- We have often talked about how micro-cap stocks will suddenly explode higher, and why establishing a long-term position early gives investors the best chance of catching a big move higher.
- We had that exact experience with two of our most recent micro-cap investment ideas, CELH and GLUC, where both companies eventually turned into 100-baggers.
- It is critical that an investor use periods of consolidation, technical basing and general boredom in a micro-cap stock to build a sizeable position that can create huge profits.
- Micro-cap companies can suddenly catch fire, and when they do investors typically will not have the opportunity to accumulate shares at favorable prices.
- As the promo for many State lotteries says “You have to be in it to win it”. We have found that to be especially true when it comes to micro-cap investing.
Before we dive into the crux of this article, we would ask that you check out these charts, by clicking on this link.
Those two visuals say more than we ever could about the five summary statements above.
They say that timing is everything. That is especially true when it comes to investing.
It represented the fourth straight quarter of successive double-digit increases in top line revenues.
It reminded us of when Celsius Holdings, Inc (NASDAQ:CELH) reported successive double-digit figures in revenue growth for the first time in the history of the company.
Most of our articles these days appear on our Google blog page, and we had actually given some thought to giving up sharing our micro-cap investment ideas with our friends and family, by writing about them in a pubic forum which they could then quickly and easily access.
However, we soon discarded that idea, primarily because we enjoy micro-cap investing and writing about the companies that we discover so much, that we just could not see ourselves giving up something that we are so passionate about.
The problem with micro-cap ideas is that they are not suitable for 95% of the investing public; something that we wrote about just recently.
We never want to be thought of as providing investment advice, and we have hammered home that point on multiple occasions over the years. We have also have been very clear about the significant risks and dangers that micro-cap investing entail.
We play in the highly-speculative deep end of the equity market pool, which is not appropriate for the typical retail investor, so please be careful, and invest wisely, if you decide to jump into the water.
However, there is something about seeing one of your investment ideas go from $0.22 cents to over $100.00 that is exhilarating, and keeps us going with the difficult challenge of finding the next 100-bagger.
Just yesterday, we authored an article about how we use insider ownership as a key indicator when performing due diligence on a promising young micro-cap company.
We wrote an article back on May 13th of this year “pounding the table” on Conservative Broadcast Media & Journalism (OTCPK:CBMJ), and how much we like the company, based upon our belief that there would be an outcry from conservatives about some of the censorship that we saw taking place on social media and other news outlets in an attempt to silence the growing conservative crowd.
In fact, in our very first article on CBMJ, on January 11th of this year, we pointed out that CBMJ was likely to be a beneficiary resulting from the conservative media fallout that was taking place at that time.
This current piece is not designed to pontificate on all of the fundamental reasons why we have accumulated close to 10 million shares of CBMJ. You can dive into our research and thesis for yourself by reading our postings on the Seeking Alpha website and on our Google blog page.
This is about developments over the last 24-hours that have suddenly changed the investing landscape for CBMJ and other conservative media stocks.
In case you missed it, the shares of Digital World Acquisition Corporation (NASDAQ:DWAC) rose more than 1,200% over the past few days on news that the Donald Trump-related Special Purpose Acquisition Corporation, or SPAC as they are more commonly known on Wall Street, was going to merge with Trump Media & Technology Group (TMTG), creating a potential Trump-led media empire that would focus on right-wing, conservative principals that would center around a social media and TV platform that would be called “Truth Social”.
The platform would feature what is being called “non-woke entertainment programming”.
While the news came suddenly, and the shares of DWAC were met with a frenzy of buying, it also woke up the shares of CBMJ.
The average daily volume traded in the shares of CBMJ for the past 10 and 90 trading days have averaged 315,494 and 345,360 respectively.
Yesterday, CBMJ traded almost 1,900,300 shares, and today the number of shares changing hands climbed to over 38.5 million, with the shares closing up 64.59%, at $0.739, after hitting an intra-day high of $0.12 cents.
Source: Fidelity Active Trader Pro
This tremendous increase in the number of shares being exchanged among investors during today’s session can be attributed, in part, to day-traders and meme-stock followers jumping on an obvious momentum trade.
Generally, this type of buying in stocks that are in a related sector, or stocks that share some common characteristics, is often called “sympathy buying”, meaning that investors are sympathetic towards the mutual traits of all companies in that investment space.
Whether or not, this newly-found catalyst driving the near term share price of CBMJ, and other conservative media stocks, has a significant impact on their prices longer term remains a mystery.
Investors, these days, have a short attention span and the big moves over the past week can quickly fade with the fickleness of day-traders and meme stock momentum players.
As Roy McAvoy, the character played by Keven Costner in the movie Tin Cup, liked to say “ya ride her till she bucks ya, or you don’t ride at all.”
Our guess is that even if the sector begins to cool down somewhat after this week’s initial surge, once we get closer to the 2024 election, there will likely be a resurgence in the level of interest in these stocks, as potential Presidential candidates look for ways to communicate their message, without the fear of retribution and censorship that we saw from mainstream social media players like Facebook and Twitter.
Speaking of Facebook, we should note that a rather interesting article appeared in The New York Times Magazine, back in 2016 that talked about the Liberty Alliance, founded and developed by current CBMJ Board member, Brandon Vallorani.
According to the Times article, Vallorani had found a way “to create and develop something sustainable, and even potentially transformational, almost entirely within the ecosystem of Facebook”.
When Conservative Broadcast Media & Journalism CEO, Mark Scahftlein, acquired Vallorani’s company DeDenato Enterprises in September of 2020, not only was he adding a company that was producing approximately $2 million in revenue, to the CBMJ portfolio of media properties, he was also purchasing the knowledge and experience of Mr. Vallorani; one of the premier marketing minds in the country.
Mr. Vallorani, a Forbes Books published author, who is regarded as a pioneer in the digital media and data driven marketing industry has been distinguished six-times as an Inc. 5000 entrepreneur. He has built and sold two other similar media companies over the past 12 years and has a strong track record of increasing shareholder value.
The idea of having a creative genius like Vallorani, as part of the CBMJ management team, was a primary reason for our choosing to make a substantial investment in CBMJ.
We are looking for Mr. Vallorani to play a major role in the implementation of CBMJ’s strategic business plan, and have confidence in his capabilities to drive new and innovative ways to increase revenues and profits for the company.
One thing is certain, there is now a sudden awareness of CBMJ, and the DWAC tailwind for the stock price will likely cause many investors to take a closer look at the fundamentals of the company.
When they do, they might just decide to stay for reasons other than the idea of riding the current momentum of DWAC.
Either way, we view this as a potential game changer, at least in the short-run, for many of the shareholders in CBMJ, and expect to see further gains realized in the share price over time, as CEO Mark Schaftlein builds on what is already a very impressive micro-cap story.
Source: The Schaftlein Report
Disclosure: I/we have a beneficial long position in the shares of CBMJ either through stock ownership, options, or other derivatives.
Additional disclosure: Additional Disclosure: Disclaimer: We are not responsible for updating this article, or our opinion on any of the stock(s) that are mentioned in our articles. We are not in the business of giving investment advice and ask that readers refrain from asking us for it. Please do your own due diligence before investing. We are not responsible for any actions that you take based on the opinions that we express on Seeking Alpha.
Please remember that this article is a reflection of our current opinion on CBMJ. It is based on information that is publicly available at the time we wrote the article. Additional public information may be available but was not brought to our attention at the time we authored the article. We provide sources and links to factual information that we include in our articles but take no responsibility for the accuracy of their content. An investor should consider that new information may become available regarding the company’s business activities, financial condition or corporate governance. It is the responsibility of each investor to make sure that they stay abreast of any new developments which may arise, that could have an impact (negative or positive) on their investment.
CBMJ may need to raise additional capital in the future, to continue with its strategic business plan and history of acquiring other companies. There can be no assurance that they will be successful in obtaining additional financing, on favorable terms, in the future. The company’s financials currently contain a going concern acknowledgement. Investors should take this into consideration when deciding to invest in the equity securities of CBMJ. There always remains the possibility that an investor in CBMJ or any micro-cap company could lose 100% of their investment.
Altitrade Partners is not an investment advisory service, and is not a registered investment advisor or broker/dealer. Investors should base any buy and sell decisions on their own due diligence and preferably with the advice of their own financial, tax and investment advisors.
The views and opinions expressed in this report are purely those of Altitrade Partners. No views or opinions should be misconstrued as advice as to whether or not to buy or sell any securities. Altitrade Partners does not offer investment advice, or investment services, and is not compensated to provide opinions, write research reports, or to comment on news related to any publicly traded company.
Each investor is responsible for making his or her own investment decisions, with the assistance of a licensed financial advisor, investment advisor or tax professional to determine whether or not an investment is suitable based on their personal financial goals, circumstances and risk-profile. Readers must understand and acknowledge that there is a very high degree of risk involved in buying and selling securities, especially micro-cap stocks, and any investment decision should be based on a thorough analysis of a company, its business, its financial condition and the securities in its capital structure. No investment decision should not be based solely on what is read in a research report, viewed on a web site, or seen on the Internet. The Principals of Altitrade Partners may hold positions in the equity securities of companies or industries discussed here; including, but not limited to common stock, preferred stock, convertible debt, as well as listed put and call options. Any such positions are disclosed to readers, so that they may be aware of any potential conflicts of interest as a result of the author’s position (long or short) in a security which they are writing about. Understand that such disclosure is made at the time that the opinion is posted, and is subject to change. Such changes may include increasing or decreasing the number of shares held, increasing or decreasing the number of options which may be exercised into common stock, along with hedging strategies designed around taking an offsetting position in the same security, or convertible securities, to manage risk.
The information contained in this article may include or incorporate by reference “forward looking statements” including certain information with respect to business results, plans and strategies of publicly-traded companies. For this purpose, any statements incorporated by reference that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting or forgoing the words “should”, “could”, “may” “believe”, “anticipate”, “plan”, “expect”, “project” and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties, and assumptions about each company, economic and market factors in industries in which the companies do business, among other factors. These statements are in no way guarantees of future performance, and actual events, along with results, may differ materially from those expressed or forecasted by the companies due to many factors.
The information contained herein contains forward-looking information within the meaning of Section 27A of the Securities Act of 1993 and Section 21E of the Securities Exchange Act of 1934 including statements regarding expected continual growth of the company and the value of its securities. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 it is hereby noted that statements contained herein that look forward in time which include everything other than historical information, involve risk and uncertainties that may affect the company’s actual results of operation. Factors that could cause actual results to differ include the size and growth of the market for the company’s products, the company’s ability to fund its capital requirements in the near term and in the long term, pricing pressures, unforeseen and/or unexpected circumstances in happenings, pricing pressures, etc. Investing in securities is speculative and carries risk.
Micro-cap stocks carry additional risks beyond those of higher classes of securities including, but not limited to trading outside of a listed exchange, potential liquidity issues, dealing with penny-stock rules, lack of margin eligibility, a possible absence of transparency regarding BBBO quotes, a limited number of Market Makers willing to provide depth to the order book, potential issues regarding financing activities, inadequate capital to execute on the company’s business plan, going concern caveats, and the potential inability to compete with larger companies due to limited financial and personnel resources. Please invest responsibly. We encourage individuals to only invest what they can afford to lose, up to a maximum of 100% of their investment.