I have a ton of stocks I am sort of on the fence about. Look interesting but there is hair on all of these. Thought some would deserve their own thread if all those bitcoin fanatics can make them all over the place.

Note that I do not recommend investing in any of these, and that liquidity in some can be poor. So be careful. Do your own work and all that.

Omnicomm
Software company for the pharma industry, they use licensing model, not SaaS. Trading at around 10x 2017 earnings, but there is a huge amount of operating leverage. So if revenue doubles, PE multiple would be closer to 2x. The main issue is the related party debt and poor visibility of revenue.

They do have an industry leading product though:
https://globenewswire.com/news-relea...-Surveyed.html
On top of that, a majority of the industry apparently still uses pen and paper (or other very primitive methods).
So there is a lot of low hanging fruit, and once they get a new customer, revenue tends to be very sticky.

Watch out with liquidity on this one.

Bluelinx
Distributor for housebuilders. They got a lot of real estate, about $11 per share (assuming similar valuations of recently sold real estate) that is on their balance sheet at cost.

Between 2004 and 2006 this business generated $70-100m in operating income per year (vs $80m market cap now). This probably won't happen again though since the housing market is quite depressed, but if things pick up a bit I can see $40-60m of EBIT, since new management has restructured their business quite a bit in the past few years.

Some recent buying by CEO and CFO as well after really good Q3 performance.

If they perform like their peers, they should be able to do more than 3% EBITDA margins, which would be $60m on revenue of $2bn. On a market cap of $80m. Especially if housing picks up, this could be a big winner. But large debt is still an overhang of course.

Rentech
There are a bunch of write ups on this one and it is a bit of a headache to get your head around this one. The overhang from the industrial wood pellet liability is gone, and you can subtract about $13m of debt from the balance sheet. This happened early november, and the market does not seeem to have reacted to this yet. This basically removes $15-30m of potential liabilities.

And their NEWP segment can potentially do $10m in ebitda with only $1-2m in capex if we get a cold winter with higher oil prices. They are looking to sell the wood chip business. And if UAN units recover to $6-9, this could be a big winner.

Tang NAV is $20m, if UAN units recover it could be a lot more. Market cap of only $2.5m.

And it is a nanocap on the pink sheets. Obviously a ton of risk here.

Townsquare media
Radio with events business, and events disappointed because of Vegas shooting. But Radio business seems stable. Trading at 4-5x FCF. CEO buying a significant amount of shares at around $7 last year. It seems they sold off way too much, especially since part of EBIT decline was rising growth expenses. They have quite a bit of debt though, and NOLS will run out in a couple years.

Channel Advisors
Software company that serves ecommerce industry. Trading at 1.8x revenue and growing single digits. The bad is that they spend 50% on marketing while getting same growth as Commercehub who spend 10% on marketing. Commercehub trades at 8x revenue.

But if they can curb marketing spend without sacrificing growth, it could be very cheap. CFO has purchased $400k worth of shares since august last year. CEO $200k, so they obviously see something here that the market is missing. And it trades on a very cheap revenue multiple compared to other software comps.

Janel corp
I asked Boredsocial about this one since 50% of their income comes from logistics business. Their strategy is similar as XPO, to do a roll up and buy private companies in logistics business for cheap. And then knock some costs out due to their larger size (so they cannot turn around and take their customers with them once the non compete ends). He was sceptical though. I am still on the fence on this one .

Although a majority seems to be services to importers and exporters and freight brokerage is only a small part of it. If warrants are exercised at $3, they will have about $15m of liabilities and trading at about 4.5x FCF (due to NOLS and intangible tax shields). But 1/3 of that will be preferred stock that cannot be called.

If they can buy private companies at 4-6x EBIT, this could be very cheap. Insiders are all buying significant amounts. And management look at least like they are above average when it comes to capital allocation. The CEO started writing a annual letter to shareholders this year:
https://www.sec.gov/Archives/edgar/d...278_ex99-1.htm

But if people who sell them their customer lists turn around after non compete ends and take the customers with them, it could be a zero as well.

What caught my eye is that van Kesteren, who was CFO for a multibillion $ swiss logistics company for 25 years purchased shares as well earlier this year. So he must see some potential here.

Fully diluted market cap of $9m, and can do about $2m in FCF.

RMG networks

I owned some and then sold it, but now it looks interesting again. The CEO seems to be filled with too much hot air though. But trading at less than 1x recurring software revenues now. There are probably a lot of growth expenses that can be cut with a more disciplined CEO. If he can actually deliver and add $3-4m in recurring revenue, this could be very cheap. It is a bit concerning that management is not buying though.

I own OMCM, TSQ, JANL and BXC. Thinking about buying some Rentech.

Feedback especially welcome if you know more about the industry . Especially with Channel advisors.

JANL looks pretty cool to me. I like their consistent revenue growth yoy over the past few years. Thanks.

Subbed this thread. Will be closely watching these stocks.

Need to read up more on the software stocks, they seem very interesting but I don't understand it that well.

I added a nice sized position in bluelinx. Seems like a levered way to playing the housing market with the margin of safety in the undervalued real estate that management has been selling and setting up lease backs. Last quarter numbers improved quite a bit and seems they improved the business quite a bit as well.

I took a half % stake in Rentech again.

Seems that Fulghum can be sold for $30-50m easily. In its current state it is a $8-9m FCF business. The big issue is that some customers have been taking production in house in the past year. And NEWP is an $7-8m FCF business in a good year as well. Wood chips are cheaper than heating oil at >$50 oil. But currently this is more like $2-3m a year in FCF due to warm weather and low oil.

The big issue with this company has been management. They got plants in Canada and a headquarters in Beverly Hills. Plus the CEO seems a bull**** artist, with a lot of stammering nonsense answers in conference calls. Overhead of more than $10m seems way too high. If you consider that Janel corp can do well with just $1m of over overhead.

Now that they are liquidating that should be less of an issue. They need to get more than $40-50m for NEWP and Fulghum combined now to make this a big winner.

Extremely risky though, given that they will probably run out of cash early 2018.

Great idea for a thread, thanks for sharing. What else do you currently own dfgg, if you don't mind my asking?

Rather not disclose it all since some stuff I own is pretty illiquid (ask being like 2x bid) and I am looking to buy more.

Intouch insight, cheap software company trading at about 1x revenue after share issue.

As far as HK companies, I own Baoye, Goldpac, Hopefluent and Zhong ao (detailed write ups exist on all 4 on various sites).

Spanish broadcasting is another one that can fit in this thread that I own. I actually wrote that up in detail on seeking alpha.

Tokyo Kisen and Kawaden are the Japanese net nets that I still own.

Sherritt international, basically a play on electric cars, as they got a low cost nickel mine, that produces significant amounts of cobalt as well.

And Hemacare. Also written up on various places I think. Interesting growth stock with a lot of operating leverage. Providing raw material for pharmaceutical firms to do research for immunotherapy treatments.

DGLY

Either they succeed in their litigation against AAXN or they go busto. I supposed they could get bought out by a patent troll or someone who can handicap patent litigation, but I find that to be rather unlikely since they could always find some firm to litigate on contingency.

If they succeed, I estimate damages to be in the 90-100m range. Even if they settle for half of that, that's still at least a triple bagger from the present valuation. My estimation is that they have a greater than 33% chance of succeeding on the merits.

Good thread idea. I do a lot of intraday trading on technicals and news makes up most of my speculation, investment wise i'm usually doing over the top DD and holding 6+ months.

Not much going on for me at the moment. I'm long TTWO and short EA speculation wise. I'm considering a significant bet on ten year treasury futures option calls, but I suppose rates can remain deflated indefinitely. Biggest retail short% on the 10 yr yield in history.

I love sherritt for the nickel cobalt ev play. One of my biggest bond positions. considering going long stock too.

You might like Lynas corp as well. Produces rare earths for powerful permanent magnets used in electric motors. At current NdPr prices it currently trades at less than 10x 2018 earnings. They got the only mine outside China, and it seems pretty difficult to extract this metal in a environmentally friendly way. So unlikely a lot of competition comes online soon (and China is cracking down hard on rare earth mining as it wrecks the environment).

So you think there's > 50% +EV here? How long until resolution do you think? I noticed the trial just went forward. I know you have a lot of experience with patent law, so curious how long the defendant could stretch this out for if they wanted to.

I think the end game is Axxon just buys them. DGLY doesn't have the bullets for a long term fight and have already announced they've hired Roth Capital to help them "explore strategic alternatives." Meaning, they'll sell themselves if the price is right.

Meanwhile, for Axxon, this is a potential existential threat to their business and they need to do something about it. Obvious solution is to buy DGLY.

Only thing is, I think there is a lot of bad blood between DGLY and Axxon so it is entirely possible that DGLY management will put their own interests ahead of shareholders and sell themselves at a low ball price to some private equity firm that allows them to continue to operate as a going concern while they pursue the litigation against Axxon, because the litigation could be very valuable and DGLY is selling for really cheap.

I think maybe 60ish% chance of busto, 30ish% chance of triple bagger plus, 10% get bought or some odd settlement (maybe double baggerish for settle, no idea for getting bought). Not the greatest play in the world, but certainly +EV at this point.

With no more IPRs to block them, typically such trials last 18-24 months, though they can be longer or shorter depending on the underlying fact pattern. There aren't really any more stalling plays that defendant can do at this point; the stay based on the IPRs was the only real shot in causing a hangup in the process.

I saw that as well, but IIRC that was before the stay was lifted due to the IPRs getting tossed out. If the IPRs went through or if the stay was maintained, then they would certainly be in trouble.

Unless they truly cannot survive for two years at their current state, there is no reason to sell themselves out at this point.

"I have a ton of stocks I am sort of on the fence about"

this, in my opinion is a big flaw. if you want to take a flyer on 2-5 stocks that you know inside and out great. expanding that list to 10 or 20 is usually adding a bunch of **** that havent been thought through, and diversification is better served with etfs. there is really no reason to think of diversification beyond an etf level. when you pick a specific stock....you know it inside and out. otherwise just find an etf

They’re hemmoraging cash and the reports they file with the SEC say that there is “substantial doubt about their ability to continue as a going concern.” That is a very important phrase in the accounting world, it means absent some exogenous event like an outside capital raise they are very likely to go bankrupt in less than a year. Plus, even if they were more likely than not to prevail at trial against Axxon, there’s no guarantee they’d be successful. Rational thing for them to do is sell imo, rational thing for Axxon to do is buy (gets rid of the lawsuit and they gain DGLY’s patent portfolio, which further reinforces their dominant, market leading position).

As far as potential damages though, suppose this does go to trial and DGLY wins. Wouldn’t Axxon (in addition to paying damages) also need to pay DGLY for licensing rights going forward?

Good point.

That is also correct, unless Axxon takes active steps to stop infringing on their patents. That would normally take a redesign of their products, so paying the royalties is cheaper in the short term until they release a new product. The royalties themselves will probably not be all that extensive (maybe 1-5% of Axxon's revenue involving the infringing products, unless it is a substantial component of the product).

There is also a small but non-zero chance that they succeed in proving willful infringement, which results in triple damages and would be triple the amount I estimated. I am not expecting that, but it would be hilarious if they succeeded in proving willfulness.

I find that this approach does not really work for me. Usually it is pretty hard to know a stock inside out, and it is easy to mislead yourself. I just look for statistically cheap stocks now and spread out more.

What kind of price did you get for the bonds? Questrade quotes ~ 87 for the various ones out there.

You EV is 20-40% better than estimated if you're on a broker where you can lend it out. DGLY has a near saturated short percentage. On Interactive Brokers, you get paid 36%/year interest to lend it out, which is paid daily. If you're considering a long play and have a non-suckful broker, you have to figure that in to the price. I'd say the short % is unlikely to go down. And the short squeeze if good news comes could be powerful, you have to figure that into the EV as well even if they fail. For example, if buyout talks start when the litigation is going well, the shorts are going to get hammered.

I don't have an opinion on the likelihood of the litigation succeeding - morish is way more knowledgable than me on patent law - just adding some EV information.

https://seekingalpha.com/news/331446...ome-sales-soar

Before these numbers housing starts are 30% below long term average. And according to latest Bluelinx presentation, NAV is actually $18 per share. And more insider buys as well. I added a bit to my position.

Another interesting oil play is Bri-chem. Just refinanced debt. Did $7m in free cash flow before oil crashed. Market cap is now $14m. If oil production really needs to grow in North America, these guys will profit. Since you need their product if you want to have oil rigs out there.

Sherritt international is an interesting play for a small Canadian stock. I would definitely also like to hear some opinions on another Canadian play. A social media App with some interesting prospects. Also some dilution coming up for some IP of value that I feel is being overpaid for, stock is PKSLF. Company is PEEKS.

Got some more canadian resource stocks I am now invested in.

Gear energy
Cona Resources (30% FCF yield at current prices)
Perpetual energy
Gran Colombia gold corp

@experienced speculators:

1) How do you "discover" stocks. I saw one comment about looking at statistically cheap stocks. Other ways? Is boots on the ground overvalued or even outdated in the internet age?

2) Where does your edge come from specifically, especially since you have to beat industry insiders who despite all bias should start at a big advantage, especially in smaller industries.

What exactly is it that you do better than the rest. What convinces you to be +EV vs the million of people who think they are smart, but really aren't smart enough.

In poker i could show you stats, leaks of my opponents. Or i can observe how he has character flaws (impatient, tilt etc). What's the equivalent for a speculator?

To me it seems absurd to speculate in a Japanese Telco (or anything random) without knowing exactly "what do i know that the majority of traders don't".

3) How do you beat industry insiders, likely trading on insider information?

In my experience most industry insiders who have the knowledge to obtain an edge wouldn't know an edge if it hit them right in the face due to lack of valuation skills and lack of risk taking skills/tolerance/mindset.

I bought at 78 in September for the 2021.

today true bond desk spreads for the 2021 is 85-86 and much lower for the 2023. Online discount brokers like questrade tend to have ****ty prices. Regulators really need to move bonds to the exchanges imo, this bond desk system is so archaic.