Today, we are getting defensive and recommending a micro-cap consumer staples company.

While this issue’s new recommendation is defensive, it has many other attractive attributes:

• Strong historic revenue growth (24% CAGR)
• Over 50% insider ownership
• A strong balance sheet
• A cheap valuation (P/E of 15.0x)

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

Today we are profiling a logistics company that is far under the radar of most investors, despite strong revenue growth, 100%+ earnings growth in its most recent fiscal year, and a mid-single-digit P/E.

Further, management and directors own 44% of the company’s stock, ensuring that investors are well aligned.



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

This week, we profile an under-the-radar podcast hosting company in secular growth that is about to announce the results of a strategic review.

Our micro-cap recommendations have performed well in aggregate. Nonetheless, I believe my open BUY recommendations remain significantly undervalued as they have been left behind in this surging market.



Micro caps don’t benefit from passive investing as they are not owned by any indexes or ETFs. Nonetheless, the historical performance (~18% annual CAGR) of micro caps speaks for itself.

If we continue to patiently buy undervalued micro caps, we should do quite well over time.



If you have not already, I recommend that you read my Cabot Micro-Cap Insider Guide. It will help you get the most out of your Cabot Micro-Cap Insider membership, and make your investing decisions easier and more profitable. It will also explain much of the shorthand we use in Cabot Micro-Cap Insider, and explain our ratings.



Our monthly member call will take place this Thursday, June 11, 2020 at 2 p.m. ET. We will review all open recommendations and answer subscriber questions. You can register here.



If you have any questions about any of my recommendations, I encourage you to reach out to me directly at rich@cabotwealth.com.



Now let’s get into my newest recommendation.

If you have not already, I recommend that you read my Cabot Micro-Cap Insider Guide. It will help you get the most out of your Cabot Micro-Cap Insider membership, and make your investing decisions easier and more profitable. It will also explain much of the shorthand we use in Cabot Micro-Cap Insider, and explain our ratings.

If you have any questions about any of my recommendations, I encourage you to reach out to me directly at rich@cabotwealth.com.



Now let’s get into my newest recommendation: Medexus Pharmaceuticals.

Welcome to Cabot Micro-Cap Insider!

This inaugural issue is a little different than future editions.



In this issue, I’ve profiled my initial five recommendations. In future issues, I will profile one new idea in depth, and provide updates on all open recommendations.



Because I’m including five new ideas today, the write-ups are more concise than you can expect going forward.



Before you read this issue, I recommend that you read my Cabot Micro-Cap Insider Guide. It will help you get the most out of your Cabot Micro-Cap Insider membership, and make your investing decisions easier and more profitable. It will also explain much of the shorthand we use in Cabot Micro-Cap Insider, and explain our ratings.



If you have any questions about any of my recommendations, I encourage you to reach out to me directly at rich@cabotwealth.com.



Now let’s get into the stocks that you should start buying today.

As I think about where we are in the economic cycle, I think financials should be relatively well positioned.

Given the volatility of September, I want to revisit my “bear market” analysis.

This week, we had limited news but there was one update that I wanted to highlight:
RediShred (RDCPD) completed a reverse split on August 18th. For every five shares that you previously owned, you now own one share. The stock price adjusted up to account for the reverse split. The reverse split has no economic impact on RediShred. You still own the same percentage of the company.

After a very strong summer rally, the S&P 500 has pulled back sharply.
The cause for concern appears to be Jerome Powell’s guidance from his speech last Friday.

After quite a strong rip higher the first half of August, U.S. markets have pulled back sharply.
The S&P 500 touched its 200-day moving average last week and then immediately started to retreat.



Retail investor sentiment has started to creep up but it still feels to me that sentiment among professional investors remains quite low.

As I touched on last week, the market has been on tear!
It’s unclear whether this is a “bear market rally” or the start of a new bull market.

This was a quiet week, and so I’m going to use my introduction to share an update on Cogstate (COGZF), which reported preliminary fiscal 2022 results.

This week, we had a decent amount of news as earnings have started to get under way.

Earnings season is coming!
We didn’t have much news this week, but our companies will start reporting in late July and August.

Not surprisingly with the holiday weekend, last week was a quiet week. And I bet this week will be quiet too.
But we did get some good news!

There was little news this week, but I wanted to highlight two things that are on my mind.
First, small and micro-cap stocks look incredibly cheap.

It was a quiet week last week, but there was one update that I wanted to highlight.

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.