Saturday, April 18, 2020

NoName Annual Performance 2019-2020

Another incredible year!  I'm up 85.3%, giving me a CAGR of 51.4% since I started investing 7 years ago.  

You can read more on my performance in past annual posts here.






Below is my portfolio.  You can compare back to last year to see what's new.  


The huge cash position is not by design.  CLSI ran up from $0.0015 to $0.10 over the summer with me selling out along the way.  RDVA buyout came in October.  HEMA was acquired in January, ending our four and a half year love affair.  In March, BMRA ran from $2.50 to $23 in two days on a COVID-19 press release.  Overall an incredible year with some really big wins.  And the first time my non-HEMA portfolio gained more than my with-HEMA portfolio (86.5% to 85.3%).

Historically I've been fully invested with more ideas than money, but now the size of my cash pile is going to cause a slow return to that style.  I move slow and these stocks are so illiquid it's going to be hard for me.  I've been buying the same old stocks lately but COVID-19 has really killed my stock research.  I've always used my train ride to and from work to read filings and look at charts.  At lunch break I would read.  A few minutes here and there at work.  Now with working from home along side my wife and kids that is all gone.  I have to get a routine going again.  

Time for some stocks, stories, and charts!

BMRA
This is a big winner and shows you why I invest the way I do.  For some history on BMRA read my old blog post.  

I first heard of BMRA from a friend of mine and I bought in the beginning of 2016.  The press releases were awe inspiring.  
I had to buy.  Imagine if the IBS product comes to reality I thought.  It was at $1.50 and I figured it's a $20 stock if that happens.  

Look at that last press release.  The board all pledged to buy stock and announced it.  That tells me two things: they believe and they want the stock higher.  I think it was an attempt to get the stock up for financing and uplisting and hey, I'll go along for that ride.  

Those press releases have kept me watching the past 4 years.  

When the stock rose to 3 I watched, smiling.  It dropped and started forming a wedge.  My mouth watered and I bought as it flattened, knowing it would rise once the wedge breaks.  Look at the stock rising into resistance, each time falling less than the last.  The buyers were overwhelming the sellers and you can just see how it will end before it happens.  Pressure builds into an eruption.When it broke above 3 I bought my fill.  

As it moved through $4 I sat smiling.  Watching.  Happy with my research and buying.  Waiting for the FDA approval to come in and IBS to carry the stock to double digits.  


Barely more than two months after the wedge break a spike came.  Up to $9.30 and back in a day.  This is what I'm here for.  I buy low share count, illiquid, easily moved stocks.  I watch for this every day...and yet I missed it.  A press release did it.  China Food and Drug Administration (CFDA) approves Biomerica colorectal screening test to help identify the early warning signs of colorectal cancer.  The stock had been moving and climbing, it started the day at $4.50.  The spike over 9 was great but only a double on the day.  I saw it.  I watched it.  And I missed it.  

I sold nothing.  Just didn't hit the button and it only lasted minutes.  Back to waiting.


Over the next two years I watched.  Eagerly reading every press release.  Scanning each 10Q and 10K for IBS news.  Estimated FDA approval dates came and went.  Trials and processes took longer than expected.  From the start I knew if FDA approval and IBS news didn't come it would fall back to a dollar.  Inaction and boredom always lead a stock to fall.  Phil Fisher said to find the growth story and buy when they stumble.  

I kept buying every now and then.  More waiting.  More watching.  

In Oct 2019 they said, "We are expecting to hit several major milestones at Biomerica over the next 12 months, and are excited to see the impact these milestones will have on shareholder value." In Dec 2019 as HEMA was riding high on news of the buyout I sold some to buy BMRA. In Jan 2022 BMRA said, "We are expecting calendar 2020 to be a breakout year for Biomerica as our shareholders begin to reap the benefits of years of research, development and clinical trials."  

I made BMRA my largest position after the HEMA sale.  That quote about a breakout 2020 year just has to mean the time is now.  The stock was still at $3 so I kept buying.  More and more.  Expecting FDA clearance news and initial IBS product shipments.  "Someday" was getting closer to "today."


Then COVID-19 hit.  BMRA dropped to $2.  I bought some more.  On March 17 BMRA put out a press release that shot the stock to the moon.  Biomerica Begins Shipping Samples of 10 Minute Test for COVID-19 Virus Exposure.  

Anything coronavirus related has been spiking and this is why I'm here.  I want stocks that move.  I buy the low, I buy the small.  The illiquid.  DYNT spiked up from $0.80 to $3.50 on nothing more than people realizing they sell masks and sanitizer.  

I was up before market open and it was moving.  The stock opened around 6 and I watched.  It held the rise and each minute it holds builds strength so I waited.  Mid morning the stock shot up to 10 and I sold my first chunk.  Maybe 20% of my holdings.  The stock was holding strong and rising so I waited.  "Hold until they make you sell" I told myself.  All day it held and then after hours it started moving more.  Up to $14.  

Up early the next morning again and I sold out as I was drinking my coffee, within 30 minutes of the opening.  Five to ten sells that morning.  Sell some and watch.  It's rising.  Sell some more.  It's strong.  Up over $20, have to sell.  Dump, dump, dump.  It got up as high as $23 and dropped back so I sold my last.  Out and by the next day it was at $8 again.  


I held BMRA 4 years and it was about flat.  Up a double from my initial purchase but flat with my avg price.  Most of my buying was around $3.  Then up 10x in 2 days and I'm out.  This is why I continue holding the stocks I do, year after year.

HEMA made me some 8000% and was a rising sun continuously for 4.5 years.  BMRA made me about 60% of what HEMA did in just two days of action.  All due to position sizing and patience.  

BMRA was a home run but not directly for the reason I bought in.  The stock is still at $8 and I'm watching, hoping for the drop to $3 when I'll buy back.  I still think the FDA approval will come.  What COVID-19 has done is slow down the process...and you know what that means.

CVV
And now to a loser with big potential.  I bought CVV at $13 five years ago and if I had to do it again I would not have bought.  I rarely buy anything over $5 but this was at the start of my journey to the bottom of the barrel.  

I end up buying a lot of stocks with very small positions.  Less than 1%.  Every time I can visualize it rising.  So much potential and one day it will be unlocked.  If I don't buy I forget about them.  But once I buy I follow.  I read and watch.  I check the chart, see the action, follow the movement.  I have to buy to follow, and you have to follow to play the game.  

CVV has been a lot of waiting and watching.  Five years watching the stock drop.  It's exciting and cheap and surprises me every day it hasn't risen.  The company is expanding and diversifying.  Setting up new business lines.  They own their buildings and have a history of generating a lot of cash.  

It's now my largest position.  I've been buying pretty heavily in the 3s.  When it ran up to 5 a couple months ago I thought this is it, back to double digits....Then it dropped to $2.  Now we are back near 4.  It'll be back in the teens one day.  



TCCO
There is nothing I like more than stock pikes.  TCCO is a low floater that continuously rises and falls.  Months or years pass with nothing then a large order or press release causes a spike.  Business is lumpy and the stock responds.  

Same story as when I wrote it up three years ago.  I've now sold out completely at least 3 times.  I think I've made 10x my money on this stock yet it sits at the same level it was when I first bought.  Most recently in Dec they announced a huge quarter and the stock jump from 2 to 10.  I sold out and have recently bought back as it dropped to the 2s.  

Look at that spike!

Here it is longer term.  Buy at the low and wait for the rise...rinse and repeat.  


VCON
Here's some value destruction.  I first bought VCON in the 1s somewhere when it was known as VII.  I wrote it up almost two years ago at $0.16.  A reverse split changed those to $2000 and $320, respectively.  The stock is now at $11!!  That's a loss of over 99%.  Look at this sad, sad chart.  



Still I watch and bought more not too long ago. If the share count is the same as when they de-registered, adjusted for the Oct 2019 2000-1 reverse split, then the market cap is only $100k. Take a look at their website and you tell me if you think this is a $100k company.

Or at least that's what I was thinking when I started to prepare a blog post on VCON recently. Problem is when you look closer.  CETX acquired 46% of VCON in Mar 2018. They took over as CEO at the same time. VCON de-registered in Jan 2019 and do not communicate. The only way you'd know they had a reverse split in Oct 2019 is by looking at the otcmarkets company info.


The way to know more about VCON is read CETX filings, like this Jan 2020 10-k. Turns out in May 2019 CETX sold themself 15M shares of VCON for half the market price. VCON had 17.55M shares when they de-registered. That would have about doubled share count, but wait there's more. After the 15M transaction CETX said they owned 70% of VCON which means this transaction moved them up 24% and so total share count would have to be 15M/0.24=62.5M.  That's more than tripling share count without so much as telling shareholders.

Post split that 62.5M = 31,250, giving a market cap of $340k which is probably still cheap but I don't know what else leadership is doing. Directors quit when they de-registered so there's no oversight. I have emailed a few times but they don't respond. They do not communicate.  Who knows what else is going on or what the share count really is.

HEMA
My favorite stock is gone.  My baby.  My first true love.  HEMA was acquired in Jan 2020 for $25.40.  My podcast interview here goes in depth on the whole HEMA journey.  I first bought around $0.30 and wrote up the stock in Aug 2015.

Here is the last year of HEMA's stock life.

And one last chart to close out the year.  HEMA long term.  This is why I still hold VCON.  This is why I follow dead crap.  What a ride.  

--Dan
disclosure: long everything shown in my portfolio screenshot

59 comments:

  1. Just amazing! Outstanding performance, unique style, extremly patient :) Are you thinking about doing this full-time?

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    1. Thanks Jan. I have thought about that but I don't think it's for me. It would be tough to replace my salary. Maybe if I was single but I have to support a wife and three kids

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    2. This I don't understand...you have multiplied your portfolio 16x in a few years, even assuming you had a small portfolio at the beginning your should at least be a multimillionaire by now, at this rate I don't see how a salary, even a large one, can compete with returns like these! I have to admit I'm following your blog because I haven't seen anything remotely close to the returns you're getting and it's intriguing to say the least

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    3. Well if I have no salary then I'd have to take money out to live. And that amount would have to be more than my salary.

      About 85% of my portfolio is in retirement accounts which I can't touch. Some more info here: http://www.nonamestocks.com/p/portfolio-performance.html

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  2. Congratulations on another spectacular year Dan,

    I'm so happy that you are well on the way to achieving your goal of providing financial security for your family. I had a big grin on my face reading this post, it just brings to life all the things Ted told us about, we can see the strategy right here before our eyes being proven time and time again.

    A strategy is nothing though without implementation though, and you have done a wonderful job of executing on it, I'm sure Ted would be proud!

    Thank you for the blog too, it just continues to provide me with inspiration and motivation unlike any other.

    Long may your out-performance continue my friend.

    Regards,

    David

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    1. Thanks David. You are too kind. Keep up the writing because yours are my favorite posts out there.

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  3. Incredible performance! Now is a good time to have the cash! I have a similarly heavy concentration in HYDI, their move to North Carolina was just recently completed and they have hit the ground running with "multi million dollar" contracts to make hand sanitizer for local emergency responders. Now if they can just keep their financials up to date, they might earn a more respectable valuation from the market.

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    1. Thanks. HYDI is probably the one I'm most excited about. I watch it constantly, just waiting for the inevitable. It has to explode one of these days.

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    2. Do you have a price target? It just had a big run up.

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    3. I don't have a price target. usually I don't have a price target. Most of my selling is on technical reasons. The stock has run up but volume is not there yet. someday there's going to be huge volume and high prices. I'm waiting for that

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  4. Dan, congratulations! Great job :).

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  5. I am a bit surprised that you like CVV so much. It is rather a big and more liquid stock (MC of 25 Mio.) and with a P/B of 0.85 and P/S of >1 it is also not so cheap. The company records losses for some years.
    Further, it was sometimes traded in the more distant past below 1 usd.

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    1. That P/S depends on what you consider their normal. They own a lot of real estate. Business is lumpy and I think their future is more bright than it is dark. http://www.nonamestocks.com/search/label/CVV

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  6. Congratulations, Dan! Wonderful to hear. How scalable do you think this would be?

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    1. I don't know but I aim to find out. That one BMRA spike was over $300M in volume which is enough for me

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  7. If you are interested in biotech in ibs with huge insider buying check out Dddd in the uk. Few posts on my blog www.deepvalueinvestments.WordPress.com to get you started.

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  8. Regarding RDVA, I still have shares in my brokerage account and was wondering if you know when they will be effectively "disappear"?

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    1. I think their estimate for the final payments was a year or two. I sold out after the $1.80 payment because I didn't want to wait for the rest.

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    2. I can't find the deal info anywhere. What was the total per share?

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    3. they paid out 1.80 per share and there was going to be a follow up payment a year or two later. It was probably in a proxy I no longer have. The follow up was uncertain and I think I was estimating around 0.20-0.30

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  9. What do you think about the chart of SCKT (Socket Mobile)? I could argue that the stock is close to an all time low and at a "resistant" level. But does such a thing (resistant level) really exist? I'm pretty skeptical, isn't that pseudo-science. Where is the proof?

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    1. There is no proof in the stock market, only percentages. No strategy works all time and everything works sometimes. Open your mind to the possibilities and study the options before making your decision.

      Do yourself a favor and read the first couple chapters of Richard Evans: Finding Winners Among Depressed and Low-Price Stocks

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    2. SCKT is sitting at support. Support is on the bottom while resistance is above.

      Imagine you buy a stock XYZ company at a dollar. You're not certain how great it going to be so you just make a 2% position. You did your research and you think it'll work out but you're not certain. A couple weeks go by and the stock starts moving. It goes up a few percent. Few percent more. Volume comes in and it's really moving now. A form 4 comes out showing the CEO buying up shares. It's up to $1.50 so now you're up 50%. You start kicking yourself about how you should've bought more. "I knew it'd be a winner" you tell yourself. "I was right." You don't buy anymore because it's so much more than it was a month ago, but you wish you had more. Without realizing it, you are building up the resistance in your mind. A month later the stock drops back down and you buy at $1, grateful for your good luck to be able to get more. Now the resistance in your mind you have put on the tape.

      The more activity there is in a certain price range, the stronger the resistance/support. The more people who have experienced that price, the stronger that price exists in the crowd's collective memory.

      it's real

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    3. That's not to say support is never broken through. Of course it happens sometimes. Just think percentages and crowd behavior

      Works the same on the top side with resistance. Imagine you buy a stock at $3. You think it's the best thing out there. It's a long term hold. A compounder. You're going to pass it on to your kids. You buy it and hold and forget about it. But you're no dummy, you know the stock and the market. You have looked at the chart and you know the stock was at an all time high of $10 fifteen years ago in the last bull market. That was a different time, with different customers and a different environment. But still that $10 is in your mind and just this simple fact is already building up the resistance at $10. You follow and watch. The stock moves up as the company delivers. It's a compounder after all. You are secure because you know how good a company this is so you just sit back and watch. No need to do anything. A couple years pass and the stock is at 9.50. Getting close to that all time high but no matter. You're going to hold this stock forever. volume comes and pushes the stock up to $10. It's going to shoot up, you think, through the all time high and beyond. You are excited and start checking the price more often. Volume is so high. The stock is so good, company so strong. But it doesn't shoot through $10. It holds. Weeks pass and a month. Stock is still at $10. It's been a good run, you figure, and you decide to just sell 20%. It is at the all time high after all... and you've just contributed to the resistance

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    4. Many thanks for these comments. I have a (used) library edition of the book by Richard Evans (from 1998) but have not read it yet. I think it covers mainly charting.

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    5. Love this explanation of the psychology. Thanks Dan.

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  10. Hi, I heard you on the Stansberry podcast. I can't wait to read some of your stuff.

    Your story is very inspiring and I wish you continued success.

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    1. Thank you. That's very nice of you to say. I hope my blog helps

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  11. Take a look at SBSAA, I think it would have been a 20 bagger this year, if it wasn't for covid 19. Had an absolute killer Q4, and Q1 this year (yet to be out). One of the few radio companies that has been growing on every metric. Yet market prices it for dead. I think post Covid, and post refinancing, they can do $15-25m of FCF. Market cap is $2m lol.

    Of course debt load is heavy, so you will have to be patient.

    Seems like a classic Greenblatt stock.

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  12. Thank you very much for your blog and for sharing your knowledge and process through this forum. It has been incredibly educational and enjoyable to learn about.

    Given your large cash position today, curious which securities, if any, that you currently hold that you intend on allocating more towards in the immediate future.

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    1. you are welcome. I love my blog

      I'm buying the same old stuff. Listed in the screenshot of my portfolio here in this post. I'd like larger positions on many of those stocks and I just sort of buy what looks good. Bought more DYNT this morning.

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  13. If compounding is the eight Wonder of the world Dan Schum is probably the ninth wonder..
    50% annualised return WAO!

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  14. Dan hello, can you give a comment on ARCW? Have you added it to your watchlist.


    1. The schedule is flat, the last year is falling, throughout history the schedule is beautiful.
    2. Revenues fall and very high cost.
    3. Market Cap Market Cap 3,755,971
    4. Outstanding Shares 23,474,819
    5. Book Value Ratio 0.44
    6. Long Term Debt 47,669

    What steps does the company take to get out of this situation:
    1 Sale of unprofitable assets
    2 Trying to diversify a business. Most of the orders are 95%. These are automotive parts that want to enter the aerospace industry and medicine.
    3 The debt is large and the main payment falls on 2021; the amount payable is 41,114

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    1. I don't know that one. Will have to look closer. I like the chart and market cap and price. would prefer few shares

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  15. Fantastic work Dan, glad you are doing so well.

    You mention a "non-HEMA portfolio" I was wondering what your returns are in your non-HEMA portfolio, obviously the same as above for the first few years and better this year but do you know your overall CAGR.

    Thanks.

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    1. I quote it in this post every year but I've never calculated CAGR for that

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  16. Do you have any comments related to the chart of KGJI? It seems that it is trending nowhere but the price is not falling anymore. Could be a support level. The company is located in Wuhan, where the covid 19 situation is improving.

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    1. I wouldn't go for a company in Wuhan myself. but just based on the chart it's been in a death spiral for years. Building a base the past few months but I'd wait longer

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  17. Are HYDI and CVV your highest conviction picks or are the high values randomly?

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    1. I don't consider any of my stocks to be my "highest conviction". That's why I own so many stocks. If something looks cheap I buy it

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    2. specifically on those two stocks. HYDI I've been buying for years and most was around 0.50 then it has come up, that's why it's a larger position. CVV has been too cheap for a long time and shares have been available so I've been able to buy a lot.

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  18. Congratulations! Do you have any views on Spot coffee? Thanks.

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    1. that one I don't know. will have to check it out

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  19. What´s up with Ekimas corporation after de dividend has been paid. They have no assets, no cash,.... how to value now the shares? Extrange things, thrilling world in nanocaps.

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    1. I think ASNB is a lottery ticket now. They have nothing but a stock ticker, share structure, and probably NOLs. The business and cash are gone.

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  20. Great blog. Refreshing because so many blogs just talk about the general market. Regarding CVV: You mention that the stock has a very liquid and strong book. I agree. Cash and real estate is a solid book. Would you kind of consider this as a margin of safety in the stock? I would not imagine that that stock would stay far below the book value for a long time, when the book is a that nature? So we can assume that the bottom of the stock should theoretically be about 3.5-4 usd?

    And what do you think about the long range chart for these 2 stocks?:
    Ogzpy and DHT holdings. Looks like quite ok 10y + charts to me.

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    1. Thank you

      Anything can happen. With CVV yes I consider the cash and real estate a sort of floor on the value. I think at some point in the next 5 or 10 years the stock will be materially higher than it is now. It's an exciting business. Lots of potential.

      I don't know those stocks. I'll check them out

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  21. Do you have any comments related to SKAS? I think you reviewed it in the past concluding that the Company has too many outstanding stocks. However, now the outstanding stocks amount to 1 Mio. However, I'd prefer the stock to be a little cheaper.
    Further, also the tiny and very cheap stocks from Tel Aviv, RSEL and INBR, would be interesting based on the numbers (e.g. RSEL trades at a P/E of around 2 and INBRs last dividend yield was 30%). But I dont speak Hebrew.

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    1. on SKAS I don't think the air travel industry is where I want to buy right now

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  22. You might be the most successful speculator I've ever come across- the momentum/day trader crowds have something to learn from you. Buy low-priced penny stocks without regard to intrinsic value, wait til uninformed buyers rush in, and sell at ludicrous prices as the tiny float collapses. BMRA, cash incinerator, sold at 15x BV and sales, while the HEMA exit multiple was even more favorable. Fascinated to see if you can continue to replicate these sales multiples.

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    1. here I was thinking I had a non-zero regard to value

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    2. There you were

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  23. $CVV.
    100% gains on no news. Didn't find any news, someboody knows anything?
    Thanks.

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    1. It's just arbitrarily being pumped (before being dumped), lots of activity @ https://stocktwits.com/symbol/CVV.
      I sold into the pump, assuming I'll be able to buy back around $3 in a few days/weeks.

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