Before we get into this recommendation, I just wanted to highlight our upcoming annual conference.

9th Annual Smarter Investing, Greater Profits Online Conference



It will take place from August 17-19 and you will hear from many experts (including me!) about opportunities in the market.



Today, we are recommending an energy name with strong momentum and downside protection.



Some additional details:



It’s levered to natural gas which has recovered sharply in 2021.

• Strong earnings growth and free cash flow generation.
• Downside protection (no debt and significant cash on its balances sheet).
• Insider ownership (management and board own 25% of shares outstanding) and recent insider buying.

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

Before we get into this recommendation, I just wanted to highlight our upcoming annual conference.

9th Annual Smarter Investing, Greater Profits Online Conference



It will take place from August 17-19 and you will hear from many experts (including me!) about opportunities in the market.



Today, we are recommending a stock with hidden value.



Some additional details:

• Its healthcare analytics division has grown at a 30%+CAGR and has a huge market opportunity in the years ahead.
• A slower growing competitor just got acquired at a premium valuation.
• My price target implies 70% upside within 12 months, but longer term this could be a multi-bagger.

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

Today, we are recommending an energy company that is both a traditional energy company but also a transition play.

The company is up over 250% in the past year, but still looks cheap on forward numbers.



Some additional details:

• Historically, the company has grown revenue at a 26% CAGR yet trades at a cheap valuation.
• Inside ownership is high and insiders have been buying as many shares as possible in the open market.
• Revenue and EBITDA are already at record levels.
• My price target implies 100% upside.

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

Today, we are recommending a classic re-opening play.

Our latest recommendation operates golf courses as well as “entertainment” golf venues (high tech driving ranges). Traditional golf is booming and “entertainment” golf will boom in 2021 as vaccine penetration continues to increase and life returns to normal.



Some additional details:

• The company will roll out its new concept (modern adult mini golf) and expects strong revenue growth.
• Insider ownership is high, and there has been recent insider buying.
• Downside is limited given asset value of golf operations business and existing entertainment venues.
• My price target implies 100% upside, but in my bull case scenario, we could see ~250% upside.

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

Today, we are recommending a call center outsourcing company.

At first blush, it doesn’t sound like a sexy opportunity.



But after you learn the details, it quickly becomes a lot more interesting:

• The call center industry is consolidating, and this company would be a perfect acquisition candidate for a several strategic competitors
• Sophisticated private equity investors own 60% of the company will likely run an auction to sell the company within 13 months
• The stock is incredibly cheap on an absolute basis (3.5x FCF) and relative to peers (3.6x EBITDA vs. peers at 10.0x)

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

Today, we are recommending a biotech company.

The company is trading well below an offer to take it private and has numerous other catalysts on the horizon.



This company’s characteristics include:

• Insiders own over 40% of the company.
• A proxy fight - A hedge fund is lobbying to have the company sold to the highest bidder.
• Royalty income streams which provide downside protection.
• Much, much more.

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

Today, we are recommending a mini conglomerate.

The stock is near a 52 week high, but there is at least 50% upside for the stock.



This company’s characteristics include:

• A cheap valuation (0.3x revenue)
• One of the best value creators of all time on the management team
• Several hidden assets that will be spun off in the next year to unlock value
• High insider ownership.

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

Today, we are recommending a leading app developer.

The stock is near a 52 week high, but I think there is ~50% additional upside over the next year.



This company’s characteristics include:

•85% revenue growing in its most recent quarter

•A reasonable valuation (P/E of 19x annualized earnings)

•Company insiders own over 12% of shares outstanding

•Recent insider buying




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

Today, we are recommending a micro-cap stock in the virtual lease-to-own market.

I think this stock has ~100% upside over the next year or so.



This company’s characteristics include:

• Secular revenue growth
• Significant operating leverage
• Company insiders own over 20% of shares outstanding
• Recent insider buying

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

Today, we are recommending a micro-cap turnaround stock. If you look at the long-term stock chart, it looks like a company in secular decline. But once you look under the hood, you will realize the company has transitioned into a software/tech enabled services company with recurring revenue.

I think this stock has ~200% upside over the long term.



This company’s characteristics include:

• Near-term tailwinds from the booming IPO and SPAC market
• A draconian valuation
• An activist investor with a 10% equity stake (ensuring aligned incentives)
• Low capex requirements

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

Today, we are being a little contrarian and recommending an investment in a company that operates in a down and out industry. Nonetheless, we believe there is significant upside over the next couple of years.

This company’s characteristics include:

• High margins
• No capex requirements
• An 8% dividend yield
• A cheap valuation

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

Today, we are profiling a Canadian SaaS company that is trading for a “value” multiple.

This company has sticky, recurring revenue. Other characteristics include:

• Strong historic revenue growth (25% CAGR)
• Over 40% insider ownership
• strong balance sheet (a significant net cash position)
• A cheap valuation

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

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.

The big news last week was the S&P 500 closed above its 200-day moving average for the first time in almost eight months.

When the S&P 500 trades below its 200-day moving average for over six months and then breaks through that threshold, the S&P 500 is up 18.8% on average over the next 12 months.

The market performed well during the holiday-shortened week.

The S&P 500 is brushing up against its 200-day moving average, and if I had to guess, I would expect it to reverse from here.

While I’m not a technical analyst I wouldn’t be surprised if we saw some weakness, similar to what happened in August after the index brushed the 200-day moving average.

There are a couple of things that I’m thinking about this week.

First, the yield curve is inverted. An inversion of the 10-year – three-month yield curve has predicted all of the last recessions, and so I have high confidence that we will see a recession in 2023.

With that being said, usually, the market performs better in the year of the recession than in the year before the recession (markets are forward-looking!).

As such, I’m relatively optimistic.

Over the past couple of weeks, there have been a couple big news items:

• The collapse of crypto exchange, FTX.
• The market rallying on lower-than-expected inflation.

The collapse of FTX has nothing to do with micro-caps, but it’s a fascinating story. I can’t wait to read the Michael Lewis book on it (apparently, he’s been working on the book for the last 6 months).

The biggest news over the past couple of weeks has been the disappointing results from big tech.

This week was another relatively slow one. However, we did have two companies report earnings.

This week was a slow one with few updates to CMCI companies.
It’s earnings season for many large-cap companies, but we will have to wait until November or later to get updates from most micro-caps.

I love Twitter. The social media platform, not the stock.
While it’s easy to get lost “doom scrolling” on Twitter, I find it to be an incredibly helpful investment tool.

This morning, I published my latest recommendation: Buy 2seventy bio (TSVT).

I’m closing out my NexPoint Diversified (NXDT) recommendation and selling my shares. I had an update call last week; I would characterize the update call as positive (more details below).

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.