.|
|Mar 11, 2022||Released research that the company announced it has received extensions and new contracts valued at $22.2 million.|
Apr 1, 2022
|Released research based on the company’s Q1 2024 results.
Key takeaway: Contract momentum has been strong and it is nice to see that high capex expenditures are behind them.
|Aug 2, 2022||Released research based on Q2 2022 results.
Key takeaway: Gross margins were negatively affected as a result of onboarding a new client.
Released research based on Q2 2022 results.
Key takeaway: Gross margins were negatively affected as a result of onboarding a new client. We reiterated some of our skepticism that we had been communicating that, despite management’s continued positive outlook, their inability to meet lofty growth goals had us form an opinion that they should look for strategic alternatives, such as selling the company.
|Aug 5, 2022||Released conference call InfoArb stating that it seems very likely that the company is possibly contemplating selling the company, going private and/or entering a joint venture/partnership.|
|Oct 3, 2022||Company announces 3 new multi-year contract wins exceeding $70 million in value.|
|Jan 3, 2023||The company announced its agreement to be acquired by Co-operators Financial Services Limited for CAD 0.30 per share ($0.224 USD).|
Good luck in having these InfoArb opportunities in stocks like Alphabet Inc. (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL). We continue ratcheting up our efforts to unveil more information arbitrage in Tier One Quality microcap companies getting ignored by the market that will present themselves as 2023’s hidden gems.
Of course, we don’t want to forget our contributors who have identified stocks that went on to have some pretty amazing all-time peak highs since the pitches. These are some of the ideas that we look forward to the most, since we feel honored to have members respect our opinions enough to want to share it with the GeoInvesting community. It validates everything we want to stand for in peer to peer collaboration and is a pinnacle of satisfaction when the ideas work out.
|1/26/2016||Paysign, Inc. (NASDAQ:PAYS)||8790.47%|
|11/30/2015||Semler Scientific, Inc. (NASDAQ:SMLR)||7577.15%|
|3/14/2016||Smith-midland Corporation (NASDAQ:SMID)||1710.94%|
|7/26/2017||Us Nuclear Corp (OOTC:UCLE)||1566.66%|
|7/29/2016||Fitlife Brands Inc (OOTC:FTLF)||1504.34%|
|11/01/2015||Socket Mobile, Inc. (NASDAQ:SCKT)||1408.52%|
|5/24/2016||Leatt Corporation (OOTC:LEAT)||1266.90%|
|8/23/2016||Galaxy Gaming Inc (OOTC:GLXZ)||1071.73%|
|9/10/2019||Rcm Technologies, Inc. (NASDAQ:RCMT)||907.69%|
|12/29/2020||Centrus Energy Corp. (NYSE:LEU)||752.97%|
PROGRESS, YEAR TO DATE
GeoResearch ArticlesPodClipsFireSide ChatsContributor ArticlesManagement Morning Briefingshttps://geoinvesting.com/wp-content/uploads/2023/02/GeoInvesting-Progress-2022.png
WHAT YOU MAY HAVE MISSED THIS MONTH
Weekly Wrap Up Highlights, Education and More
February 5, 2023
February 6th, 2023In concert with one of our favorite themes of highlighting compelling content from other investors, this week I have opted to bring you another investment thesis from a peer who also focuses on micro to small cap companies. Last week, we shared a pitch from a hedge fund that is putting stake in a money services company that it believes is grossly undervalued and whose opportunities are misunderstood or discounted by investors who think foreign bank notes don’t have a bright post-Covid future. So, after another bout of research from “around the web”, we found an intriguing pitch from a Seeking Alpha author who wrote on a dividend-paying microcap company that designs, manufactures, and sells recreational fiberglass powerboats for the sport boat, sport fishing, and jet boat markets worldwide.
January 29th, 2023
While perusing through Twitter, I came across a tweet that highlighted an investment letter by a long/short hedge fund based in New York, which included their bullish thesis on a company, together with its subsidiaries, engages in the money service and payment businesses in the United States and Canada, with a general increase of those activities in some select foreign countries.” A segment of the company’s operation deals with banknotes, which are “bills” or forms of currency that one party can use to pay another party. What caught my attention was that hedge fund has a three year price target of $70 on the stock, and it’s currently selling at $18.69 with a P/E ratio of 10.5. We’ll get into the investment thesis in a second. It’s not often that we seriously track companies that are in finance related industries, but when the stock came across our screener in June of 2022, we couldn’t help but do a little more investigating into the fundamentals that were improving, of which success is dependent on some predominant trends in the travel sector that deals with international currency and payments.
January 22nd, 2023
This January, our first Fireside Chat was with a nearly 100 yr-old company that takes a multi-channeled, technology enabled, approach to customer experience (CX), operating through three segments: Marketing Services, Customer Care, and Fulfillment & Logistics Services. It’s not our first talk with a company involved in a part of that industry, who dealt with customer satisfaction and employee standard operating protocol management, which could be viewed as a subset of CX. We argued that in the post-Covid era there would be an increased need to put an emphasis on the way businesses understand their customers, and why it’s now more important than ever. As the world sees it, there is plenty of room for CX to grow. A study conducted by Grand View Research determined that…
January 16th, 2023
In light of the riskier market environment we are in, I have been writing to you about our new Recession Proof and Recession Resistant Model Portfolios. A great related next step is to dive deeper into the tunnel and focus on the topic of Chapter 11 Bankruptcy and how to profit by focusing on two buckets: 1) Companies that survive a bankruptcy process. Will Muscle Pharm Corp (OTC:MSLPQ) be a candidate? 2) Companies whose businesses will actually benefit as bankruptcies increase.
January 11th, 2023
We’ll be getting back to the normal Monthly GeoWire format next month, but we wanted to take this first edition of the new year to look back at everything we were up to in 2022. Don’t worry, we will be getting back to our normal video format starting in February. This month’s GeoWire will be split up into 2 issues – one today, and the other next week. A lot happened in 2022, and we thought it was best to split it up into two separate posts to be able to put adequate focus on the themes we want to discuss. This Week: The stock market and recession, our new Model Recession Portfolios, and still the chance to participate in our special offer for 2023.
January 8th, 2023
In 2016 we addressed the dichotomous approach to understanding the differences between generally accepted accounting principles (GAAP) and non-GAAP earnings. There are ways they should be scrutinized when trying to get a sense if numbers being reported by a company are a true representation of what is going on at the net income level. Non-GAAP financials are also referred to as “adjusted.” For example, “adjusted earnings per share (EPS) or “adjusted earnings before interest taxes & depreciation & amortization (EBITDA). Because we plan on delving into this subject in a Tweet thread that we anticipate will engage our investor network and extensions thereof, we feel it is a good idea to give another primer on the subject, especially since GeoInvesting’s Premium Subscriber base has grown substantially since 2016. If part of your investment strategy is executing bullish or bearish short-term stock trades on earnings report news flow, it’s extremely important to understand if the GAAP and Non-GAAP earnings per share numbers being reported in a press release are “clean”.
January 3rd, 2023
The sales, earnings and thus share prices of cyclical stocks (cyclicals) tend to fluctuate with the overall economy and are associated with industries that are heavily affected by the economic cycle and consumer demand. (Example: stocks in the automotive, airline, hospitality, housing, building material and retail industries). Cyclicals do well when the economy is strong and consumer demand is high, and conversely, can suffer when the economy is weak and consumer demand is low. This makes them an attractive investment class for those who are skilled at identifying economic trends or when it becomes fairly obvious that an economy is peaking or bottoming.