Today, I’m recommending a micro-cap “thrift” (a type of bank) that is likely to get acquired within the next year or two.

Key points:
· Insiders are buying like crazy.
· The stock is buying back its own stock hand-over-fist.
· 70% of thrifts ultimately get acquired, and this thrift will be eligible to be acquired in 12 months.

All the details are inside this month’s Issue. Enjoy!

Today, I’m recommending a tech company that is growing like crazy yet trades at a “value” price.

Key points:

· High insider ownership.
· Hidden assets that will eventually be monetized.
· Buying back stock (over 20% of shares already retired).

All the details are inside this month’s Issue. Enjoy!

Today, I’m recommending a biotech company.

Key points:

· I expect a dividend within 15 months representing 126% of its market cap.
· Asymmetric upside potential beyond the upcoming dividend.
· High insider ownership and insider buying.

All the details are inside this month’s Issue. Enjoy!

Today, I’m recommending an energy company that is gushing free cash flow and is likely to be sold in the near future.

Key points:

· 33% of market cap in cash (downside protection)
· High insider ownership
· Trading at a price to free cash flow multiple of 4.3x

All the details are inside this month’s Issue. Enjoy!

Today, I’m recommending a financial that is taking advantage of a special opportunity that is only available to small community banks.

Key points:

• Due to a special program (Emergency Capital Investment Program), earnings are expected to grow by 250% over the next three years.
• Cheap valuation. Stock trades at current P/E multiple of 13.2x.
• Downside is limited given high cash levels on bank balance sheet.

All the details are inside this month’s Issue. Enjoy!

Today, I’m recommending a real estate company that is 86% owned by insiders.
Key points:

• Stock is trading at 100% discount to fair value.•Company has 87% of its market cap in cash.•Majority shareholders will likely attempt to buy out minority shareholders at a premium shortly.

All the details are inside this month’s Issue. Enjoy!

Today, I’m recommending a company that’s benefiting from “green” initiatives.
Key points:

• •27% revenue growth last year, and 17% expected growth for the next 5 years.•256% EPS growth last year.•A strong balance sheet with net cash.•High insider ownership.

All the details are inside this month’s Issue. Enjoy!

Today, I’m recommending a liquidating real estate trust with significant upside.
Key points:

• •Its assets are conservatively worth 50% more than its current market cap (it has no debt).•It pays a 10% dividend yield.•Ongoing asset sales will create even more income and the trust will be completely liquidated within 5 years.

All the details are inside this month’s Issue. Enjoy!

Today, I’m recommending a U.K. natural gas company that is trading at a ridiculously cheap valuation and is run by capable operators who generated a 40x return on their last natural gas company.
Other key points:

• •It’s benefitting from the booming natural gas market in Europe.•It’s trading at 1.5x free cash flow.•It has high insider ownership (20% of the company).

All the details are inside this month’s Issue. Enjoy!

Today, I’m recommending a company that has grown revenue at a 30% CAGR and EBITDA an 80% CAGR over the past 10 years. Despite this impressive growth, the company trades at just 5.3x EBITDA.
Other key points:

•Top 3 player in the U.S. paper shredding industry.•Massive opportunity for organic and acquired growth.•High insider ownership (over 30% of the company).

All the details are inside this month’s Issue. Enjoy!

Today, I’m recommending a company that will benefit from the post-pandemic travel boom.
Other key points:
•145% quarterly revenue growth
•Cheap valuation: 5.7x EBITDA
•Hidden high-growth payments division
•High insider ownership (21% of the company).
All the details are inside this month’s Issue. Enjoy!

Today, I’m recommending a company that provides the “picks and shovels” to the massive Alzheimer’s market.
Other key points:

•High insider ownership (30% of the company).•45%+ revenue growth this year.•Secular winner trading at P/E of 33x.

All the details are inside this month’s Issue. Enjoy!

I’ve never liked gambling. I went to Las Vegas once with friends and had a blast. But that was because the weather was beautiful, and we sat by the pool during the days and then had some good nights out. Some of my friends loved to play blackjack. I enjoyed it for entertainment value, but I was only interested in playing at tables with low minimums. Why? Because I know that the house always wins! (Unless you are Edward Thorp, the famous card counter.)

This week, all everyone cares about is the banking system, and so I’ve been thinking about it a lot. I continue to believe that this banking crisis is manageable and NOT systemic. Here’s how I see it…

For my introduction this week, it feels like I can’t write about anything other than Silicon Valley Bank. What a stunning collapse! And before I get into my thoughts, I wanted to plug using Twitter.

As expected, the second half of February was pretty weak from a stock market return perspective.But February is over and March and April tend to be seasonally strong, according to Ryan Detrick of Carson Investment Research.

This week, I want to use my introduction to spend some time diving into Liberated Syndication (LSYN) because I spoke to the CEO, Brad Tirpak, for about an hour last week.


To review, Liberated Syndication stopped trading publicly in late 2021 because it was so behind on its historical financials, that FINRA/SEC revoked its ability to trade. So since late 2021, the stock has been private.

For the first time that I can remember, I didn’t watch the Super Bowl. We had been skiing all weekend in New Hampshire, and I was EXHAUSTED. I think our entire household was asleep by 8 p.m. It sounded like an incredible game, but I’m not upset I missed it. An amazing night of sleep was worth it. Maybe that means I’m getting old?

The stock market finished January on a strong note which bodes well for the remainder of the year. Despite a rally in the market, I’m adding new ideas to my watch list on a weekly basis. I’m continuing to find plenty of ideas that look attractive on an absolute and relative basis. I look forward to sharing my latest idea in next week’s new issue of Cabot Micro-Cap Insider.

The S&P 500 is off to an excellent start in 2023 and according to Ryan Detrick of Carson, that bodes well for the rest of the year. I’m continuing to see many opportunities in the micro-cap world. The two areas that seem the most interesting to me right now are the biotech and energy sectors.

2023 is off to a good start! So far in January, the S&P 500 is up 4.2% and many of our micro-cap recommendations are also starting the year off on the right foot. We will see if the positive momentum can continue to close out the month. Earnings season is officially beginning for large-cap stocks.

Happy new year! Hope you were able to take some time off to re-charge and get ready for the new year. I enjoyed my time off, but December has been a month of sickness for the Howe family. Covid, ear infections, colds – you name it, my family got it. Here’s to a (hopefully) healthier January! This week was another very slow week from a micro-cap news cycle perspective.

I hope you’re having a wonderful holiday week. I celebrated Christmas with my wife and kids (Gracie-7 and Tripp-4), as well as my parents and in-laws. I’m lucky because we all live in the Boston area – so travel was minimal. We enjoyed tons of good food and wine.

Well, December has been a drag.

No Santa Claus rally.

And my New England Patriots look awful.

With the Patriots’ comically bad loss to the Raiders on Sunday night, they aren’t mathematically eliminated from the playoffs. But they effectively are.

Today is a sad day, in a way.

Why?

Because I’m parting ways with Dorchester Minerals (DMLP).

I originally recommended buying BBX Capital (BBXIA) in October 2020 at a price of 3.17, shortly after its spin-off from Bluegreen Vacation Holdings (BVH).

I was recently able to speak to Laurie Sims, President at Libsyn. We had a nice conversation, and I got some good insights into the business. See my notes at the end of this update.

Greystone Logistics (GLGI) filed its 10-K recently, and I was surprised that sales declined in the 4th quarter by 5%.

I recently downgraded Donnelley Financial (DFIN) to Hold as I had concerns that the company was overearning given buoyant capital market activities which tend to be cyclical.

This morning, we received bad news from Medexus. Medexus announced that it has received a complete response letter from the FDA related to Treosulfan, its newly in-licensed drug that was expected to drive substantial revenue growth. What is a complete response letter?

I will keep this update short and sweet.

As the Cabot Micro-cap Insider recommendation list has swelled in size, I’m realizing that I have too much capital allocated to previously disclosed ideas.

Aptevo filed an 8-K disclosing that Proposal 4 (Company Sale) passed. However, as you can see in the screenshot below, the company made a special point in the footnote that the majority of non-Tang shareholders voted against the immediate sale.

U.S. Neurosurgical Holdings (USNU) recently filed a 10-Q to report first-quarter earnings.

Last night, Medexus Pharma (MEDXF) reported excellent results. Revenue increased 70% y/y to $31.5MM in the quarter. While that top-line number benefitted from ~$3MM of sales that slipped from last quarter to this quarter, it was nonetheless a very positive report. Adjusted EBITDA increased to $5.1MM from a mere $700,000 a year ago.

Zedge (ZDGE) has appreciated a lot faster than I had anticipated. It is up over 100% since we profiled the name last month and is trading above my fair value estimate of $9.80.