Dear Reader,
I have some quick nanocap blurbs to pitch as a result of scanning Dan Schum (nonamestocks.com) ‘s portfolio as well as taking a peek at most nanocap OFS/consumer stocks on seekingalpha. Most of these are extremely illiquid. You should be very careful if you decide to trade any of these. I own several of them you should assume that I could sell them for any reason at all, including the price going up. Most of these I’ve hardly done any work on, so please do message if you have something to share. (I left out some names that already have visibility on Twitter.)
$KLNG — I own a substantial amount of this. It’s an offshore service provider that has somehow “hung in there” the last decade whilst even reducing its share count and maintaining a net cash position. New management came in recently. They have a new product and have booked new contracts. It’s possible that their last quarter was an inflection but it’s hard to tell how lumpy things are moving forward.
WYY 0.00%↑ — I don’t own any of this but I’m thinking about taking a punt. Some sort of government contractor. Yuck. I can never tell what the heck companies like this actually do. They’ve had minimal dilution and have net cash + a promising financial profile with top line growth on first glance. Timothy Stabosz on seekingalpha (who’s made a lot of good calls in microcaps) has been highly critical of management, to say the least. But is it puntable? With its current financial profile and the stonk potentially breaking out, I think it probably is…
REED 0.00%↑— I own a very small amount of this but I might buy more — some of you might be familiar with their products, namely the root beer / ginger beer. The business has been a total disaster. I’m interested because it screens so horribly but management has a plausible enough story about cost cuts + some orders getting delayed last quarter. Aside from turnaround potential I think it’s puntable on the buyout optionality with $40mm+ in revenue. Plus I like the chart with a plausible capitulation.
BOF 0.00%↑ — Again I own a very small amount of this producer of dehydrated fruit and vegetable snacks. This dog is hardly traded at all. I like the chart with an attempt to breakout after an announcement about a national retailer followed by a selloff on disillusionment. They claim that the retailer has committed to $8mm annually and that the company will enter 1400 stores in September 2024. Is it bullshit? Maybe. Is it puntable? Yeah, I think so… That said, 0 gross profit is pretty concerning.
$MACE — I’ve actually followed this company for a while and have briefly owned it before. The business has been a total flaming disaster. Don’t own any at the moment but I reckon it’s puntable on potential election chaos and takeout potential, though I think the brand value has nearly faded to 0.
JVA 0.00%↑ — What’s going on here? I don’t own any but I like the chart and revenue was up 24% y/y last quarter. It has very little net debt and could hit $80mm in revenue this year. Is that puntable? I dunno — maybe…
FAMI 0.00%↑ — Some sort of Chinese scamco that sells mushrooms. I own a little bit. Insiders cashed themselves out with a secondary sale then executed an 8:1 split. They claim to be profitable with growing revenue and net cash. Is it all a fake scam? Yeah, probably. But it’s cheap enough for a punt, in my opinion.
ZVIA 0.00%↑ — Not quite a nano and I don’t own any currently but I think it could be interesting. Soft drinks that use stevia as a sweetener. Looks like an epic insider grift as they’ve leeched over $100mm of stock-based compensation. Revenue started flatlining last year but they do have over $70mm gross profit. Possibly puntable on takeout optionality.
$TOFB — This is one of the original vegan brands that got substantial distribution in grocery stores. I own a little bit that I overpaid for as a tracking position as this thing barely trades at all. Revenue has been in decline but they’ve hung in there without diluting. This is a family-run business and it looks like they need to give up and sell, but it’s not clear if anyone is interested in buying just $10mm in revenue. Management “assured” shareholders in the latest quarterly press release that they are “working hard” to return to profitability in 2024. Unfortunately he could not afford the end quote in his press release — but I digress.
$KLYG — I find this one particularly interesting and I do own some. They provide plastic surgery materials that can fuse with the bone. I think they can 3d print them to custom specifications. They claim a competitor just went out of business and received some new FDA approval recently. With plastic surgery being a megatrend (in my opinion), this is the definition of puntable but unfortunately this thing’s market cap is only $2mm.
$MFCO — I’m not going to pretend to know what’s going on here and I don’t own any, but based off the chart and net cash position it might be puntable.
$ELST — see above
VISL 0.00%↑ — Again not going to claim to know what’s going on here and don’t own any. Burning through cash but appears to have at least a year’s runway on balance sheet. Chart shows potential disillusionment after a capitulation. Might be worth trying to understand what’s going on here if you’re bored.
CPSH 0.00%↑ — They sell some sort of advanced defense materials. Management has consistently overpromised and underdelivered but they’ve kept a strong balance sheet. Meh. I think it’s puntable here or getting close. I don’t own any currently.
$SPRS — Small electrical components supplier. Management has egregious comp if I recall correctly (I’ve followed this for a while). Has reduced share count long-term. I don’t own any and it’s extremely thinly-traded; I think it could be worth watching if there’s a vacuum from a seller.
TCS 0.00%↑ — I don’t own any but I think people like shopping there / it has a good brand and might just be suffering from COVID pulling-forward demand. I think it’s puntable.
$AIFS — Don’t own any but looks interesting on first glance with net cash position, profitability and minimal dilution. Apparently they sell some sort of data upload service to libraries.
$DEWY — Don’t own any and not gonna pretend to know what’s going on, but they have a history of profitability, no dilution, and recently unlocked some cash with a real estate sale. Looks like it essentially doesn’t trade.
JCTCF 0.00%↑ — Don’t own any of this but I feel that I should with a history of buybacks, net cash, and profitability. Business may just be going through a tough time. Deep value investor Chase Rickert on twitter has been bullish.
BOSC 0.00%↑ — Don’t own any and not gonna pretend to know what’s going on, but they have revenue growth and profitability. Huge diluter so I dunno. Could be worth looking into.
$MRCR — Don’t own any and not gonna pretend to know what’s going on. But they’re making money and they’ve reduced the share count (marginally) over time. Stonk chart breaking out. Could be worth looking into.
Past Pitch Updates
MCS 0.00%↑ : I did in fact end up selling this soon after my write-up. With Inside Out 2 posting the second largest animated domestic box office opening of all time and a plausible capitulation on the stock chart, I picked up a smaller position recently.
NGS 0.00%↑ : I sold half my position around $22 and sold November covered calls from $20 to $25 on the rest. I suspect that the former CEO, Stephen Taylor, whom I was a big fan of, agreed to leave because he was too friendly with customers and didn’t want to play “the bad guy” with price hikes. The fundamentals have only grown more bullish with customer negotiations now extending to early 2026 delivery dates and the bank consortium expanding their facility to $300mm. I think the stock has been impacted by the broad selloff in the OFS sector. I’m considering adding here and I think $16 would be an incredible price to buy at.
$YAMCY : I think there’s been a sigh of relief in the market that the worst may be over here as indicated by management guidance plus general optimism about China. They also executed well on substantial buybacks.
Inflation / Fed Policy
I have just one hot take here: with the Fed’s entire framework/mandate based on the Phillips Curve, I’m pretty skeptical that they will cut rates unless we see services inflation dip (convincingly) below 5% y/y: