GeoWire Monthly, Vol. 3, Issue No. 6, July 2023 – 88% Cumulative Return Expected From 2 Peer Stock Pitches

In staying with the same theme as our June 2023 Geowire Monthly Newsletter, we are glad to present another installment of “Peer Stock Pitches”.

Before I launched GeoInvesting in 2007, you could say that I somewhat secluded myself to a cave, searching for stocks that fit my own mold, based on a research process I trusted. Luckily, GeoInvesting and the way the internet/social media has evolved led me down a path to be able to develop some great relationships with successful investors.

You learn quickly that amazing talent exists outside your world. In fact, one of the first multibaggers at GeoInvesting came due to a 20 minute conversation I had with a GeoInvesting Subscriber in 2009. We had written a bullish opinion on a stock, but he said that we needed to be looking at the warrants, and laid out his pitch to me. Well, we relayed this message on GeoInvesting and the warrants went from about 20 cents to over $6.00 in a few weeks.

So, today, part of my research process extends beyond what I know, to keeping an open mind to what others have to say. As a famous nursery rhyme goes:

“There was an old owl who lived in an oak, The more he saw, the less he spoke; The less he spoke, the more he heard; Why can’t we all be like that wise old bird?”

This task is still not easy since the internet is rife with numerous articles and robust content on microcap stock pitches, varying in quality and reliability. But, we’ll do our best to bring you ideas from around the web and social media.

By the way, we also sort through the stock picks that our premium subscribers publish on our platform (over 80 and counting) to try and find some timely selections.

Having accumulated over three decades of experience in researching and analyzing Tier 1 microcap companies, our team possesses the expertise required to thoroughly review microcap pitches from fellow investors. With this perspective, let us go over 2 pitches from the web – one from Seeking Alpha, Assertio Holdings, Inc. (NASDAQ:ASRT) and one from Twitter, Gravity Co., Ltd. (NASDAQ:GRVY).

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Title: Buy Spectrum Pharmaceuticals For Exposure To Assertio Holdings

• Company: Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI)
• Author: Clinically Sound Investor
• Article Date: July 24, 2023
• Price at time of Article: $1.03
• Current Stock Price: $1.04
• Percent Increase: 0.97%
  
• Author Price Target: $1.14 (assuming the company is bought by Assertio)
• Author’s Projected Percent Increase: 16.32%

What They Do:

Spectrum Pharmaceuticals Inc. is a biopharma company focused on oncology therapies. Among their products, they market Rolvedon, a drug to treat neutropenia – a lack of certain white blood cells caused by cancer, chemotherapy, or by other conditions.

Why We Chose SPPI

Spectrum Pharmaceuticals is banking on the potential market success of its flagship product ROLVEDON, which competes directly with established white blood cell producing medications like Amgen’s NEUPOGEN and Neulasta. On April 25, 2023, the company agreed to be acquired by Assertio Holdings, Inc. (NASDAQ:ASRT).

There could be an interesting set up due to potential contingent right payouts related to ROLVEDON’s achieving net sales milestones in 2024 and 2025.

Author’s Summary Points:

• Shareholders of Spectrum will also be granted contingent value rights in addition to receiving shares of Assertio.
• The rewards will be distributed upon reaching specified sales targets for Spectrum’s primary drug in 2024 and 2025.
• Rolvedon accomplished the initial and most challenging sales target during Q1, even before the J-Code’s implementation in Q2.

Overview Of Pitch From The Authors Point Of View:

Spectrum Pharmaceuticals is a small company that focuses on cancer treatments through its product, ROLVEDON, which can help adult cancer patients avoid infections. The company is agreed to be acquired by Assertio Holdings (ASRT) in a deal that gives SPPI shareholders an upfront payment of $1.14 per share, along with a 65% bonus compared to the stock’s closing price. They might also receive additional payments based on how well ROLVEDON sells in 2024 and 2025.

ROLVEDON is a type of injection used to treat cancer patients. It competes with similar products like NEUPOGEN and Neulasta made by Amgen. Studies have shown that ROLVEDON works better than Neulasta in reducing severe neutropenia and is equally safe. Because of this, ROLVEDON could take some of the market share from its competitors, leading to significant growth in revenue. This could be helped by the recent simplification of claim submissions and reimbursements by the Centers for Medicare & Medicaid Services.

The merger with Assertio is seen as a positive move for Spectrum, potentially providing them with a more-proven business model and increased chances of market success for ROLVEDON. Long-term investors may find Spectrum a better deal as long as ASRT is above 5.61x SPPI’s price, with Assertio currently considered a deep-value play. Overall, the acquisition and market potential of ROLVEDON make Spectrum Pharmaceuticals an interesting prospect for investors seeking exposure to the oncology therapeutics market.

ASRT also happens to be one of the stocks in our Contributor Returns Portfolio which was written about via a bullish article by Scott Weis from Semco Capital in early February 2022, back when the stock traded at $2.60. Since its addition to the portfolio, ASRT has delivered great results, attaining a current return of 108% and a peak return of 203%.

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Title: Gravity Co. A Mobile Gaming Company Estimated to Increase 160%

Gravity Co. Gravity Co., Ltd. (NASDAQ:GRVY) is a mobile game company trading at ~2.0x EBITDA with +70% of market cap in net cash by year-end and inflecting earnings.

Below is the summary thesis (link in the next tweet).

Any feedback / comments / pushback is appreciated! pic.twitter.com/0O9OTLvE9N

— Clark Square Capital (@ClarkSquareCap) July 9, 2023

• Company: Gravity Co., Ltd. (NASDAQ:GRVY)
• Author: Clark Square Capital
• Article/Post Date: July 9, 2023 (Tweet)
• Price at time of Article: $72.30
• Current Stock Price: $75.10
  Percentage Increase: 3.32%
• Author Price Target: $115.68
• Author’s Projected Percent Increase: 160%

What They Do:

Gravity Co. (GRVY) is a South Korean gaming company that develops and publishes online and mobile games, including the popular MMORPG (Massively Multiplayer Online Role-Playing Game) “Ragnarok Online.”

Why We Chose GRVY

Gravity Co. (GRVY) is an interesting stock after reporting strong 1st quarter results, due to the successful launch of its videogame Ragnarok Origin and because it has plans to expand globally. The company has a substantial net cash balance, while shares have a low valuation. Additionally, according to the author, the company’s growing cash reserves provide options for shareholder friendly moves. 

Overview of the Pitch  From The Authors Point Of View:

The investment thesis highlights several reasons why the author believed investing in GRVY is a compelling proposition:

• Gravity’s sales and profit growth accelerated in Q4 2022 with the launch of Ragnarok Origin in Taiwan/HK.  I expect that the momentum in top-line and EBIT will continue as the company releases Ragnarok Online in Southeast Asia and globally.
• GRVY’s valuation is extremely asymmetric. GRVY is currently trading at ~2.0x ‘24 EBITDA or a +35% FCF yield, but the downside is limited by the company’s net cash balance ($50+ net cash/share vs. $72 current price).
• The company’s growing cash pile provides for significant optionality through possible repurchases, dividends, or thoughtful M&A.
• The company’s game pipeline could provide valuable diversification of earnings and further upside if the company develops another hit game.

The author suggests a potential 160% upside from the current stock price, with a target price of at least $180 per share.

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GeoInvesting Progress and Stat Summarizations

In July, we processed 10 quarterly earnings reports. By comparison, only 5 of our covered companies published earnings in the prior month. The bulk of the second quarter microcap earnings season is about to heat up. 

As each quarter passes by, we get to see which companies are adapting to the new market environment. We are excited to start processing Q2 2023 earnings reports, using a new smart press release product I created. Stay tuned for more details on this here. 

2023 Quarterly Earnings Reports Processed, YTD

11 companies from our Model Portfolios reached new 52-week highs in July 2023

Top 10 Performers Across Coverage Universe, July 2023

Top 10 Research Contributor Returns, July 2023

Since February 2022, our research contributors have shared 7 stock pitches through video presentations and well-crafted written pieces, demonstrating an impressive average peak return of 59.16% and an average current return of 27.16%.

Research Contributor Stock Pitches, February 2022 to Date

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So far in 2023, apart from daily emails and weekly GeoWire Content, we have published a combined 33 pieces of Premium content across the following segments:

3 Research Reports & “Reasons For Tracking” (RFT) pieces:  Articles are in-depth stock analysis columns focusing on qualitative and quantitative aspects of stocks, while RFTs are shorter, concise research on stock ideas.  Learn more about our services.

8 PodClips – Audio clips consisting of quick “hot take” follow-ups to management interviews, brainstorms on a new stock idea and updates on current ideas. 

3 Contributor Articles –  Investors we invite to publish their analyses on microcap stocks as well as market forces and industry trends that impact the world of microcap investing.

6 Skull Session Fireside Chats – Live/archived video events with management to discuss a company’s entire business plan, growth initiatives and risk factors.

6 Skull Session Management Morning Briefings (MMBs) – Live/archived update video events with management to discuss key developments.

3 Skull Session Expert Insights – Recorded and live podcasts that feature conversations with industry experts.

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5 July 2023 GeoWire Weekly Issues – Premium Subscriber Insights and Pitches

Skull Session Clips – Meet Jeffrey Korn, New CEO Of CXDO (GeoWire Weekly No. 90)

Last week we had a busy Wednesday, first hosting a Skull Session with the management team of Crexendo, Inc. (NASDAQ:CXDO), and a little later in the day invited the CEO of Issuer Direct Corporation (NYSE:ISDR), Brian Balbirnie, to hop on a Twitter Space to talk about the State of the Microcap space.

Urgent Email On GeoInvesting Service – Please Read [GeoWire Weekly No. 91]

Welcome to The GeoWire and thank you for your support as a premium subscriber to GeoInvesting. As a premium subscriber, you receive full pro portal access to our Calls to Action, morning emails, Model Portfolios, In-depth microcap research and articles, premium video content including live Fireside chats and Monthly Forums, and all premium Weekly Wrap Up content.

Over the last several months, we have been in the process of making some serious changes at GeoInvesting.

Post July 2023 Forum Follow Up – Model Portfolio Review [GeoWire Weekly No. 92]

Fresh off Thursday’s Open Forum reviewing the past month’s activity and coverage at GeoInvesting, there are a few clips that we feel are important, being that they are related to one of our main topics covered in the July 9, 2023 Weekly Wrap Up. They encompass the need for an assessment of our model portfolios and holdings.

How Quant Investor Ryan Telford Achieved 40% CAGR In Microcaps [GeoWire Weekly 93]

On July 14, 2023, I had a marathon conversation with DIY quant investor Ryan Telford, during which we discussed quantitative investing strategies, insights into microcap and nanocap stocks, and delved deeper into other approaches to microcap investing. And by marathon, I mean it lasted over three hours. Quite frankly, we could’ve probably spoken for another two. But don’t worry, we’ve extracted a few clips from the conversation for this week that we found interesting, and hope you will as well. We’ll also be working a ton more to dissect the video.

The post GeoWire Monthly, Vol. 3, Issue No. 6, July 2023 – 88% Cumulative Return Expected From 2 Peer Stock Pitches appeared first on GeoInvesting.