An Information Arbitrage Party [GeoWire Weekly No. 149]

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TSSI Q2 Earnings Did Not Disappoint

A lot happened at GeoInvesting this past week, but arguably the big news of the week was the 55.7% move Tss, Inc. (OTCQB:TSSI) made in reaction to the company’s second quarter 2024 results published on August 14. The delayed price reaction in the morning did not capture the essence of the bullish developments transpiring at the company. Those developments were communicated in the related earnings conference call that began at 9 AM Eastern time. It’s going to go down as a classic case study in information arbitrage. 

We did our best to bring you our analysis as soon as possible that morning, which you can see here.

You can also reference Mark Gomes’ usual Friday YouTube live session, where he talked in detail about the opportunity and what’s going on at the company for the first 45 minutes.

The other unsung hero of the week was Power Solutions International, (OOTC:PSIX), which increased over 40% after we added the stock to our AI screen and Buy On Pullback (BOP) Model Portfolio #12. But more on that later.

Netflix Case Study by Thomas Birnie

I recently reached out to one of our long-standing GeoInvesting subscribers and research contributors, Thomas Birnie, to help prepare some case studies on multi-bagger stocks. The aim is to understand the factors that lead to such successes, helping us identify these opportunities during our research. For those unfamiliar with Thomas Birnie, you can learn more about him in the following clip:

Here is Thomas’s video case study on Netflix, Inc. (NASDAQ:NFLX):

In October 2020, Thomas Birnie also introduced us to a valuable information arbitrage opportunity with Smart Employee Benefits Inc. (SEBFF, SEB.V), an operator of an employee benefit management platform. Although the company had a solid business plan and product offering, it struggled to grow due to its capital structure, which burdened the balance sheet and made raising capital without significant shareholder dilution difficult.

Despite these challenges, at its acquisition price (see entire chronology of coverage here), SEBFF eventually landed at a 76.47% gain in our Select Coverage Model Portfolio and a 124% gain in the Contributor Index for Thomas, but not before having posted peak returns of 194.1% and 250%, respectively.

Our Contributor Index tracks the performance of stock pitches by our subscribers and research contributors.

The key driver behind this multi-bagger success was the information arbitrage discovered during a conference call where the CEO hinted at the indications of interest that would result in the above-referenced acquisition. We’ve never seen anything like that in our investing journey. It truly was crazy.

NEW InfoArb Find…

This is a fitting lead into the information arbitrage we encountered this week.  

Get Access to this idea.

Press Releases as a Platform (PRaaP)

This brings to light the importance of the Press Release as a Platform (PRaaP) tool I have been talking about lately. It’s through the use of this tool that I discovered Power Solutions International, (OOTC:PSIX) strong 2024 second-quarter results and its data center angle – and much quicker than I would have had I not had use of the platform.

As some of you might recall from the PRaaP product we shared on Monday, when I began investing over 30 years ago, screening tools were not very reliable due to the poor quality of data, especially with respect to the microcap space. By the way, even though tools have gotten better, this problem still exists today. Consequently, I avoided relying on screens too heavily, as they often omitted potential multibagger setups.

Additionally, screens can lack qualitative insights into a particular business. 

These are the reasons why I became obsessed with consuming press releases for many years. Even today, reading public company press releases is a vital part of my daily research routine. Unfortunately, without filtering capabilities, this process can take hours.

To give some perspective, before this platform, it would take me about six to seven hours to go through a press release session. Now, I can filter by market cap, price, outstanding shares, and various categories. Previously, I would have had to open each press release and determine if the company was a micro-cap or small-cap—since I wanted to avoid big caps—and filter out those with high outstanding share counts. I even hired an outsourcing team at one point, but that proved too costly. 

Sure, you may be able to find tools that help navigate that process better, but they can be very expensive, like thousands of dollars per year.

With this new press release platform, I can now swiftly conduct a press release earnings research session. 

After 30 years of turning over rocks in this industry, I can confidently say that doing the grunt work pays off. Not everything in investing can be asset-light, but this product helps make the grunt work a lot easier and reduces the effort needed to find great ideas faster. 

4th Annual CEO Networking Event Hosted by Semco Capital

I’ll conclude this weekly discussion with some thoughts on the Chicago conference I attended last week, organized by one of our premium subscribers and research contributors at GeoInvesting, Scott Weiss (@scmre111) of Semco Capital. This was the fourth conference Scott has organized in Chicago. What I appreciated most about the conference was its intimate setting and attention to quality.

Only about 20 to 30 serious investors attended, along with 6 companies, allowing us to focus deeply on understanding a few handpicked companies that Scott believes have strong potential. While Scott and I may not always agree on stock picks, this diversity of thought strengthens our relationship.

Being at the conference also gave me the opportunity to be the first to conduct a fireside chat interview with the new CEO of Tss, Inc. (OTCQB:TSSI) in front of the dinner crowd.

Before the commencement of the conference, I also interviewed three CEOs on camera—Lakeland Industries, Inc. (NASDAQ:LAKE), Creative Realities, Inc. (NASDAQ:CREX), and Bk Technologies Corporation (NYSE:BKTI). We will release these interviews soon.

However, I’ll give my brief thoughts on BKTI:  

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