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Micro-Cap Insider
Micro stocks. Maximum profits

April 5, 2023

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The big news this week is that OPEC+, including Russia, made the decision on Sunday to cut oil production by 1.16MM barrels per day from May through the end of the year. It appears that OPEC+ wants to keep oil in the $80-$90/barrel range.

Unfortunately, the U.S. hasn’t refilled its strategic petroleum reserve and may be forced to buy at higher prices.


This could add upwards pressure to oil prices.

Of all my recommendations, the one that stands to benefit from higher oil prices the most is Unit Corp (UNTC). I expect the company to declare a $2.50 dividend very soon and continue returning cash to shareholders all year.

The stock remains too cheap at an EV/FCF multiple of 2.2x.

In other news, I’m reaching out to the management teams of all the banks that I’m recommending: M&F Bancorp (MFBP), Truxton (TRUX) Esquire Financial Holdings (ESQ), and William Penn (WMPN).

I feel very good about the capital position of all of them, but I just want to confirm I’m not missing anything. So far, I’ve spoken to the CFO of Truxton and the bank’s position is even better than I thought.

More to come.

In terms of updates this week, there are several that I wanted to highlight (full updates below):

1) Cogstate (COFZF) was featured on the Yet Another Value Podcast. I highly recommend listening to the pitch.

2) Medexus (MEDXF) announced last week that it has secured a new licensing agreement to sell a topical treatment called Terbinafine.

3) NexPoint Diversified REIT (NXDT) filed its 10-K. I summarize the key takeaways below. NexPoint remains a high conviction idea.

The next issue of Cabot Micro-Cap Insider will be published on Wednesday, April 12. As always, if you have any questions, please email me at

Changes This Week: No changes


Cogstate Ltd (COGZF) reported disappointing fiscal 1H 2023 results on February 27. Revenue declined 15% y/y due to timing of clinical trials which can be quite lumpy and difficult to project. For the full fiscal year, management expects revenue to be down 6% to 9%. The revenue shortfall is due to slow patient enrollment in Alzheimer’s clinical trials. This isn’t lost revenue but revenue that has just been pushed out a year or so. Eisai and Eli Lilly each have a phase III Alzheimer’s drug that could be approved this year. If they are approved, there will need to be many more trials to gather additional data. Cogstate will benefit as cognition will need to be measured in a systematic manner. Finally, management mentioned on the call that it approved a share repurchase authorization of $13MM (5% of market cap). Management stated, “We’ve announced that Cogstate will buy up to $13MM of stock. This really reflects the Board’s position that the future commercial prospects that we see in the business aren’t really reflected in our share price as it sits today.” While Cogstate’s performance has been disappointing, I remain confident in the long-term outlook. Original Write-up. Buy under 1.80

Copper Property Trust (CPPTL) paid out $0.106699 per trust certificate on March 9. This distribution doesn’t include any proceeds from asset sales and implies a 12% yield while trust holders wait for more assets to be sold with proceeds to be distributed. Copper Property Trust continues to look attractive. Original Write-up. Buy under 14.00

Currency Exchange International (CURN) reported another excellent quarter on March 15. Revenue grew 32% to $16.5MM, beating consensus expectations by ~$1MM. While we have grown accustomed to 100%+ revenue growth, typical seasonality is returning to the business (Q1 is typically the weakest quarter while Q3 is typically the strongest). Banknote revenue grew 26% while Payments revenue increased 60%. Currency Exchange’s valuation looks attractive at 9x forward earnings and 7x forward free cash flow. Original Write-up. Buy under 16.00

Epsilon Energy (EPSN) reported solid year-end results on March 23. In 2022, revenue increased 64% to $70MM. Adjusted EBITDA increased 120% to $53MM. During the year the company bought back 4% of shares outstanding and the board of directors authorized another one-year share repurchase authorization to buy back up to 10% of shares outstanding. The company has hedged ~20% of production at a natural gas price of $3.96. The balance sheet remains strong with $45.8M of net cash, representing 38% of its market cap. While lower natural gas prices will hurt results in 2023, it will still be profitable. In 2020, when natural gas prices were at similar levels, Epsilon generated $15.7MM of adjusted EBITDA. Thus, the stock is trading at just 4.2x 2020 (which I view as trough) EBITDA. This valuation appears compelling. Meanwhile, the company is paying a nice dividend and buying back stock. Original Write-up. Buy under 8.00

Esquire Financial Holdings (ESQ) had no news this week. The company reported on March 15 that its CFO bought 1,500 shares in the open market. This is reassuring given the current banking crisis. The company reported Q4 results on January 25. Net income increased 18%. The company generated an industry-leading ROA and ROE of 2.8% and 24%, respectively. Loan growth and strong underwriting are driving the excellent results. Non-performing loans remain at 0%. Despite strong fundamentals, Esquire trades at just 10x forward earnings. Original Write-up. Buy under 45.00

IDT Corporation (IDT) reported another solid quarter on March 8. Consolidated revenue decreased 7% due to continued tough comps, but NRS continues to grow like crazy (+103%) and net2phone does as well (+30%). The company generated $23.2MM of consolidated EBITDA. Thus, it’s trading at 6.2x consolidated annualized EBITDA. So the stock now looks cheap on both a consolidated and SOTP basis. Given challenging market conditions for high-growth companies, IDT’s subsidiaries won’t be spun off soon, but we know that ultimately, they will be monetized either through a sale or through a spin-off. The investment case remains on track. Original Write-up. Buy under 45.00

Kistos PLC (KIST: GB) had no news this week but I expect the company to report full 2022 results in early April. Kistos reported an operational update on January 18. By my math, Kistos generated €100MM in the second half of 2022, or €200MM on an annualized basis. As such, Kistos is trading at a price to free cash flow multiple of 1.6x. Further, Kistos has 40% of its market cap in cash. Management stated that the regulatory environments in the Netherlands and the U.K. have made investment decisions more difficult (excess profit tax). Nevertheless, the company is evaluating acquisitions outside of the Netherlands and the U.K. It is also considering returning cash to shareholders. Kistos continues to look compelling to me. Original Write-up. Buy under 7.50

Liberated Syndication (LSYN) is working to gain liquidity for shareholders. I spoke to the CEO on February 17 and got an update. He is pursuing any and all liquidity options for investors including: 1) partnering with a SPAC, 2) merging with another public NOL shell, 3) raising money through an IPO, and 4) taking on private equity. I don’t have a sense of timing in terms of when LSYN shareholders can expect liquidity, but I know it is a big focus for the company. From a financial perspective, Libsyn continues to grow strongly. Revenue grew from $42MM in 2021 to $57MM in 2022. On a pro forma basis (full-year contribution from the acquisition of Julep), revenues are over $60MM. Profitability is down as the company is focused on expanding into the podcasting advertising market which has lower profitability than the hosting business. Still, I’m optimistic that Libsyn has a bright future. Original Write-up. Hold

Merrimack Pharma (MACK) had no news this week. It is a biotech company that has no employees. It relies on contractors to minimize costs. Its sole purpose is to receive milestone payments from Ipsen related to the drug Onivyde. Onivyde will likely be approved for first-line metastatic small-cell lung cancer in early 2024 which will trigger a $225MM royalty payment. Merrimack has committed to distributing any royalty proceeds to investors. I expect Merrimack to distribute $15 per share to investors within ~15 months, representing more than 125% of its current share price. Additional upside can be achieved through future milestone payments. Finally, insiders are buying stock in the open market. Original Write-up. Buy under 12.50

M&F Bancorp (MFBP) reported quarterly results on February 10. EPS increased 115% to $0.82. Return on equity increased to 34% from 12.2% a year ago. As expected, M&F is benefiting from new funds from the Emergency Capital Investment Program. M&F’s balance sheet remains strong with 0.2% non-performing loans. Stockholders’ equity represents 26% of total assets. The investment case is on track. Despite an appreciating stock price, M&F is trading at just 7.7x annualized earnings. I expect EPS to grow to $4.74 in 2025. Assuming M&F continues to trade at its average P/E multiple of 9.3x, the stock should hit 44.00 by 2025, implying significant upside. Original Write-up. Buy under 21.00

Medexus Pharma (MEDXF) announced last week that it has secured a new licensing agreement to sell a topical treatment called Terbinafine. The product could be approved in Canada this year. Management hasn’t provided sales potential, but it will be a positive contributor. On March 8, Medexus announced that it has secured new credit facilities amounting to $58.5MM. The interest rate for the facilities is only 8.58%, is an attractive rate. The new facilities include a $35 million loan, of which $30MM will be used to repay long-term debt, and an additional $5MM that can be used to pay off debentures. Additionally, there is a possibility of accessing an extra $20MM of uncommitted capital. Medexus plans to use this capital to repay convertible debentures in cash, which could potentially halve the dilution. Overall, this is a big positive. All in all, my conviction level remains high. The stock’s valuation looks cheap. Original Write-up. Buy under 3.50

NexPoint (NXDT) filed its 10-K this week. A couple takeaways: 1) NexPoint’s current NAV (net asset value) is $25.14. As such, the stock is still trading at a massive discount. 2) NexPoint is trading to refinance its debt ($145MM) for its Cityplace Tower in Dallas. The debt was originally due in September, but the maturity has continually been pushed out to May 8 and it could be pushed out further, to September 8. Management remains confident that it can complete the refinancing, but I’m watching this closely as Cityplace represents ~10% of NXDT’s NAV. 3) The company authorized a share repurchase agreement in October of $20MM over a two-year period. So far, the company has not bought back any stock. I believe this is because the company is retaining liquidity to support the Cityplace refinancing. NexPoint it remains a high-conviction idea. Original Write-Up. Buy under 17.00

Opera (OPRA) reported an excellent quarter on February 27. Revenue grew 33%, beating consensus expectations by 7%. EPS of $0.27 beat consensus expectations by $0.70. The company is expecting revenue growth of 15% and EBITDA growth of 12%. This seems very conservative, which is the company’s typical approach to guidance. The investment case remains on track. Original Write-Up. Buy under 8.00

P10 Holdings (PX) had no news this week. The company filed a form 4 statement on March 16 that seemed to indicate that an insider is selling. But it appears that the company repurchased those shares at an 8% discount to the market (privately negotiated transaction). What appears like a negative is actually a positive. P10 announced an excellent quarter on March 6. Fee-paying assets under management increased 23% y/y. Revenue increased 32% and adjusted EBITDA grew 29%. P10 continues to benefit from secular tailwinds in the private equity industry. Despite strong growth, P10 trades at just 12.9x EBITDA and just 13x cash earnings. This is too cheap a valuation. The investment case is on track. Original Write-up. Buy under 15.00

RediShred (RDCPF) had no news this week and will report year-end 2022 results in April. The company announced good quarterly results on November 27. Revenue grew 50% y/y to $14.7MM CAD (47% constant currency growth). EBITDA increased 27% to $3.6MM CAD. On an organic basis, EBITDA grew 13% y/y. Organic growth is being driven by increased demand for shredding by businesses. Higher fuel costs and driver costs hurt margins. However, the company plans to pass through price hikes which will help offset these headwinds. RediShred is also active on the acquisition front. The stock continues to look incredibly cheap at a 5.1x EV/EBITDA multiple and a 7.4x price to free cash flow multiple. I continue to see 100% upside over the next 12 months and significantly more upside looking out a few years. Original Write-up. Buy under 3.50

Transcontinental Realty Investors (TCI) filed Q4 and 2022 results last week. The results look great. As of December 2022, Transcontinental has $471MM of cash and note receivables on its balance sheet. Its current market cap is $362MM. The company does have some debt for which it has no recourse as it’s tied to additional real estate that Transcontinental owns. Long story short, this stock is very, very cheap. Unfortunately, there is no hard catalyst now and we don’t know what management is going to do with the stock, but we know that the stock is extremely cheap. Insiders are incentivized to buy out minority shareholders at a premium to the current stock price but at a discount to book value. Currently, the stock trades at price to book value multiple of just 0.4x. Original Write-up. Buy under 45.00

Truxton (TRUX) has no news this week. The stock has generally sold off in 2023 in sympathy with the fallout from Silicon Valley Bank. However, Truxton should experience no impact from the SVB disaster. It reported Q4 earnings on January 26. For the full year, diluted EPS increased 15% to $5.02. Credit quality and loan growth continue to look good. Most importantly, Truxton authorized a $5MM share repurchase, raised its dividend by 12%, and declared a $1 per share special dividend. Truxton continues to look attractive at 14x earnings. This isn’t the most exciting stock, but it’s a slow and steady winner. Original Write-up. Buy under 75.00

Unit Corp (UNTC) released both its 10-K and an investor presentation for 2022 on March 17. The company generated $130MM FCF in 2022, in-line with what I had expected. With a market cap of $390MM, UNTC is trading at 3.1x FCF. With net cash of $118MM, its enterprise value (EV) is just $277MM (EV/FCF 2.2x). The company sold its 50% interest in the midstream joint venture with SP Investor for $20MM, $12MM of which they will get at close, the other $8MM deferred over 12 months. UNTC reiterated its plan to monetize non-core drilling locations and continue to sell minor interests in outlying areas. Within its core fields, Unit expects to drill in 1 to 2 net wells per year, with development capex of ~$10-$20MM per year. UNTC has been weak recently. While oil and gas have sold off, UNTC is just too cheap (I think 100% undervalued). Further, downside is limited with a net cash balance sheet. Original Write-up. Buy under 65.00

William Penn (WMPN) had no news this week. It reported that its CEO bought 50,000 shares on the open market at a price of 10.68 on March 13. This is encouraging given the current banking crisis. William Penn is a micro-cap “thrift” bank that is extremely cheap. Most thrifts sell themselves three years after their thrift conversation (acquisitions are prohibited before then). This anniversary will be in 12 months (March 2024). At that point, I expect the company to sell itself for a 50% premium to its current price (based on typical thrift acquisition premiums). Finally, insiders are buying shares on the open market and the company is buying back its own shares aggressively. Downside is low given the stock is trading below liquidation value. Original Write-up . Buy under 12.50

Zedge, Inc. (ZDGE) had no news this week. It reported a disappointing quarter on March 15. Revenue grew 1% to $7MM while adjusted EBITDA declined 63% to $1.4MM. Fears of a recession and a pullback in advertising are negatively impacting Zedge’s business. As a result, the management team has put in place a plan to cut $2.5MM to $3.0MM in expenses which will enable Zedge to operate at a breakeven level. Fortunately, Zedge has $13MM of net cash on its balance sheet representing 50% of its market cap. As such, the company is well capitalized to ride out the downturn. Importantly, the company is using the current downturn to buy back stock. From November 1, 2022 to January 31, 2023, the company bought back 318,000 shares at a price of 2.15 per share. Zedge’s valuation looks attractive at 2.4x EBITDA. Original Write-up. Buy under 6.00

Price on
Cogstate Ltd (COGZF)1.74/13/221.03-39%Buy under 1.80
Copper Property Trust (CPPTL)12.938/11/22111%Buy under 14.00
Currency Exchange (CURN)14.15/11/2218.632%Buy under 16.00
Epsilon Energy (EPSN)58/11/215.316%Buy under 8.00
Esquire Financial Holdings (ESQ)34.1110/10/2137.811%Buy under 45.00
IDT Corporation (IDT)19.372/10/2134.5178%Buy under 45.00
Kistos PLC (KIST)4.797/13/222.9-39%Buy under 7.50
Liberated Syndication (LSYN)3.066/10/203.7523%Hold
M&F Bancorp (MFBP)19.2611/9/2223.4922%Buy under 21.00
Medexus Pharma (MEDXF)1.785/13/201.07-40%Buy under 3.50
Merrimack Pharma (MACK)11.991/11/2312.192%Buy under 12.50
NexPoint Diversified Real Estate Trust (NXDT)14.151/12/2210.41-22%Buy under 17.00
Opera Ltd. (OPRA)7.042/8/2310.4448%Buy under 8.00
P10 Holdings (PX)**2.984/28/209.6222%Buy under 15.00
RediShred (RDCPF)3.36/8/222.71-18%Buy under 3.50
Transcontinental Realty Investors (TCI)40.2210/13/2238.53-4%Buy under 45.00
Truxton Corp (TRUX)*72.2512/8/2166.75-4%Buy under 75.00
Unit Corp (UNTC)57.4412/14/2244.45-3%Buy under 65.00
William Penn Bancorp (WMPN)11.913/8/2310.910%Buy under 12.50
Zedge (ZDGE)5.733/9/221.95-66%Buy under 6.00

Buy means accumulate shares at or around the current price.
Hold means just that; hold what you have. Don’t buy, or sell, shares.
Sell means the original reasons for buying the stock no longer apply, and I recommend exiting the position.
Sell a Half means it’s time to take partial profits. Sell half (or whatever portion feels right to you) to lock in a gain and hold on to the rest until another ratings change is issued.

Disclosure: Rich Howe owns shares in KIST:GB, LSYN, MEDXF, PX, IDT, APVO, NXDT, COGZF, RDCPD, TCI, ZDGE, and MFBP. Rich will only buy shares after he has shared his recommendation with Cabot Micro-Cap Insider members.

Rich is a trained economist and Chartered Financial Analyst (CFA). He has researched and invested in stocks for more than 20 years and has become a recognized expert in micro-cap stock investing. He started his career at investment advisory firm Eaton Vance where he covered a wide range of sectors including software and internet, financials, and health care.