Latest Thoughts: 1/24/18

Before I jump in, if you haven’t read my first post, please do. I want the changes I’ve made to be very clear to everyone (content, delivery, etc). As it pertains to content, you’ve already seen some changes. That will continue (if not tighten) going forward. My goal is to focus on pure research. In doing so, I wish to eliminate as much opinion and perception of bias/promotionalism as possible. This is the new normal.

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Long-time readers should note some significant changes in how I communicate in the public domain. The sole purpose of this forum is now to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses. Accordingly, this document should not be construed as an endorsement of the companies or securities discussed herein. The disclosure below is critical to understanding the content of this document. Further, I frequently trade my positions and may buy, sell, or short the securities mentioned herein at any time, regardless of the facts or perceived implications of this article.

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Commentary. The stocks on my Interest List have done very well to start the year… just not the ones I’ve most-recently discussed. That tells me two things: 1) with the stocks I was most-actively writing about on Seeking Alpha, perhaps investors were too reliant on my writing and 2) with the stocks I haven’t been discussing, a different set of investors have been doing their homework and liking what they see.

Of course, there’s overlap between these two investor types. A good opportunity is a good opportunity, no matter who’s interested in it (or why).

The difference is that I never wanted a dependent audience. The associated pressure and legal liability exceeds anything I ever experienced as a Wall Street consultant (and that’s saying something).

My goal has always been to 1) share research, as a give-back for the blessing my life has been and 2) attract like-minded investors to help determine if my ideas are truly good ones. For proof, just look at the first article I ever wrote on Seeking Alpha (yes, most of my articles are still there if you know where to look). The tone of that 2009 article was no different than the tone I used in 2016 — a growing trend, a new product, and a greatly undervalued stock (which BTW went from $1 to a high of $7and was eventually acquired for $5.75).

Perhaps this is why I’ve been feeling a growing sense of relief over the end of my relationship with Seeking Alpha. It breaks my bond with folks who require a professional by their side. I’m not a registered investment advisor (and retired), so I’ve never been someone who could serve that role. If that’s what you need, you need to seek a registered investment advisor. There are many (on Seeking Alpha and elsewhere).

Instead, I’m now spending more time with people who have contacted me with their own research and findings. Collaborating and debating. Figuring out the truth. That was always the goal. I now feel that I’m closer to that goal than ever before.

FYI, for those who are wondering, I still own the same number of shares in my top two positions as I owned last week… and the week before that. In the absence of new news, my preferred inclination is to “buy low and sell high”. It is also not my inclination to repeat this paragraph in the future.

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Latest Thoughts On HMNY. On Seeking Alpha, Ben Rabizadeh has done a great job of researching MoviePass the way it should be researched. I don’t agree with 100% of his conclusions, but that’s a matter of his opinion versus mine. I respect him and his opinions. I know that he’s working with a complete set of publicly-available facts and that’s the most important thing.

Personally, I agree that getting into the business of investing in movies is a great move for MoviePass. All else being equal, I believe that the stock deserved a bump on that news (disclosure — I am neither long nor short).

In addition, the news should serve as a reminder to investors (especially those who tend to be skeptical) that one should never underestimate the ability of a management team to come up with great ways to monetize their strengths. From that perspective, the news isn’t just positive for what it is… it’s positive for what it says about Ted & Mitch’s ability to formulate new monetization strategies (and that might be the more valuable takeaway).

On the flip side, Ted & Mitch’s recent comments clearly validate my belief that the large theaters won’t be playing ball with them anytime soon. Their statements demonstrate unequivocal resignation to the reality that their near-term momentum will be limited to smaller theaters.

Netting the two sides, HMNY deserves its place on my Interest List (for now), but I’m still not inclined to buy back into the stock (for now).

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Regarding The Theaters. FYI, I believe that the major theaters are all benefiting from MoviePass and its relentless acquisition of new subscribers (disclaimer — that’s a business comment, not a stock comment).

I’m not going to name names (and none are on my Interest List, because I’m taking a pause from adding new names to it). However, MoviePass’ comments suggest that they are buying over 3 million (and growing) movie tickets per month. Their statistics also suggest that over half of those tickets would never have been purchased if MoviePass didn’t exist.

Further, each ticket (both, the ones that would and the ones that wouldn’t be sold without MoviePass) is driving 120% more concession revenue than the average ticket (also according to their publicly-stated stats).

This gives us everything we need to estimate the benefit to theaters. I encourage investors to do the math on all of that and figure out how much revenue, gross profit, and operating profit results. Per my new philosophy, I’m going to restrict myself to a certain level of financial / stock-related commentary, but everything required to do the math is out there and readily available to the public.

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Because Someone Asked. I’ve stated this publicly in a couple of places, but I still get asked. For the record, I have no intention of ever starting another pay service… or being part of a pay service… or being compensated in any way for anything I do… ever again. I’m retired and should have stayed that way, so let’s see if I can get it right this time.

As it relates to stocks, I have no intention to do anything accept share information (and I prefer to keep that focused on company-specific information). That means no recommendations, no price targets, and certainly nothing that can even be perceived as an attempt to promote a stock.

I’m doing this as a hobby and a source of collaboration. Period.

I hope that clarifies things… and I hope you’re all having a great week. Cheers!

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I wrote this article myself, and it expresses my own opinions. I am receiving no compensation for it, nor do I have a business relationship with any company whose stock is mentioned in this article.

The information in this article is for informational purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.  I am not a financial advisor.  Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein.  Similarly, the disclosure above may state that I am long or short shares of the companies mentioned herein, but should not be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. That disclosure is true as of the time the article is placed in queue for publication, but it is possible (or even likely) that I might be buying and/or selling the stocks mentioned herein immediately thereafter or at any other time, regardless of (and possibly contrary to) the content of this article or this website’s timing of its release.  The disclosure will not be updated following submission of the article and may be inaccurate thereafter.  Likewise, any opinions are as of the date of publication, and are subject to change without notice and may not be updated. I believe that the sources of information I use are accurate but there can be no assurance that they are.  I wrote this article myself and I receive no compensation for writing it.  All investments carry the risk of loss and the securities mentioned herein may entail a high level of risk. Investors considering an investment should perform their own research and consult with a qualified investment professional.

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27 thoughts on “Latest Thoughts: 1/24/18

  1. Come on Mark. You need a small position in HMNY! There’s enough going on to have a little skin in the game and it’s more fun to follow that way! I tried telling you that on SA too, but you wouldn’t listen. 🙂

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      1. I have made money on it, but I am not saying I trust it yet although I do have some shares in a long position right now. I purchased those at $6 & $7 back in December so I am feeling ok for the moment, but I watch it like a hawk!

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        1. Bingo. “Watching it like a hawk” is what I try to avoid when it comes to investments. I want to find great opportunities and let them play out without worry about how the stock acts on any given day. I feel I have that in my portfolio right now, and it’s a great feeling knowing that I can wake up at any time on any day and do anything I want. #TheMatrix

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      2. Yea, yea, yea. My point is no matter what stock you buy or how good you feel about it, wouldn’t you keep an eye on it, stay up with current news, happenings, etc.? If I did not want to do that, then I wouldn’t buy it and just put the money in a mutual fund. Of course in the case of Enron, once you knew there was a problem, it was too late, so I see your point.

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        1. Current news and happenings, absolutely! That’s a given, But doesn’t require daily commitment. Companies don’t change in a day, week, month, or even a quarter. When I buy stock, I am fully prepared to hold it for however long it takes for the risk reward ratio to become unattractive to me.

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        2. The funny thing is, MOST investors do not listen to the earnings calls (or read the earnings transcripts), nor read the quarterly SEC filings. To me, those are two of the three most important things an investor should do (speaking with Management being the third).

          The reality is more like charts, chat boards, and press releases 😂

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      3. I rarely get on the call but I always read the transcript. Always read every SEC filing (some of the not so important ones I just skim). Of course HMNY’s last earnings release told me nothing, really. Or maybe I was not smart enough to glean anything from it.

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        1. Good man! FYI, I’ve been getting more out of the moviepass interviews online than anything else. Of course, the SEC filings have been invaluable due to the numerous rounds of financing. I’ve lost count of how many fully diluted shares they have outstanding. 😂

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      4. Agree. The most recent SEC filing around the Feb 5th meeting was quite interesting to me. What did you think about today’s shelf registration announcement?

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      5. I guess Ted wants to bring the AMC standoff to a head. Feels a little early to me to start shooting. Not sure MP army is big enough yet. Of course all the misreporting is atrocious as they cut 10 AMC’s from their app, not the whole 600 theater chain as many stories have said. I am a little concerned about Ted’s aggressive comments. They need the theaters too. Obviously Ted thinks they have the upper hand. We will see if he is right.

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  2. Love the new and the old Mark! Still here hanging out, checking in on you to find out when you are naughty and nice. I treasure all of your words. I am still playing with the leftovers from my lottery win and still trying to get used to watching the “put side lottery win” into managed “safe” hands NOT grow, lol. It is difficult to watch paid professionals in a large brokerage firm spin their wheels. I’ll give them a year and then reevaluate. As for me, I still hope to stop playing by the end of March or at least stop sitting here all day each day watching it. I need to get this old body moving before they put it in a box 6 ft under.

    Anyway, just as always, I wanted to say thanks for hanging out and being around – as well as counting my blessings in knowing you.
    Larry

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    1. Thanks Larry! Sounds like you should just wrap it up now and be grateful for what you have. I could have done that 10 years ago and probably should have. I’m thankful for the blessing of how things have turned out, but would never want to risk it again. Cheers and best of luck to you😇

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    1. My Interest List is an “interest list”, as stated in the sheet. I am mandated to disclose my position in any stock that I discuss, but other than that I don’t want my choice of investments to influence anybody else’s decision. I’m only here to contribute research and collaborate on what it might mean for the companies involved. Cheers.

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    2. It’s been known that I haven’t owned any HMNY for while (and even wrote a couple scathing articles). I’ll continue to judge them according to my personal opinion of each move they make (most recently positive), but I want my contributions to be just that — contributions. My words should not influence what stocks people buy or sell. Stocks will go where they belong with or without me, preferably without (as was the case with Lionbridge, back when I had exactly zero followers on a then-unknown Seeking Alpha).

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  3. Hi Mark,

    I find your research very extensive and it shows just how much work you put into it. Why aren’t they allowing you to disclose your opinions openly? It doesn’t seem to make much sense as your opinions are only opinions. If I choose to use your research as a guide towards my stock picks its still me who’s purchasing the stock.

    I guess I’m just upset I won’t get to see you say stuff like “…potential 10 bagger status” or something along those lines.

    I am long AEHR, GAIA and SMSI, and I would say whatever happens to those stocks is my sole responsibility. I was able to find out about those stocks through you, but the responsibility of purchasing and owning those stocks fall on myself.

    Anyways, sorry for the long rant. Looking forward to your updates.

    Liked by 1 person

    1. I appreciate the rant. This forum can be used for anything you wish to communicate!

      If everyone was like you, there wouldn’t be any problem. However, this world is filled with people who don’t know how to take responsibility for their own decisions (and other people who take advantage of people who don’t properly understand the principles of investment research).

      This creates a great risk for those who attempt to be helpful, because causing harm is in inevitable (albeit unintended) consequence of providing opinion in the public domain. I’m not restricted from providing my opinion, but I place myself at risk by doing so.

      I have come to realize that this is one of the reasons that most wealthy people don’t try to help the less fortunate. I am saddened by that, but there’s nothing that can be done about it. Thus, I will continue to do what I can, but can’t do anything that puts myself at risk.

      Liked by 1 person

  4. Mark, I’m not sure where to post a comment on AEHR so I’m doing so here. If this is not correct please inform me where I can do so. Just curious if you felt the sell off today in AEHR was due to the recent Apple downgrade and issues with their iPhone sales? I’m adding a bit on the dips; my average is $2.77. IMO, nothing has changed regarding the opportunities with AEHR for 2018 and beyond.

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    1. That’s definitely a possibility, so good comment! But AEHR is not yet DEPENDENT or fully leveraged to such things, so that would be silly to me. They’ve only sold a few of their new machines to date (many for customer evaluation). The promise of fuller-scale production orders is why I’m invested. Cheers.

      Liked by 1 person

    2. LITE had issues, leading to AAPL giving $400M to FNSR. That $$ is earmarked for a production facility that will presumably feature more reliable production and testing than LITE possesses. Therein lies no guarantees, but certainly a measurable opportunity.

      Liked by 1 person

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