The Good and Bad Sides of ESMC

Some people look for great companies with unbreakable competitive advantages.  Some will only buy if the history of profitability is secure and guaranteed to continue.  Others reject an accumulated deficit or buy only what is growing.

I steer clear of the masses in a search for the least competition.  I look for the beaten down...the hated, forgotten, and lonely.  In this area of the market only some companies will survive.  My bet is the winners will rise enough to cancel out the dead.  Most stocks I look at have problems.  There is always potential and there is always something wrong.  That's why we have opportunity.  All is not rosy and for sure there is a real risk of loss.

There are always two sides to the coin and ESMC is no different.  If you accept the truth you may see the opportunity.

CVV is too Cheap to Ignore

I first wrote about CVD Equipment Corporation (CVV) three years ago in Oct 2015 with the stock at $12.25.  That's a very high price for me and it has not worked out.  If given another chance I would not have bought at that price but what can you do.

The stock has now slid all the way down to $4.29 and it's a buy here for sure.  Recently I've been buying more and I may continue.  With tax loss season upon us this may very well get cheaper but it's got to be worth a double at least.

SEC Considers Blocking Dark Stocks

The SEC has a series of round table discussions to combat penny stock fraud.  One horrible proposal they discussed is, “If a company is a dark company and listed in the OTC market and hasn’t put out financials for six months, maybe it shouldn’t be quoted or offered to retail investors,”

This would mean death for dark stock investing.  The SEC is taking comments on these proposals as feedback on their Equity Market Structure Roundtables.  Tell them what you think.

Examples

Today I'd like to run through some examples of my stock purchases.  I've already blogged about these so nothing new on that front, but this will give you an idea how I go about buying stocks over the long term and why I buy when I do.

Let me try to tell you how I buy and why I buy.  What I do with winners and losers.  

I have 3 winners and 3 losers to run through.  Yay charts!

Sorry About the Lack of Comments

Quick housekeeping post.  I have been wondering why I got no comments for the past few months until a blog reader emailed me asking what's going on with his comments not going through.  I checked and there were a lot of comments waiting for approval...sorry everyone about that.

I have comment moderation turned on because I get a lot of spam comments.  Something happened and the feature that emails me when a comment is placed got broken.  I've just gone through and manually accepted a ton of comments.  I'll check directly like this from now on.

--Dan

PCYN is a Buy and Here's Why

Today's blog post comes to you from the land of the tiny and cheap.  If you're a follower of my blog you've heard this story before.  This company is pretty much my ideal: tiny, no debt, low share count, illiquid, high potential.

Procyon Corp (PCYN) is an extremely small holding company with one operating subsidiary: AMERX Health Care Corporation.  Current stock price is $0.18 giving a market cap of $1.5M.  Annual revenue is ~$4M and has risen 44% in the past couple years.

Cheap and tiny.

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.
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