Today, I’m recommending a company that has been on my watch list for several months. It looks too compelling to ignore.

Key points:

• No debt and 37% of its market cap in cash.
• Cheap valuation. Good dividend yield and share buyback program.
• High insider ownership.

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

Today, I’m recommending an aerospace company that is poised to double revenue over the next 3 years.

Key points:

· Earnings to triple over the next three years.

· Cheap valuation. Good dividend yield and share buyback program.

· High insider ownership.

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

Today, I’m recommending a biotech that is well capitalized and has an approved drug that is growing 100%.

Key points about the company:

• Over $300MM of cash on its balance sheet
• Key drug to hit $500MM in annual sales in 2023
• Obscure tax law points to an acquisition offer in November or December.

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

Today, I’m recommending a “buy when there’s blood in the streets” type of stock:

Key points:

• The company owns valuable real estate in Manhattan and Brooklyn.
• The underlying asset value implies 7x upside to the stock’s current price.
• Insiders have been buying aggressively over the past year.

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

Today, I’m recommending a failed biotech that is undergoing a strategic review.

Key points:
· Based on conservative assumptions, I see 30% to 92% upside within 12 months.
· Low downside risk given stock market cap is 51% of net cash.
· High insider / institutional ownership assures incentives are aligned.

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

Today, I’m recommending a micro-cap “thrift” (a type of bank) that is likely to get acquired within the next year or two.

Key points:
· Insiders are buying like crazy.
· The stock is buying back its own stock hand-over-fist.
· 70% of thrifts ultimately get acquired, and this thrift will be eligible to be acquired in 12 months.

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

Today, I’m recommending a tech company that is growing like crazy yet trades at a “value” price.

Key points:

· High insider ownership.
· Hidden assets that will eventually be monetized.
· Buying back stock (over 20% of shares already retired).

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

Today, I’m recommending a biotech company.

Key points:

· I expect a dividend within 15 months representing 126% of its market cap.
· Asymmetric upside potential beyond the upcoming dividend.
· High insider ownership and insider buying.

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

Today, I’m recommending an energy company that is gushing free cash flow and is likely to be sold in the near future.

Key points:

· 33% of market cap in cash (downside protection)
· High insider ownership
· Trading at a price to free cash flow multiple of 4.3x

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

Today, I’m recommending a financial that is taking advantage of a special opportunity that is only available to small community banks.

Key points:

• Due to a special program (Emergency Capital Investment Program), earnings are expected to grow by 250% over the next three years.
• Cheap valuation. Stock trades at current P/E multiple of 13.2x.
• Downside is limited given high cash levels on bank balance sheet.

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

Today, I’m recommending a real estate company that is 86% owned by insiders.
Key points:

• Stock is trading at 100% discount to fair value.•Company has 87% of its market cap in cash.•Majority shareholders will likely attempt to buy out minority shareholders at a premium shortly.

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

Today, I’m recommending a company that’s benefiting from “green” initiatives.
Key points:

• •27% revenue growth last year, and 17% expected growth for the next 5 years.•256% EPS growth last year.•A strong balance sheet with net cash.•High insider ownership.

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

Today August 23 will be my last day as the author of Cabot Micro-Cap Insider.

In terms of micro-cap news, we had four updates that I want to highlight (more details below):

1) 2seventy bio (TSVT) reported earnings and hosted an earnings call. I still believe in the stock’s long-term outlook.
2) Unit Corp (UNTC) announced a $2.50 dividend and strong earnings.
3) P10 (PX) announced a strong quarter.
4) Medexus (MEDXF) announced a strong quarter.

This was another quiet week in the micro-cap world as large-cap stocks continue to roar higher.

Many large-cap companies have reported, but we will have to wait a few weeks for our micro-cap companies to report Q2 earnings.

Here are some takeaways from earnings season.

This was another quiet week in the small-cap world, but large-cap companies are in the full swing of earnings.

Earnings season represents a great time to “check up” on our micro-cap recommendations to make sure each investment case is on track.

Here’s what’s on tap for earnings this week in the large-cap world.

This week was a relatively quiet one in terms of our micro-caps, but the market had a good week.

The reason?

The June CPI and PPI readings came in significantly below expectations.

Hope you had a wonderful 4^th of July!

The weather was less than ideal (raining all day in Wellesley, MA, where I live) but we made the most of it and had friends over for some hot dogs and hamburgers.

This has been the rainiest start to the summer in a long time. Fingers crossed better weather awaits us in the second half of July and August.

Last week, I wrote about how the U.S. markets look expensive both on an absolute basis and relative to international stocks.


Since then, the market has pulled back by about 3% following a couple of hawkish comments by Jay Powell.



Nonetheless, the S&P 500 chart looks relatively healthy and I’m not in a rush to “fight the tape.” Upward trending markets tend to continue to trend upwards.

“Don’t fight the tape” is a famous expression that I’ve learned to appreciate.

I don’t know who coined the expression, but it refers to the practice of not going against the prevailing trend or momentum of the market.

The phrase emphasizes the idea that it is generally unwise to take positions that oppose the direction of the overall market trend.

This week, I wanted to share a few charts before getting into my weekly update.

The first chart shows the amazing valuation discrepancy between small stocks and large-cap stocks.

Mega-cap stocks are trading at a PE ratio of 29.4x while small-cap stocks are trading at a 12.8x.

These days, AI, or artificial intelligence, is the buzzword du jour.

And it’s easy to understand why.

Play around with ChatGPT, and you will find it to be an incredibly helpful tool.

This week, I wanted to share a couple good charts to show why I continue to be bullish on energy stocks.

First, energy still represents a very small weight in the S&P 500.

Energy as a percentage of the S&P 500 reached as high as 16% in 2009. Today it’s under 5%.

These days everyone is talking about the U.S. Debt Ceiling and whether it will be raised again.

The U.S. debt ceiling currently stands at $31.4 trillion, and if it isn’t raised, the U.S. could default on its obligations.

U.S. Treasury Secretary Janet Yellen said in January the government could pay its bills through early June without increasing the debt limit.

Goldman Sachs estimates that the Treasury could announce an early June debt limit if tax receipts are down 35%. If tax receipts aren’t down quite as much, the deadline could push out into July.

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.