FRTN is Why I Buy all These Junk Stocks

Fortran Corp (FRTN) stock has risen from $0.03 to $0.60 in the past few months.  With all the drama there could be more room to run or it may crash to zero.  This is a post to show you exactly why I buy the dying crap that I do.

This story involves shareholders successfully challenging a company to provide records in court.  We have nanocap activism resulting in the ousting of a shady CEO.  A fresh start and potentially bright future clouded by a bankruptcy petition...

The Intelligent Investing Podcast

I had the pleasure of being on the Intelligent Investing Podcast with Eric Schleien. This was the first time I've ever done a podcast and it was a lot of fun. Maybe we'll do some more in the future.  You can tell how nervous I was when I welcomed Eric to his own show...

Check it out here: intelligentinvesting.podbean.com

VII Becomes VCON

On June 19, Vicon Industries closed at $0.36 and it had been pretty flat around $0.40 for over a year.  The next day the company put out a press release announcing failure to comply with NYSE listing requirements and on July 12 the company changed symbols from VII to VCON as they moved from the NYSE to the OTCQB stock exchange.  

With no other news the stock has dropped all the way to $0.16, a loss of 56%.  I want you to ask yourself if a stock exchange name is worth half the company.

COMX Buyout

A buyout announcement came out this morning for COMX to be acquired by Zonal Hospitality Systems for 7.46 GPB = $9.91.  Shares are available now under $9 for anyone wanting to play the arb game.  I picked up more shares right at market open.

I first wrote about COMX in Apr 2016 with the stock at $1.60 and gave it a $6 value.  I gave COMX a $10 value in my most recent post in Feb 2018, what a guess!

HAUP Hides in the Darkness

There are various shades in the land of dark companies.  The brightest have de-registered from the SEC to save money and care enough about their shareholders to continue communication through their own website or otcmarkets.com.  Some companies lie in grayish middle ground where they will release info to shareholders only when asked.  The darkest of the dark don't  care about the stock price or wellbeing of any shareholder.  They hide in the shadows and communicate nothing.

Hauppauge Digital, Inc (HAUP) is one of the bad ones.  Their CFO, Jerry, told me they have de-registered and do not have to communicate.  I reminded him he is breaking state law by refusing to give financial information to a shareholder.  He uses the SEC as a scapegoat, claiming it will violate fair disclosure rules to send information to only one shareholder.  This is a gross misinterpretation and makes clear he does not care about us.

Still I hold shares and think the stock is likely cheap.  They recently put out the first press release in years.  They have redone their website.  As you can imagine the stock has dropped into the toilet and Jerry could care less.  I think the market cap is about a half million and I'd wager revenue is way higher than that.  This one is a gamble.

CNGA Comes Back to the Light

Conair Corp (CNGA) de-registered from the SEC in 1995 and completely disappeared.  They did not file reports anywhere.  The stock sank to the bottom while shareholders wondered if the company was even alive.  CNGA stayed in the darkness for 22 years until filing quarterlies and an annual in Sept 2017.  Since then they have kept up with reporting and even put out press releases!  This is a major change of heart and where there's change there is opportunity, so let's investigate.

NoName Annual Performance 2017-2018

Another amazing year! I'm up 75.7% and that pushes my CAGR up to 41.3% since I started investing 5 years ago. I don't know how long this will last.

SLGD Continues to be Cheap

I caught Scott's Liquid Gold (SLGD) a few years after the ugly potential turnaround phase and since I bought in two years ago it has always been cheap but not cheap enough to write about.  So this post will be a bit different from my usual.  Here we have real earnings and real growth.  This is not a company on its deathbed I'm betting will scrape by.

Revenue has been growing at about 20% over the past 5 years while earnings has gone from nothing to $0.38 a share.  The stock is at $3.35 giving a P/E of 8.8, P/S of 1, and P/B of 1.9.  I'm surprised the stock isn't closer to $5.

Take a Bite of This PEYE

Sorry I can only say 'cheap' in so many blog titles before I revert to puns.

Precision Optics (PEYE) is small, cheap, and illiquid.  The stock is boring and the price is low.  Market cap is only $5M.  They are in the exciting field of medical device optics.  How could I not be interested?!

Stock price = business value + perception 

The Dark and Cashy Trio of ADDC, COMX, SIMA

Let me give you update on ADDC, COMX, and SIMA.  I don't know who else is talking about these stocks and the companies don't communicate with the public so if I don't give out their numbers the world will never know.  I have these three filed under "maybe they'll do something with the cash someday."

Other than updated numbers I don't have much to add to my previous posts: ADDC, COMX, SIMA.  If you want any reports just send me an email.

MGTC: Cheap with a Side of Dark

Megatech (MGTC) is another in my line of super cheap yet unfortunately dark companies.  It's also very illiquid so good luck on that front.  This will be a quick post because there's not much to the story: real company, real dark, real hard to get info... and real cheap.

Currently trading at 10% of book.

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Update 1/27/2017: How funny. I published this post last night then this morning MGTC sent the latest financials. I've updated the numbers with 2016 data.
***

Riding the Wave of Agitation at PRAC

One thing that encourages me to buy into a stock is change. Change creates opportunity and can cause a stock to soar. It doesn’t always work out but the potential is there.

Productive Technologies Corp (PRAC) is undergoing serious change. Or at least one dissident director is pushing hard for serious change. Jesse Levine, the CFO, is fighting for control of the company with his uncle, the chairman. The company de-registered from the SEC in 2006 and vanished. The stock tanked, with a bottom of less than a penny in 2012. Out of nowhere Levine started putting out press releases in Sept 2017 discussing his desire to start a dividend and realize the value of PRAC for shareholders. Why the change of heart you ask? I don’t care. What matters is we have a large inside shareholder pushing for major change in a dead stock.

DAAT is Cheap

Today we're going to play my favorite game, Value That Stock!  I can see you're overcome with joy.  Here are the numbers:

• Rev $13.1M in 2016 vs 12.6M in 2015 vs 10.9M in 2014
• Net income $100k vs 81k vs 21k
• EPS $0.02 vs 0.02 vs 0
• Shares 5.33M
• No long term debt
• BV $5.2M vs 5M vs 5M

I'll go with a range of $5M - $10M for those numbers. If it was run better they would be more profitable but let's just say $8M to take a number and that would be $1.50 per share.  

Current stock price is $0.24, giving a market cap of $1.3M, so it's cheap however you look at it. Whether that value will ever be realized is a different question.

VLXC: Patience and the Unknown

There's a bit of gambling in my line of penny stock investing.  I know that's sacrilege to all the intellectuals out there reading 500 pages a day and I know Benjamin Graham would not approve.  Whatever.  Sometimes the upside vs downside is compelling enough to take the plunge.

Veltex Corp (VLXC) is one of my gambles.  There is no revenue or operations.    They issue shares to pay bills.  Here is the investment thesis in one sentence: VLXC has been awarded $153M in damages from a lawsuit and has a market cap of $9M.

Major Change for SOFT, WPCS, MRCR

Tiny companies meander through life with peaks and valleys along the way.  These three stocks have all had major announcements recently which perfectly illustrate life in this unloved corner of the stock market.  Rather than the good, the bad, and the ugly I think we have the good, the bad, and the who knows.  

I like to buy tiny companies with potential.  Sometimes that potential turns into reality (as seems to be happening with MRCR), sometimes the potential gets replaced with other potential (WPCS), and sometimes the potential turns into a fire that burns the company to the ground (SOFT, maybe).  MRCR and WPCS are definitely actionable if you think there's value to be had while SOFT is so illiquid and uncertain it may not be. 

WPCS is a low voltage electrical contractor who recently announced they are merging with DropCar.  MRCR is a construction business that de-registered from the SEC in 2004 then filed reports with OTC Markets for a decade before disappearing from the public eye in 2014.  Just today MRCR posted reports to the public for the first time in 3 years and got removed from the dreaded OTC Markets Stop Designation List.  SOFT was selling off business lines a year ago to concentrate on a new high potential division...then a few days ago they put out an 8k announcing everything is for sale including their domain listing and NOLs.

An Interview with NoNameStocks

Jan Svenda interviewed me for his OTC Newsletter a couple of weeks ago.  It was a ton of fun and Jan was great.  He has authored many articles on Seeking Alpha and we have crossed paths on a few stocks.  This is the first and only interview I've ever done.

Today he released a cut down version of the interview on Seeking Alpha and I just thought I'd throw up a link here in case you're interested.

DEWY: Real Estate, Change, and Survival

Dewey Electronics (DEWY) has annual revenue of about $6M and a BV of $2M. On top of that, their 22 acres of land and facilities has been appraised at $4.5M and completely depreciated. Next to their facilities they have another 68 acres of excess land whose sale for $18M fell through in 2005 due to restrictions put in place by New Jersey's Highlands Water Protection and Planning Act.  You get all that for a market cap of only $1.9M.

The company has recently changed their tune, stating the stock is undervalued and claiming they are working to correct the situation. An 18% shareholder joined the board a few months ago.

I love a tiny company reinventing itself and DEWY is doing just that as they diversify away from their decades long main product, a 2kW rugged military generator.

The ELST Boredom Might be Changing

Electronics Systems Technology (ELST) is another in my long line of small companies with potential.  What can I say other than it fits my style.  Clean balance sheet, low share count, good potential, cheap stock, low range on the chart.

Even if you don't agree on the cheapness you must recognize the story can change in a hurry.

ELST has evidence of change and potential.  That is all.  Quick post.

Hydromer and the Value of Potential

A common theme among my stocks is potential. Either a stock has to be incredibly cheap versus the current numbers, priced as if the company is dead, or packed with potential. Above all any stock I'm going to consider must be tiny, illiquid, and low priced.

When I say low priced I mean cheap, and when I say cheap I mean in every sense of the word. A $100 stock may be cheap relative to intrinsic value but it is not absolutely cheap. Even a $20 stock is not absolutely cheap so it would take something real special to get me to venture into that realm. Anything over a few dollars starts making me uncomfortable and my preference is really closer to a nickel. I'm looking for maximum stock price movement and that comes from four things: supply, demand, perception, and resistance.

Activism and a Possible Sale of QDLC

A concerned shareholder group has started a proxy fight at QDLC by calling a special meeting on July 11 to elect a new board.  Their stated intention is increase communication and sell the company ASAP.  The current QDLC board has fought back by calling their first annual meeting in over a decade on July 10.  It's a lot of drama and the craziest part is the CEO is part of the concerned shareholder group!

This is a call to action for all QDLC shareholders to ignore the company proxy and vote yes on the concerned shareholder group's proxy for all new directors.