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Tyler Laundon

Chief Analyst, Cabot Small-Cap Confidential and Cabot Early Opportunities

Tyler Laundon is chief analyst of the limited-subscription advisory, Cabot Small-Cap Confidential and grand slam advisory Cabot Early Opportunities. He has spent his entire career managing, consulting and analyzing start-up and small-cap companies. His hands-on experience has taught Tyler that the development of a superior business model is the biggest factor in determining a company’s long-term success. Accordingly, his research focuses on assessing the viability of management’s growth strategies, trends in addressable markets and achievement of major developmental milestones.

Tyler’s small-cap portfolios favor a high allocation to stable, high growth companies, upon which he layers strategic purchases of higher risk, event-driven investments. He first began publishing his analysis of small-cap opportunities in 2009. Since 2012, he has led his subscribers into 10 doubles. Between 2012 and September, 2015 his small-cap recommendations generated cumulative returns of over 2,300%, including both winners and losers, and outperformed the Russell 2000 Index by an average of 28% per year.

Prior to joining Cabot, Tyler founded and operated a small business for 15 years. He then worked as a consultant for start-up technology companies, as well as Vermont’s largest health care institution. From 2009 to 2015, he was the chief analyst of growth stocks at Wyatt Investment Research, where his research spanned the full spectrum of the growth stock universe, from micro-cap start-ups to multi-national mega-caps.

Tyler holds a B.S. and MBA from The University of Vermont, where he graduated Valedictorian. He has been a long-time contributor to the Wall Street’s Best Investments, has been quoted by U.S. News & World Report, and has presented investing ideas and strategies for The Money Show and Bloomberg Markets LiveINSIGHTS.

From this author
Yesterday the FOMC decided to move ahead with another 25bps hike, bringing its federal funds target rate to a range of 4.75% to 5%. The statement was missing the phrase, “...ongoing increases in rates would be appropriate,” which was present in the eight previous statements, suggesting the Fed may be done hiking soon.
In this week’s video, Mike Cintolo talks about the market’s under-the-surface improvement that he’s seeing; no indicators have changed, which will need to happen for him to extend his line in a big way, but there’s no question most stuff has seen improvement and more stocks are beginning to act properly. Mike did a little buying this week and is hoping to add more should the market be able to build on the recent action.
The big news of the week is, of course, rising risks in the financial system following the failures of several smaller regional banks in the U.S. as well as instability in some larger institutions abroad, mainly Credit Suisse (CS). We also received February inflation data in the form of CPI (Tuesday) and PPI (Wednesday), which continue to show that inflation is moderating but isn’t collapsing. The February PPI report showed a 0.1% decline versus estimates for a 0.3% increase.
: In the March Issue of Cabot Early Opportunities we take a look at what’s been unfolding in the financial system and consider implications for the FOMC’s meeting and subsequent rate hike decision next week.

Suffice to say, buying a bunch of stocks into the current uncertainty doesn’t seem like the best idea. We’ll add a few partial positions, but the bulk of this month’s new ideas are going on our Watch List.

We’ll take things as they come and consider plucking names off this list as things develop.

Never a dull moment!
In this week’s video, Mike Cintolo talks about the market’s under-the-surface improvement that he’s seeing; no indicators have changed, which will need to happen for him to extend his line in a big way, but there’s no question most stuff has seen improvement and more stocks are beginning to act properly. Mike did a little buying this week and is hoping to add more should the market be able to build on the recent action.
Trimming BCAB, SGHT and NRDS
Warren Buffett can’t buy small-cap stocks any more, but here’s why you can and should. Keep reading to learn more investing like Buffett.
The big events so far this week have been Fed Chair Jerome Powell’s testimony before the Senate Banking Committee (Tuesday) and the House Financial Services panel (Wednesday). He sounded more hawkish than he did during his February 1 press conference.
Ahead of next week’s March issue, I’m going to make a few changes to our portfolio today.
Want to know how to find small-cap stocks? Here are my five rules for investing in these high-return, high-risk investments.
We picked up maple sugaring as a fun, spring-time activity, but running into the unexpected offered some lessons for me as a small-cap investor.
Earnings Season Updates: IOT, RIVN, SNOW, XPOF
Earnings Updates: FTI, PWSC, OPCH
This month we are going with a small industrial company that is showing how consistent focus on operational improvement can pay dividends.

Once thought of as a highly cyclical company with management that tended to drop the ball, execution has improved dramatically. In 2022 revenue was up 14% and EPS was up 41%.

With exposure to megatrends like infrastructure and global electrification, I see more upside ahead.

Flywire (FLYW) reported Q4 results after the close yesterday that beat expectations on the top and bottom lines. Revenue was up 42% to $73 million (beat by $7.55 million) while GAAP EPS of -$0.01 beat by $0.11.
Small and mid-sized companies are trading at a discount to larger peers, but one sector looks particularly cheap.
Expensify (EXFY) reported after the bell yesterday and revenue was a touch light (2% miss) while EPS beat expectations on the back of strong margins. Revenue rose 7.8% to $43.5 million (missed by $850K) while adjusted EPS of $0.07 beat by a penny. Management reaffirmed long-term revenue guidance of 25% to 35%.
We’re in the thick of our portfolio’s earnings season so today’s update will be short and sweet. My focus this week is on providing updates on positions as they report and laying out expectations for companies that have not yet reported.

While our reports have been mostly good so far the market is still swinging with the interest rate breezes. I had thought that influence might diminish but with Fed members making hawkish public comments and expectations for more hikes after March both the 10-year and 2-year yield have become troublesome.
Earnings Updates: FTI, PWSC, OPCH
TransMedics Group (TMDX) reported another terrific quarter after the bell yesterday that should have shares trading higher today. Revenue grew 223.7% to $31.4 million (beating by a whopping $7.8 million) while GAAP EPS of -$0.21 improved from -$0.46 in the year-ago quarter and beat by $0.11. That result caps off a year in which TransMedics grew revenue by 209% to $93.5 million.
Sprout Social (SPT) reported Q4 results after the close yesterday that were close to expectations as bigger deals, partnerships (i.e., and price increases drove revenue and annualized recurring revenue (ARR) higher, despite a challenging market for IT spending. Revenue in Q4 was up 30.8% to $69.7 million (missed by $200,000) while adjusted EPS of $0.03 increased from -$0.05 a year ago and beat by $0.05.
With individual company specifics likely to be a big driver in 2023, I wanted to highlight three small-cap stocks that look intriguing.
The market has continued to hold up surprisingly well in the face of less-than-great inflation reports.

We’re in a period where it appears the pros of slightly stronger economic growth outweigh the cons of a slower-than-desired inflation retreat. Earnings season is helping to return focus to company specifics, for the time being.

Our earnings season really heats up next week as we should have at least six positions report. It’s going to be an intense week, so buckle up!
NerdWallet (NRDS): Sell A Quarter and Hold the Rest
In the February issue of Cabot Early Opportunities, we continue to pursue stocks offering exposure to a diversity of end markets.

Our top pick this month is a mega-cap tech company making waves with AI investments that promise to shake up one of the largest software markets in the world.

We also take a look at a small industrial company, cover two software stocks with leadership positions in their respective markets and peak at a recovering semiconductor stock.

As always, there should be something for everyone in this month’s issue!
Earnings Updates: ABNB, NRDS, TIXT, SEDG, UDMY
This week has been taking place in the shadow of last week’s market-moving events.

Of course, I’m talking about the FOMC meeting and the resulting 25bps hike, followed by Jerome Powell’s press conference where the term “disinflation” reverberated around the conference room over and over. The event sent the market higher in a risk-on rally that extended the move from the day before.
Inspire Medical (INSP) delivered yet another better-than-expected quarter after the closing bell yesterday as Q4 results came in near the high end of management’s pre-announced range.
Pinterest (PINS) reported Q4 results after the bell yesterday that were lighter than expected but don’t change the story of a company streamlining operations and tweaking the platform to drive modest user growth and, as a result, higher advertising revenue. Pinterest is also growing internationally.
I don’t love the action in Procept (PRCT) this week. While the broad market has been acting well and a lot of “risk on” stocks have gone up, shares of PRCT have headed south.