MFCO Cheapened up Thanks to the SEC

Microwave Filter Company (MFCO) filed an annual the other day showing the following per share numbers:

• rev $2.01
• book value $0.76
• EPS $0.10

That EPS is without the PPP loan that was forgiven and book value is after.  The stock sits at $0.43.  With 2.6M shares out that gives a market cap of $1.1M.  I'd bet the fully depreciated building they own is worth 3 times the market cap alone.  The stock is cheap.

ADDC Tender

ADDC recently put out a tender offer to buy shares for $18.25. They are trying to get above 90% ownership to move onto a short form merger, buying out everyone without a choice.

Anyone out there who owns shares please email me nonamestocksdan@gmail.com. I am trying to figure out how many shares I know of that will not accept. I know we only have until Dec 3 so I am late with this post (family/Firebird getting in the way).

You can find the official offer and latest annual report here. Table of numbers is below

ECIA: Dominoes and the Guessing Game

I like to buy stocks at the bottom, when the narrative has broken down and masses have left.  This is when it gets interesting.  Stock_price = company_value + public_perception so how can you buy on the cheap unless the sky is filled with doom and gloom.  

I first bought ECIA around $0.30 and wrote up the stock a couple years ago at $0.39.  It had dropped to support, near the all time low.  With an exciting medical business and tons of potential I bought with dollar signs in my eyes.  

What I do is buy tiny, low, sleepy stocks with potential then wait and watch.  Potential comes from both business and stock.  I like a business with room to grow.  The stock should be low with capital structure tight, and bonus points for a theme that can be meme'd to the moon.  

After the buy starts a years long process of optimistically following along.  I can see the rise in my mind.  If things don't go my way I wait longer and as the situation warrants I buy more.  This is the story of puzzle pieces falling into place.  

Capital Employed Podcast

I was recently interviewed on the Capital Employed Podcast by Jon Kingston.  It was a lot of fun.  Jon keeps it quick.  We talked about my background and style then dug into two stocks: PGNT and GVP.  

TCOR Pummeled in the Darkness

Treecon Resources (TCOR) closed today with a stock price of $0.35 giving a market cap of $7.9M.  This for a company with TTM revenue of $80M and $0.181 EPS.  I like buying stocks at 2x earnings, how about you?

Brokerages, the new SEC Rule, and a Podcast

Now that the SEC followed through with their rule 15c2-11 change blocking quotes from non-reporting companies, the brokerages are all backing away.  I don't know if the SEC realized this would happen but it seems like every online brokerage company's response is to just take their ball and go home.  

In recent weeks we've seen announcements from Schwab, TDAmeritrade, and others saying they will not allow clients to purchase non-reporting stocks after August 2021.  Unfortunately I don't know of a single online brokerage that will let you buy dark stocks after the rule change goes into effect in Sept 2021.  

I was a guest on The Investor's Roundtable the other day to discuss this topic.  You can hear the audio here and watch video here.  Give it a listen to hear my own opinion as well as some others I really respect.  I have to say it was a real trip to be on a panel with my hero Dave Waters of OTC Adventures / Alluvial Capital.  

Closing the Book on SIMA

I first wrote up SIMA almost 5 years ago with the stock at $0.65. Since then it went as high as ~$13 before falling back a bit.

A couple weeks ago the company put out a tender offer to buy out all sharesholders at $10 (oddballstocks wrote up a nice summary here).

PIRS Spells Potential

I like to buy stocks I think have the potential to make me 5x, 10x, 20x my money. I don't feel confident enough in myself to think I can judge when a stock should be slightly higher, like say 25% or 50%. I search out situations where the stock could move a lot. I need big moves and huge winners to make up for the losers and to cover for when I don't look deep enough.  Singles won't get me where I'm trying to go, I need home runs.

There are many different situations in my portfolio and they all have one theme in common: potential.  I'm here for the potential to change my life.

Pieris Pharmaceuticals (PIRS) is a "clinical-stage biotechnology company that discovers and develops Anticalin-based drugs to target validated disease pathways in unique and transformative ways". Agreements with a number of huge companies give PIRS total potential milestone payments of over 30x the current market cap, plus royalties! Sound interesting?

NoName Annual Performance 2020-2021

It's been a great year in NoNameStocks land.  I'm up 35.7%, giving me a 50.3% CAGR since I bought my first stock 8 years ago.  

You can read my past annual performance posts here. 

PGNT for You and Me

I did most of my PGNT buying a year ago and with the stock up over 200% I'm still adding.  This one may keep going so let's take a look.  

It's been a while since we played our favorite game, Price That Stock!  Here we go.  No looking at the stock price before playing.  Humor me

In the Market Trenches Podcast

I recorded a fun podcast yesterday with Gary Ribe and Eric Furey, In the Market Trenches.  I had a great time talking about my approach, how I do things, and why I do things.  We did a little deep dive into two strange, yet somehow normal in the dark space, stock stories: EKCS and VCON.  

Audio version here.  Video version here.  

DYSL's De-List is Working

For all my negativity and rants towards companies de-registering from the SEC, sometimes it does help operations.  It definitely saves them money and enables them to spend more time on the business.  

The real risk is communication.  If they cut the world off the stock can drop to nothing but as long as they keep talking good things can happen.  

Dynasil (DYSL) de-registered from the SEC in the fall of 2019 with the hope of saving $900k per year.  They filed their last 10k in Dec 2019 and told shareholders to only expect an annual report moving forward.  A week ago they put out the report and the numbers back up their motivation for de-registering.

Harbor's Dark Takeover

In 2011, the "development stage" Harbor BioSciences HRBR lost 3.8M which was an improvement over the $6.6M lost in 2010 and $15.6M lost in 2009.  Not pretty and with a market cap of only $6.5M, not inspiring.  Amun LLC came along with a cash infusion of $2.8M to save the day if only shareholders will approve the following conditions:

• must perform reverse/forward split to get below 300 shareholder cutoff for de-registration
• must file to de-register from the SEC
• must give 3 board seats to Amun
• must approve a provision to preserve Net Operating Losses (NOLs)
• money will be forfeited if "At any time following the Deregistration, the Company makes any filing with the Securities and Exchange Commission (“ SEC ”) pursuant to Sections 13 and 15(d) of the Exchange Act on a voluntary basis"

Wow.  Amun wanted the NOLs and to disappear.  The transaction was approved and HRBR stopped communicating after putting out one last 10k in Jan 2012.  

After 8 years of muted darkness Harbor Diversified (HRBR) put out an 8k in Apr 2020 with one of my favorite lines ever: 

as of January 1, 2020, which is the first day of the Company’s current fiscal year, the Company determined it no longer met the eligibility criteria under Rule 12h-3 of the Exchange Act to suspend its reporting obligations under Section 15(d) of the Exchange Act. As a result, the Company determined it is required to file the Annual Report

Shareholders made them file again!  So amazing and here's an article.  I don't know the details but it seems they were taken to court and forced to come back to the light.  Whoever did this is my hero.  They've since put out a 10k showing $69M cash, $78M book value, and $263M annual revenue.  They earned $4.2M in the latest 10Q.  The market cap is currently $12M...sound interesting?

Avoiding the Crowd Podcast

A couple days ago I was a guest on the Avoiding the Crowd podcast with Maj Soueidan of GeoInvesting.   It was a ton of fun!  We talked about a lot of stocks I own and my process and the otc/dark space.  Great talking with someone who knows all these little stocks.  

CEMI: Potential, Hope, and Hype

I like to buy the forgotten, lonely, and broken then sell the exuberant and frothy.  As a once treasured stock tarnishes the masses move on to the next shiny toy, leaving destruction in their wake.  That's when I get excited.  I try to find what has been tossed aside, knowing that if the sun hits just right the sparkle may bring them back.

Chembio Diagnostics, Inc (CEMI) is a medical diagnostic test developer.  On Mar 16, 2020 the stock closed at $2.36, it's lowest point in 9 years.  Four days later CEMI announced a $4M order for a COVID-19 test.  Eleven days after that CEMI launched their DPP COVID-19 test, triggering the highest volume day ever.  The stock peaked at $15.89 a month later.    

Alas it was not meant to be as the FDA rejected their test on June 17 and the stock instantly gapped down from $10 to $4.  What a change of heart.  

CEMI is not giving up.  On July 6 they announced a US FDA contract to develop a COVID point-of-care antigen system.  They also announced they are revising the system and will seek EUA approval from the FDA for their system.  The question is what happens if they get that FDA clearance.

Financially Free Podcast

Last week I was interviewed on the Financially Free Podcast by Ney Torres which you can listen to here.

We mostly discussed my process and how I look at stocks.  Used some examples HYDI, TCCO, and others.

5 Years

5 years ago today I started this blog.  I can't believe it's been so long.  It has been the most amazing ride!

To anyone out there considering writing, please do.  Jump in full force.  I have improved more than I ever thought possible and so much is due to writing this blog.  It has improved my process, my speed, and my understanding.

I appreciate everyone reading this.  Love the comments and emails.  Thank you so much.  This blog lights up my heart

NoName Annual Performance 2019-2020

Another incredible year!  I'm up 94.9%, giving me a CAGR of 52.5% since I started investing 7 years ago.  

    

****update Feb 21, 2021****

I made a calculation mistake when first writing this post.  My real return is 94.9%, not 85.3% which means my CAGR is really 52.5%, not 51.4%.  See comment at end of post for explanation.

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

Stansberry Investor Hour Podcast

A couple weeks ago I was interviewed on the Stansberry Investor Hour Podcast.  My episode went live today and you can listen here.  They even put up a bio page with my picture, so fancy!

It was a lot of fun.  We talked about my investment process, dark stocks, low liquidity, etc.  Dove in a little bit on our old friend SIMA.

Buying the DYNT Chart

Sometimes you need little more than a chart.