On this episode of Avoiding the Crowd with Maj Soueidan, the case study of Retractable Technologies, Inc. (NYSE:RVP) is discussed. With vaccines now being delivered and seemingly there being a light at the end of the tunnel, Maj wanted to describe a case study that was relevant to what’s been happening in 2020, as well as a company that took you on a classic microcap Information Arbitrage journey.

Information Arbitrage Journey

  • Continuous insider buying by CEO as the company battled lawsuit with BDX concerning unfair marketing practices and patent infringement issues.
  • Investors failed to realize that that Retractable had been winning the legal battle.
  • Investors unfairly punished shares after the court ruled in RVP’s favor after the final proceedings, but no monetary award was issued in the company’s favor.
  • Regardless, the companies agreed to settle claims with one another, and to not pursue further actions on the patent infringement claims.
  • RVP has a best in class product that had flown under the radar and gone unnoticed by investors, until recently (COVID-19 catalyst).
  • A long standing $83.8 million government contract that had yet to be executed was amended to include COVID-19 language. At the time of the amendment, the market cap of RVP was $50.3 million.
  • We found township meeting minutes that showed the U.S. government would fund the construction of new facilities for RVP to address the volume of syringes needed to combat COVID-19.
  • Result – RVP stock price increased from $1.50 when we initiated our bullish coverage for GeoInvesting premium members on March 11, 2020 to an intraday price of $15.50 as of 12/15/2020, or a 930% rise. (Stock peak by day’s end was $15.79)

 

Key Dates In Our Research

RVP Chart as of 12-15-2020