Simple Lessons & Tips To Make Millions

If you’ve missed my Live broadcasts on Marin Software (MRIN), be sure to check them out before sending questions my way. Most of the most common questions have been answered (often more than once) in the videos.

You can see the first one here (MRIN is discussed at the 28 minute mark), the next one here (MRIN is discussed at the 15 minute mark). Finally, I did an in-depth Q&A session on MRIN (at the 33-minute mark) during last week’s Live broadcast.

As always, be sure to read my disclosures / disclaimers below. Cheers!

 

Here are a couple of quick / easy lessons to help polish your game…

Lesson #1 — Risk/Reward Beats Charts and Catalyst Chasing

One of my readers asked if I had any updates on Pixelworks (PXLW), an old pick of mine. Back in 2013, I launched coverage on PXLW, due to the expectation that 4K TVs would take off during the 2014 holiday season (which would start about 18-months later).

The stock was cheap relative to their patents and R&D spending, so I viewed the risk as low (maybe 50% of potential downside). Simultaneously, if 4K took off, the reward could be high (a potential 10-bagger).*

* FYI, those calculations were based on a deep industry/company evaluation, coupled with the proper math that my mentors (successful Wall Street equity analysts) had taught me to do.

That made it a great 18-month bet.

For many investors, that’s about 17 1/2 months too long (LOL), but that’s how the big money really gets made on Wall Street. Over time. Not in quick little bites.

A little over a year later, PXLW had risen from 2-something to nearly $10. The excitement around 4K TVs was reaching a fever pitch. However, having followed the company for over a year, I had a good feel for the progress… and I didn’t like it relative to the new risk/reward equation.

Yes, 4K could still take off and send PXLW to $20, but if it didn’t, it could fall back to $2.

That’s called a coin flip.

Coin flips are o.k. if you stand to make more for winning vs. losing (or if the coin is more likely to land on heads than tails, for some reason).

In this case, the latest research on 4K technology told me that there wasn’t enough 4K content being created to drive as much demand for new TVs as I was hoping to see. So, with the stock not paying us enough for the risk, I told everyone that I was exiting the position.

As it turns out, 4K did not take off (and now, 6 years later, it still hasn’t!). The stock eventually dropped to $1. I didn’t get involved at those levels, but could see why someone would — the patents and R&D spending was still there, so the risk/reward was attractive again — maybe 50% of downside vs. 5x of upside.

Over the next couple years, the stock rose to $7. It has since pulled back to $3, but the lesson is clear. By focusing on risk/reward, your thesis can fail to play out and still give ample (and multiple) opportunities to cash out with a win.

Because of this, as long as my thesis doesn’t die, I tend to stay patient. When I don’t, I often regret it later. However, when the story does appear dead (like 4K TVs clearly not taking off during the holidays a few years ago), it’s usually best to reallocate the $$$ to a better opportunity.

But as we’ve seen with stocks like GLUU, PXLW, ATTU, and even HIMX in late-2017, patience pays, as long as you have risk/reward on your side. Bascically, if you wait long enough, some catalyst (old or new) can make the wait worthwhile.

This is all enabled by getting in at an attractive risk/reward price…

…NOT looking for a catalyst or chart pattern. There are many reasons for this (a lesson for another day).

Regardless of the company’s news flow, upcoming catalysts, etc., simply getting in at the right level with faith in the thesis (story), gives you many ways to win (execution, M&A, pure luck)… and not too many ways to lose (because even a failed story often leads to M&A, when the stock is cheap enough).

Remember, just the cost of being public will knock $1-2M from the cost structure for an acquirer. That alone is worth $10-20M of market cap!

Apply that notion to a company like MRIN (which has a few suitors that would like to buy them) and you can see that we’re effectively buying the stock for free. So, why should I care what the chart says or what the next catalyst will be? One way or the other, something is likely to break in the stock’s favor.

I don’t care if it’s big and tomorrow or small and months from now.

I only care about making enough profit to beat the market… and this method has enabled me to do that year after year, with very few exceptions dating back to 1996.

 

Lesson #2 — Everyone Is Stupid!

Another investor only recently read through the HEAR transcript from their Q4 earnings call a year ago. According to the investor, management “gave a heads up on sales boom” that was soon to come and gave “multiple other data (points)… in the ensuing months”.

He continued:

“The stock did not move at all. STAYED at $2 for many months until results actually hit the bottom line. Anyone listening to the calls could have made a mint. Reminds me of where MRIN and SMSI is now… the real catalyst even before Fortnite was licensing of Hypersound back in October 2017 which reduced expenses by $10M a year and flipped the company to EBITDA profitability even at just $150M revenue. That was a pound the table buy then if you knew the story: 2014-2016 was down all because of burning cash into Hypersound research.”

I responded (paraphased):

I know. That’s reminiscent of MRIN’s deal with GOOG flipping them toward cash flow positive. More times than not, small companies become worth a lot more before individual investors realize it (and, as a result, long before the stock price reflects it).

That’s how I do what I do. It’s not hard. It just requires patience and an understanding that the stock isn’t moving because not-enough people have figured it out yet.

I tip investors off when I find opportunities like that, but unless they really know in their hearts what’s going on, they get scared (or get shaken out by someone crying “pump”) and bail out before the big payday even has a chance to come.

That’s the problem with day trading. Traders never learn how to identify winners. If they did, they’d become much more dangerous traders!

In short, this dynamic is made possible by the fact that 1) most professional-level investors don’t deal in small companies and 2) most investors who deal with small companies don’t do professional research.

So, when someone asks why one of my picks hasn’t taken off yet, I say, “because everyone is stupid!”

Of course, that’s hyperbole. However, it’s a fact that if a risk/reward opportunity arises, the gap won’t close unless/until enough people catch on to it. Even with the amounts of money I deal with, I avoid owning more than 4.99% of any company in which I invest (the legal limit before encountering reporting requirements), which won’t put a big dent in most stocks.

In other words, skepticism or a stock that isn’t moving is NOT necessarily a sign that things aren’t playing out properly. In fact, it’s more likely that people simply haven’t figured out what the stock should actually be worth to properly reflect its risk/reward.

And this is why I so-often share the story of my first 10-bagger, entitled “Lose 33% In 9 Months To Make 1,000% In 15?

So, now you know…

As always, be sure to read my disclosures / disclaimers below. Cheers!

 

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Disclosures / Disclaimers: I am long MRIN and SMSI. However, this is not a solicitation to buy, sell, or otherwise transact any stock or its derivatives. Nor should it be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. To be clear, I do not encourage or recommend for anyone to follow my lead on this or any other stocks, since I may enter, exit, or reverse a position at any time without notice, regardless of the facts or perceived implications of this article.

I am not a financial advisor. Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein. Any disclosures regarding my holdings are true as of the time this article is written, but subject change without notice. I frequently trade my positions, often on an intraday basis. Thus, it is possible that I might be buying and/or selling the securities mentioned herein and/or its derivative at any time, regardless of (and possibly contrary to) the content of this article.

I undertake no responsibility to update my disclosures and they may therefore 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. 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.

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.

The primary purpose of this blog/forum is to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.

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79 thoughts on “Simple Lessons & Tips To Make Millions

  1. As I was reading point 1, all I could think about was exactly what you wrote in point 2. So much of the chatter on SMSI is “I’m going to sell because this is trading lower and it hasn’t taken off yet!” or “I bought calls expiring in January expecting a catalyst” when management has said that it’d probably happen in H1. An overall woe-is-me attitude.

    I want to participate in some of these message boards, but there’s only so much you can talk about once you have done your DD and you’re just waiting for updates on execution.

    That said, you have consistently done a great job of identifying good risk/reward plays and some of us appreciate this with the understanding that not everything happens overnight.

    Liked by 2 people

    1. “I want to participate in some of these message boards, but there’s only so much you can talk about once you have done your DD and you’re just waiting for updates on execution.”

      WELL SAID. This is problematic too. I personally avoid doing much with stocks on a day to day basis, because watching paint dry will make you want to leave the room… so many investors’ habits reinforce their behavior.

      Great post. Thanks!

      Liked by 2 people

      1. Hey Mark, Appreciate your lessons. However, I hope you were not encouraged to write this post in response to any recent negative trader sentiment on SMSI chat boards. There’s only so much you can do to extol the virtues of buying low and holding before it falls on deaf ears.

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    2. I completely agree with you, Kevin. The fact that many people are now throwing in the towel or close to throwing in the towel on SMSI makes me think it’s about time to start turning the corner. Like Mark said, most investors, despite what they may claim, are looking at about a 6 week to max 6 month time frame. If someone really likes SMSI’s story, then they should wait. Let’s say even by the end of 2019 the stock is only up 50% from where it is now. How much would we all be worth if we could earn 50% every 18-24 months in our portfolio? If SMSI executes, it could easily be 50% above where it is now, perhaps much higher. The downside doesn’t seem that much.

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      1. Yep. As the lesson teaches, if the thesis hasn’t broken down, your guide should be risk/reward, which becomes better as a stock falls and worse as it rises.

        Thus the saying, “buy low / sell high”.

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      2. Who is throwing in the towel? Just curious. Let me preface what I am about to say with the disclosure that I have a large position in SMSI and I still believe it will pay nicely to have that position during 2019. What I am still trying to figure out is whether the potential reward is getting better or worse from the original story.

        On SMSI in particular let’s be honest. The story has changed from this time last year significantly and there is no guarantee yet that it’s for the better. There has been a significant amount of new shares issued that will bring down EPS or require much higher earnings to get the same EPS than what otherwise would have been needed. The money received from the additional shares needs to produce.

        The acquisition adds potential risks as well. They could struggle to perform with this product or lose business with the change of ownership as an example. Of course there is potential reward

        Finally the timeline for success at a level that is likely to be recognized by enough investors to drive the shares higher has been pushed back by sunset delays, offerings and the acquisition IMO.

        The fact that the share price is almost back to where it was after the 2nd (and never explained) offering early last year may simply be the reflection of the legitimate concerns that some of these folks throwing in the towel may have.

        Liked by 2 people

        1. Also well said, as usual Brad.

          Funny though… to me, a lot of the changes are all par for the course. Companies evolve and I’ve grown pretty tolerant of it via experience.

          As long as the general risk/reward feels similar, so to does my position size.

          Liked by 1 person

      3. Are you referring to Stocktwits or Whatsapp or some other chat board? What reasons did those people give for “throwing in the towel” (other than reasons such as chart-related, lack of volume, lack of SP rise)? So far, I haven’t recently found any compelling bear argument – hope I didn’t miss out on any useful discussion.

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        1. You haven’t missed anything. Those lessons are for folks who are new to my work.

          For the vets, calm down on the “throwing in the towel” comment. I forget who said it, but I don’t remember feeling like it was a big deal. The comment was made in the context of a discussion about why it’s not smart to give up just because a stock is moving against you.

          In fact, my lessons on risk/reward preach the opposite — that “throwing in the towel” on a company whose thesis remains intact is the mark of an investor who is destined to failure.

          Besides, if that strategy was wise, the entire market would have gone to zero last month 😂

          Liked by 1 person

        2. Yea, I don’t see a bear argument either as in anyone making the case for this failing. More so an assessment of the facts that have changed since the original bull thesis in early 2018 of the changes and whether the risk / reward remains in tact or has changed in any significant way. I have some concern about what I see as excessively running up the share count, but assuming that does not continue, my concerns will fade.

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          1. If they sign T-Mobile for S&F / CommSuite, and follow that up by selling Smart Retail to Sprint & T-Mobile you will never hear me complain about the additional shares again. 😜

            Liked by 2 people

          1. I see no issue with the merger. In fact, if they love it (they do), then I love it! Frankly, I like it regardless. It’s accretive AND has plenty of upside. I don’t understand the consternation folks have about it.

            Beyond that, the CEO has decades of experience in the CFO is excellent IMHO. They know better than any of us (by a long shot). We’re not here to run the company. We’re here to invest in the company and trust in management to do a good job running it.

            If we don’t, we shouldn’t be invested 💯

            Agree with everything else you said, Especially about risk/reward. None of that guarantees success, but that’s why we calculate risk (and why we get rewarded when things work out).

            Spreading your bets across a number of great risk/reward opportunities wins year after year, with very few exceptions. I happily take those exceptions for what the typical year has delivered 😊

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          2. I don’t have any issue with the recent acquisition, my concern is with TMUS merger, especially since I’ve seen more info indicating they will essentially just use S for their customers but TMUS operations will basically run things. At this point, I think that’s primary reason stock price is remaining so low.

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          3. We reviewed that months ago. The research determined that TMUS is more likely to be a positive than a negative. However, even if T-Mobile does not adopt Smith’s products, Smith will remain at Sprint for years based on the structure of the contract in place.

            Thus, while this merger increased the risk to SMSI, it also increased the potential reward… but by a MUCH greater degree. Thus, the merger made the risk/reward more attractive, Even though it made “the story more scary”.

            Again, we reviewed that many months ago.

            But this is part of the reason why I write research… Because all humans (including me) are prone to forgetting things in the face of a perceived scary situation. So, when my confidence gets shaken, I simply go back and read what I wrote to remind myself of why I got involved in the first place.

            Besides, we don’t invest on the basis of scariness (in fact, Buffett says to be bold when others are fearful). That’s why we invest on the cold basis of risk/reward.

            Liked by 1 person

          4. He is referring to the Tmobile / Sprint merger. Feels there is some risk, even if low, that Tmobile decides to kick SMSI out sometime after the merger.

            Liked by 1 person

          5. I agree that the TMUS merger may be a legitimate concern. Posted a lengthier response below. Feel free to critique!

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          6. Your lengthy response was great. This one, I disagree 💯 TMUS is MUCH more of an opportunity than a threat for the reasons in our other comments (which echoes the research I did when the merger was originally announced) IMHO.

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  2. Thank you for your lessons Mark! You have changed my investing from being a loser for years to profitability. I greatly appreciate it. I am super excited on what 2019 and 2020 will look like with the shared research on SMSI, MRIN, TPCS, and GAIA. Life changing if one of those companies execute their plans, not to mention if more than one hits!

    Liked by 2 people

    1. That’s the way to look at it. Not many members of the team have to become superstars.

      Wish it was easier to know which ones will make it happen. I’ve always been good at assembling teams, but not so great at knowing which ones will make the year shine.

      Cheers 👍🏼

      Liked by 1 person

  3. Not sure if this been previously discussed – last Dec, TMUS’ CFO outlined the takeover strategy for integrating Sprint. I viewed this as a positive for there being less risk of TMUS removing S&F, in the long-term. Also, even if that were wrong – it’s clear that the integration/transition into TMUS would take much more than 2 years.

    https://www.bizjournals.com/seattle/news/2018/12/10/t-mobile-braxton-carter-sprint-takeover-strategy.html

    TMUS’ prior handling of 2013 MetroPCS acquisition will be particularly telling of how Sprint will be integrated, as hinted by TMUS’ CFO. Up to now, Metro has maintained its identity and separate services*, existing as a division within T-Mobile. Last September, it got rebranded as “Metro, a brand of T-Mobile USA, Inc” for marketing purposes – however, MetroPCS’ website, paid services and apps have persisted since 2013. Looking at the app store, there are apps such as MetroSMART Ride which overlap in functionalities (vehicle GPS, roadside assistance) such as with TMUS’ SyncUP DRIVE.

    So it’s possible that TMUS will follow a similar route with Sprint – specifically, maintaining Sprint’s separate identity and services*, and keeping it as a division in TMUS. If so, then services such as S&F can continue to exist, especially since TMUS’ priority is to minimize customer loss (although this may dependent on S&F continuing to grow to be a sizeable portion up to the merger completion). There is already value in Sprint’s brand, customer recognition, services and customer base – something that TMUS would definitely want to preserve.

    On the other hand, I think bears may argue that MetroPCS was allowed to exist as a separate entity in order to differentiate it as a prepaid network service – and this may not necessarily apply to Sprint since it is much more similar to TMUS. Again, I would argue that TMUS would not want to risk upsetting/losing customers – some of which I believe will be loyal to the Sprint brand and services. Other than reducing advertising/marketing costs, I don’t really see the upside in assimilating Sprint and relabeling it – not to mention to added cost of updating shops, services, staff, etc – which is something CFO Carter probably wants to avoid.

    The main aim, as stated by CFO Carter in the article, eventually integrate/re-allocate Sprint’s cell towers with TMUS’ network and share the carrier network with all future customers; this does not explicitly suggest that Sprint’s brand and services will be eliminated. Not to mention that TMUS will aim to integrate Sprint’s assets (which should include services such as S&F).

    Also, another thing to consider is that it will very likely take a long time to decommission Sprint’s cell towers and shift customers onto TMUS’ network. Case in point, it took over 2 years for TMUS to finally decommission MetroPCS’ network – and this is a far smaller company than Sprint (>280X less customers)! Apparently they will individually have to evaluate this on a city-by-city basis – which I can’t imagine being very fast. This is consistent with what Mark said a while ago – I recall that he approximated at least 3 years – although not sure what he based that number on.

    Liked by 2 people

    1. BINGO… and answer your question, I based that number on the TMUS integration roadmap provided by their management team when the merger was announced.

      SMSI isn’t getting kicked out anytime soon (and is more likely getting more business in due time).

      Our minds forget these details and data points over time, but the details and data points remain the same.

      Another reason to take notes and reread them occasionally. 💥

      Like

    2. Ah, just noticed a bad mistake I wrote – MetroPCS in 2013 should have had 9.3M subs around merger, so would be ~6X smaller than Sprint today (54.5M) – and NOT 280X bigger… Originally, assumed 190K subs – which seemed too low – so checked again, it turned out to be the number of subs still remaining on their network on the final day of decommissioning in 2015.

      https://www.chicagotribune.com/business/ct-xpm-2012-10-03-chi-metropcs-board-oks-merger-with-tmobile-usa-20121003-story.html
      http://s21.q4cdn.com/487940486/files/doc_financials/quarterly/2018/Q2/01_Fiscal-2Q18-Earnings-Release-FINAL.PDF

      Like

  4. Hi Mark;
    I’ve heard you say several times you short call options. Does that mean you are buying put options????
    Thanks for the response.

    Like

  5. Mark, thanks for sharing your research. Its very helpful. I had a couple of questions I wanted your thoughts on regarding the SMSI signing of a Tier 1 carrier during the 1st half of 2019. I think we have discussed there being 2 major benefits of this: 1) additional customers for the product and 2) reduction in customer concentration. If the Tier 1 signing is T-mobile like we suspect, is there really any reduction in customer concentration since T-mobile and Sprint are merging? Seems like the concentration would be the same, just the size of that customer would be much larger. Also, if the Sprint and T-mobile merger occurs prior to the signing of T-mobile, does this really count as signing a second Tier 1 carrier since Sprint/T-mobile will already be a customer of theirs at that point? I know a lot of that is just semantics, but was curious if you or any other readers had any thoughts.

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    1. Everything you said was accurate, but what matters most is that it will be a huge step forward for their revs and profitability, no?

      Remember the rules of confirmation bias… place the proper weight on each data point. Don’t ignore the negative, but don’t overweight it either.

      Like

    2. We still don’t know for certain which Tier 1 carrier or which product they are getting a deal – so I think it’s too premature to speculate on the concentration risk. Even if it were TMUS – they could be signing onto a different product from Smith, which would decrease the concentration risk.

      Like

      1. A great point is embedded in your comment. People need to stop worrying about things we can’t / don’t know.

        The most obvious stories often end up being the worst investments. When everybody is 100% sure of something the stock price ends up too high because it is perceived as being “safe”.

        In reality many of the best investments involve identifying companies that are simply positioned to do well and then trust your research and let them do their job.

        Yes, that creates unknowns… But that uncertainty is what creates deep discounts in stock prices, which lead to outsized gains for those who have the “courage“ to risk loss.

        Indeed, I often lose. But my willingness to lose enables me to make millions. When one stock drops 50% and another triples in value, the resultant combined return is 75%.

        So, if half of your stocks triple in two years and the other half lose 50% in two years, your total return over 20 years is nearly 300x… so $30,000 becomes $10 million.

        Class dismissed. 😉

        Liked by 4 people

        1. The CEO spoke about the next tier-1 carrier in the context of “driving growth from our Sprint deployment”. This strongly suggests the product being sold into the next tier-1 carrier is Safepath.

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          1. From that quote alone, that’s false.

            It could also be Commsuite (also deployed at Sprint) and/or SafePath IoT (derived from SafePath).

            Gotta work on thinking things through, my friend. LOVE that you’re doing your homework though. Home your skill and you’ll become an expert.

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          2. Agreed this is not 100% guaranteed but here is the full extract from the transcript. All the previous discussion was related to Safepath not CommSuite. In fact, the immediate sentence was related to Safe and Found. That is why I think the discussion around the new tier-1 carrier is related to Safe and Found. Nor certain, agreed, but all the indications are towards Safe and Found.

            In the fourth quarter, we are launching a Spanish version of Safe & Found, Sprint’s branded SafePath product. Sprint retail stores will run promotional offers to increase sign-ups of new subscribers by sales associates. We will use contest and rewards to drive retail excitement and focus. We also have some digital online marketing campaigns focusing on targeted personas, such as millennial moms, Gen X moms and Hispanic moms, building awareness of the power of Safe & Found in promoting Family Safety.

            As we drive growth from our Sprint deployment, our vision is even bigger. We are aggressively working to close our next major carrier customer with careful focus on North America. While I cannot share any new details, I believe we are getting closer to our goals.

            Like

          3. NOW I agree. Actually, I already knew all this, but had to disagree based on the quote you provided. I encourage thoroughness and accuracy here. Details matter!

            Good stuff 👍🏼

            Like

  6. Last Nov, TMUS’ CFO stated (with greater certainty) that the S/TMUS merger should close by 2Q or even 1Q in 2019. A week later, in SMSI’s 3Q CC, Bill states that they expect the new Tier 1 deal to close in 1H 2019 and that they would be allowed to announce the deal sometime after that, provided the carrier starts shipping the product.

    Therefore, is it safe to assume that if the new Tier 1 carrier is indeed TMUS, then the product is NOT Safepath (Family)? Possibly Safepath IoT or Commsuite? There would be no need to work on a deal for something the same as S&F (Safepath Family) since TMUS will shortly be gaining control of Sprint’s assets anyway – which presumably would include the existing S&F contract.

    In fact, I would view it as much more bullish if the Tier 1 was either a) TMUS signing a non-Safepath family product or b) another Tier-1 carrier signing with Smith. I think the TMUS merger is going to be a great opportunity either way to grow both Commsuite and Safepath – if a THIRD carrier were getting added into the mix, it would be icing on the cake.

    Like

    1. That’s circumstantial reasoning 👎🏼👎🏼

      Sounds like you’re trying to convince yourself that TMUS is coming (not an accusation, just saying that’s what it SOUNDS LIKE as I read it).

      A lot of people try to soothe their fears when a stock isn’t working, but there is no room in stock investing for fear.

      I’ve provided plenty of facts in my past videos and research that point to TMUS being the next tier 1 (and the timing of the merger is the least of them, because it is the most circumstantial & therefore almost useless).

      Resumes, contacts, and other hard data points are more reliable (though still questionable). The most important thing is that Management has guided to winning another tier one in the first half of this year.

      That’s far, they have delivered on everything within their control so, that is no excuse for some people (not you) to freak out over the fact that they’ve had no new news over the last few weeks.

      Business doesn’t happen in weeks, it happens in over the course of multiple quarters and years.

      Those folks should go watch paint dry. It’s less arduous and will save you from making the investing mistakes that come from staring at the screen and letting your imagination run wild.

      Personally, I don’t stare at the screen. I set alerts for certain prices (mostly to buy more of my favorites). So, today I did some shopping and took a nap. After that, I researched a few shorts on my radar.

      No idea how much I made or lost.

      Nice relaxing day 😊

      Liked by 2 people

      1. Actually, I have no idea if TMUS is indeed the next Tier 1 carrier deal. Just wondering if the soon-to-be-completed TMUS/S merger rules out certain product contracts with Smith IF the tier-1 carrier is TMUS. (Perhaps I should have emphasized it in the last post.)

        It is mainly based on the assumption that when TMUS/S closes the deal in 1Q/2Q, they would already have access to Commsuite/Safepath Family via Sprint’s assets (their contracts with Smith) – which leaves behind Safepath IoT. I just thought IF TMUS can attain those anyway, why would they need to make a deal with Smith? Maybe this is where my reasoning falls apart? Or is the TMUS/S merger still not so certain?

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        1. “Just wondering if the soon-to-be-completed TMUS/S merger rules out certain product contracts with Smith IF the tier-1 carrier is TMUS.”

          For the Xth time, no… and there’s a LOT more beyond that in my old research so I won’t repeat 😉

          Like

          1. Not sure if this is significant, but just seen an uptick on the number of downloads on Apptopia for the Android version of Safe and Found from 38K to 40K over the past 30 days. Could this be an indication that the sunset of Family Locator has started? If anyone has access to AppAnnie it would be interesting to know if this is reflected in their statistics as well.

            Like

          2. Android is ~70% of their total and iOS tends to follow.

            FYI, I already have a good sense of whether this data point is the sunset in action because I told just collect data points — I ANALYZE them!! This is an uber-important step that almost every investor skips!!

            Remember my teachings. Don’t ask the question (at least not publicly) — DO THE MATH (or at least privately ask someone you can trust to hook you up with the answer before the public can reap all the reward… something I do for people every week) 😉

            For the record, SMSI and I have previously provided all the info required to ANALYZE the data point..

            So why not do it?

            After all, you may have just been the first to discover something that sends the stock rocketing higher (as I did by analyzing the MRIN:GOOG news when MRIN was still “only” up 30% from $3.25 while the math told me that the news should push MRIN AT LEAST $5 higher!)

            That ANALYSIS is literally money in your pocket. So, why tell everyone before you’ve ANALYZED THE DATA POINT to determine what it’s worth? If this one is worth a big instant increase to SMSI’s share price, you just gave it to the public instead of using it to make a LOT of instant money (for me, ANALYZING the MRIN data point earned me a quick 6-figures and the confidence that much more is still to come). There’s no way I was going to spread the GOOG news before ANALYZING and acting on it! $$$$$$

            Learn my lessons folks! Many merely follow along. Those who learn and apply the lessons gain a big leg up on making the next million. We’re all working together, but we’re also in competition with one another! 💯😉

            All that said, thanks for sharing the data point! We’ll see where it goes from here… 👍🏼😊

            Like

  7. Agreed analysis of a data point should be undertaken when its possible. But this is impossible to analyse -the 2K rise in downloads over the last 30 days could be due to the release of the Spanish version of Safe and Found or it could be the sunset of Family Locator in a particular Sprint region or it could be more retail stores trained on Safe and Found or it could be due to the marketing activities mentioned by the CEO on the Q3 CC. Impossible to determine unless you a member of the internal Sprint team with full knowledge of EXACTLY what marketing/promotion activities they are undertaking. My question was meant to be rhetoric until anyone else could contribute more information which could help isolate the real cause of the increase in downloads.

    Like

    1. I disagree. In fact, you supplied a roadmap for tracking down the reason (and even called your data point “rhetoric until anyone else could contribute more information which could help isolate the real cause of the increase in downloads”… CORRECTLY implying that an ANALYSIS IS INDEED POSSIBLE!) 😂
      You don’t have to BE one of those people you referenced. You just have to GAIN ACCESS to one or more of them (remember my teachings about stock analysis being more about investigative journalism than P/E ratios)!
      I’ve developed contacts all over the world. That has provided me with a strong edge for decades… and as long as I avoid inadvertently receiving insider info, it’s not only legal, but a coveted skill that earns people high-paying jobs at Wall Street firms 😉
      In my case, it enabled me to launch Pipeline Data and the blessing of retirement, just four years later. 🙏🏼😇💥

      Don’t sell yourself short until you test your limits. FYI, my comments are NOT directed at you, but rather EVERYONE.

      Like

      1. “You just have to GAIN ACCESS to one or more of them”

        Indeed! And am I using this forum to gain that access as well as other message boards. Regrettably I don’t “have contacts all over the world” since I am not, and never have been, a professional analyst with multiple contacts in different spheres of life. So if, for example, a reader of this forum has just noticed Safe and Found posters being displayed in their local Sprint store, if they posted that information it would lead to possible thesis that the increase in downloads is due to more Sprint stores being trained. Or if a reader of this forum is a Sprint customer and they have just received a communication from Sprint that Family Locator will not be available from a certain date, if that information was posted it would lead to a possible thesis that the sunset of Family Locator has started.

        I monitor many web sites, message boards and other sources of information, but if every reader of this forum stays alert and posts what may seem trivial information, when all such information is collated together, a more accurate conclusion can be drawn as to the root cause of an increase in the 30 days download figure.

        Like

        1. That’s true… but my army of contacts was not built because I was a professional analyst. I became a professional analyst because I built an army of contacts.

          Meet people 😉

          But don’t let my preachy demeanor distract from my first comment. Sharing as a community is GOOD. There’s is power in numbers… but more power accrues to those who go the extra mile in developing their personal base of contacts and skills.

          Like

  8. OK. How about this for an analysis…….

    Sprint has 18 sales regions and they have said they will sunset in around 6 months region by region. i.e. 3 regions a month on average.

    There are a total of around 350,000 Family Locator subscribers, Assuming an equal spread across all 18 regions that equates to around 19,444 per region

    So for 3 regions that equates to around 58,332 subscribers a month migrating to Safe and Found.

    Assuming 30 days in a month, that equates to around 1944 per day.

    Very close to the 2000 increase in downloads reported by Apptopia.

    Conclusion: The increase in downloads is directly related to the sunset which looks like it started 30 days ago i.e. the start of the New Year

    BUT……many assumptions which could be incorrect. Next check point tomorrow to see if the number of downloads reported by Apptopia have increased again by a further 2K from 40K to 42K

    Like

    1. Without doing any investigative journalism, that’s solid analysis. I like that you gathered the region data and sunset plans. Most would fail that quiz. 🙌🏼

      A few things though:

      1. There are only about 290,000 FL subs remaining. Many have already moved over.

      2. Each sub consists of about 3-4 downloads (one for each device under the subscription).

      3 Even if your math was accurate, you can’t / couldn’t draw conclusions without at least some confirmation from contacts (SMSI IR, Sprint employees, etc)… gotta knock on doors, so to speak.

      Your conclusion is actually a hypothesis. An early step in a scientific process, which also applies well (VERY well, in fact) to stock investing.

      Google “hypothesis” if unsure exactly what it is, how it should be treated, and how to solve for it.

      Either way, what you did here is a lot more than what 99% or investors do. That’s a lot of people to have an advantage over. 💥

      Like

    2. The android download numbers have been hovering around 40k (plus or minus 3k) since October. I think we’ll see a much more significant movement when sunset begins.

      Like

  9. In hindsight there are a few other errors with those calculations- not thought through properly!!! e.g. the 2K increase was seen between 01/29 ad 01/30 so the sunset would have started on 01/29 not 30 days ago. Also the subscriber download would not increase by 2K a day – it would stay at 40K a day to generate an additional circa 60K a month. Back to the drawing board!!!

    Like

    1. Woah, I think you’re jumping to too many conclusions over 2K downloads – which I still think is far too insignificant to care about.

      Also, the most likely cause is probably Smith offering FREE S&F subscriptions to ALL SPRINT employees, a week ago. Some uptick was to be expected.

      Like

        1. What do you disagree with?

          The facts: Sprint has about 30,000 employees. S&F offered free to Sprint employees (as shown in the Twitter pic).

          So it is fair to assume that an increase in S&F will occur soon.

          Like

      1. BTW, are there more than one of you named “Someone”? I think that’s the default name WordPress uses for anonymous users.

        Might be a good idea to choose a user name so we can tell one “ Somebody“ from another 😉

        Liked by 1 person

    2. I monitor AppAnnie downloads and nothing about those download numbers leads me to believe there’s been any meaningful implementation of the sunset. I thought SMSI’s tweet last week was likely the first step: train Sprint employees at the call center before rolling out the sunset. I would expect it to begin sometime in February based on that. I have no inside info or special contacts as it relates to this, just piecing things together as best I can.

      Liked by 1 person

      1. Thanks for the AppAnnie data which I assume from your comment was also showing a daily 2K increase. While I agree that the number of downloads has been hovering around the 40K mark (+ or – 3K), I don’t recall seeing a 2K daily jump before. Excellent point about them giving away the Safe and Found app free to Sprint employees which could also account for the daily 2K rise.

        @Mark – When do you think you will have an opportunity to re-work the financial model based on the ISM acquisition?

        Like

        1. I have no intention to update the model. I provided a video lesson on how to build it for everyone’s benefit, not to create a new retirement duty 😂 For my purposes, I build these models once to understand the operating structure. Once that’s done, it’s largely in my head (and I don’t worry much about quarter to quarter fluctuations)… so now it’s up to you folks to take that lesson and learn from it.

          Interesting point in there — most investors don’t build these models and fret over every little data point, while guys like me build these models and don’t fret over the minutia.

          These are the major differences in process that help produce major differences in performance. 💯

          Even rolls of the tongue nicely 😊

          Like

          1. Apologies. I mis-understood this comment in your blog titled “MRIN Wins Google & SMSI Acquires ISM’s Retail Solution”

            “As for the impact on SMSI’s stock price, I believe I have enough data to rework my revenue, profit, and valuation estimates. I already know that all three will be moving up. I just need to run the numbers to determine the magnitude.”

            I thought the comment “I have enough data to rework my revenue, profit and valuation estimates” implied you were going to publish another model.

            Like

          2. No… MY apologies. I should have been clearer.

            I have many PERSONAL models that I don’t publish (because many people would want them updated and many others would use them to determine if the companies make or miss their quarters).

            Neither was the purpose of publishing that model. Check out my video on operating leverage to understand more — https://youtu.be/zxlyn5CsKpM

            To me, it should be my most watched, but is among my least. Shows you how investors want to be given fish instead of learning how to fish. 💯

            Like

      2. I’ve noticed a nice steady rise in appannie download ranks of Safe and Found from the 21st of January on the iPhone, and 28th of Jan on Play. This coincides well the the tweet posted anonymously on this very forum, of SMSI working with Sprint call centers:

        https://markgomesstocks.wordpress.com/2019/01/24/simple-lessons-tips-to-make-millions/#comment-5373

        While these may be unrelated,what is different, and encouraging about this instance of rising ranks is the low volatility or low day to day variability in its rise. In other words, the smoothness of the line as it increases. These two data are new and encouraging to me; SMSI training, and slow and steady rise in ranks.

        There has been an increase in positive reviews as well, but many are from unknown sources and seem to have similar writing styles. So, I personally discount that datum.

        Cheers,

        Like

        1. I agree with this. I posted the SMSI tweet link re call centers—not sure why it would show as anonymous. In any case, one way or another this past week saw a steady rise in downloads. No matter what the reason, it’s a good sign for SMSI.

          Like

        2. Great post. BTW, it never ceases to crack me up how people continue to give any credence to the reviews (both the good ones and the bad ones).

          We discussed and squashed that issue several times long ago. Basically, anyone saying anything about the reviews (good or bad) doesn’t know what they’re talking about (unless they provide a caveat, as you did in your post).

          Like

          1. Hi Mark,

            I disagree about the reviews, in part. I think that the substance of some of those reviews are helpful. It answers the question: what are the major issues that upset people about the app? I am seeing battery drain and inaccurate location services as the major issues. Can those be fixed? I believe so.

            Also, I think it would be positive to see a change in the relative number of those complaints compared to the more general complaints from people frustrated about how to operate the app, or it not installing on a new phone update, etc. I think we have all felt that frustration with a new app that we don’t know how to use yet!

            Cheers

            Liked by 1 person

          2. Sure, if you KNOW which reviews are real AND accumulate enough of them pointing to a persistent issue. That’s NOT the case with reviews, because a small % of people are posting reviews and a small % of those reviews are real… so the conclusions drawn are not “statistically significant”.
            I’ve PERSONALLY tested Safe & Found with MULTIPLE families and gained a firm understanding of how much battery it utilizes (nowhere near as much is the complaints you see in the reviews, according to my phone’s power utilization app) and the location accuracy level (pretty much the same as every other app, which is limited by the accuracy of the GPS chip in your phone).
            People who haven’t tested the app and rely on unconfirmed sources are subjecting themselves to investing with inaccurate (or worse, conformationally biased) info.
            It’s a minefield out there. Can’t afford to walking with a faulty metal detector. 💯

            Liked by 1 person

          3. Mark, Tim Huffmyer told me they pay attention to reviews and try to address issues. Now, granted, he did not tell me WHICH reviews they use–maybe just feedback from Sprint–but that is what he said. I haven’t checked today, but last night I noticed several positive reviews from Feb 1 – Feb 3. They all looked to me like they could easily be advertisements for S&F. :)-

            Like

          4. Yeah, they SHOULD pay attention to reviews… but it’s much easier for them to separate fact from fiction for many reasons including the fact that they largely know how well (or poorly) their product works.

            Too many people DON’T… plus, they overweigh the importance of the reviews (positively and negatively). The best product often does NOT win the most market share.

            Like

  10. Should help TPCS for the long term.

    General Dynamics reported earnings this morning. They were quite bullish on Block V Virginia Class and Columbia Class Submarines for the future. Here is a couple quotes from the CEO:

    “In response to the significant increased demand from our Navy customer across all three of our shipyards, we continue to invest in each of our yards with particular emphasis at electric boat to prepare for increased production associated with the Block V of the Virginia submarine program and the new Columbia ballistic missile submarine.

    As you may recall, Block V is a significant upgrade in size and performance requiring additional manufacturing capacity. As you know, we have also increased our internal training program as well as our public private partnerships with Connecticut and Rhode Island to meet our need for skilled trade.”

    “So they have done nicely with slow steady growth, but the real growth driver is Electric Boat. And you see that in two respects. Both on the – we’ve got the Virginia class two-year volume in Block IV, and then Block V is a — as I noted in my remarks, really a significant upgrade into the performance, and it is a let me just leave it at that. It is — it will drive additional revenue, incremental revenue. And then the advent of the Columbia, which will begin early construction in next year. So this is a steady growth engine for us as we’ve been saying for some time. I’m very pleased with them.”

    Remember the subs are coming…Don’t miss the boat!

    Liked by 1 person

  11. Hello, Sir:
    Although there is no new word in below Mark’s writing, I can’t understand it, especially the last sentence saying “worth $10-20M…” Could anyone explain it to me?

    “Remember, just the cost of being public will knock $1-2M from the cost structure for an acquirer. That alone is worth $10-20M of market cap!”

    Thanks,

    Like

    1. If a company is deciding whether to acquire a company, they calculate how many costs can be eliminated due to the existence of overlapping infrastructure in the acquiring company. An accounting department is one example.

      Thus, a small fairly-valued public company will almost surely be worth more to a synergistic acquirer because there will be many overlapping costs which can be eliminated, thus increasing the value of the acquirer (assuming no change to its P/E, which is generally the case).

      Fewer costs equals more profitability. Multiply that increased profitability by a PE ratio and you can place a value on the cost savings.

      In this case, the costs of being public are known to be about $1-2 million. If we assign a PE ratio of 10 to those cost savings (we’ll below the average company’s P/E ratio), then we can assign a value of $10-20 million to those savings.

      Liked by 1 person

  12. Not sure what is justifying the sell-off in ATTU – perhaps many are disappointed in the FY19 revenue guidance of 20.6 – 25.3% YoY growth, which is a big slow down compared to 39% growth in 2018. Also, Non-GAAP operating margin staying in same range. Perhaps this is not enough to support the recent 6 month surge in ATTU’s price.

    Like

    1. I think they’re trying to be conservative in guidance, but that’s the stock market for you.

      I made a small bet that it would keep going higher, as I have done on previous ATTU reports, but nothing works 100% of the time.

      Either way, it’s nice to see one of my early picks closing in on 10-bagger status. It’s been a roller coaster, but rewarding for those who have endured the ups and downs.

      Such is the result when you carefully validate a product / strategy via industry experts. Some win and some lose, but a multibag winner offsets any loser, including a bankruptcy.

      This is why I seek under-followed investments with strong operating leverage (https://youtu.be/zxlyn5CsKpM) and strategic positioning. One or two winners can make your whole year. Requires patience and being ok with taking losses though — those are unpleasant-but-unavoidable parts of executing this winning strategy.

      Like

  13. TPCS

    Yesterday Huntington Ingalls was awarded two aircraft carriers valued at $14,917,738,145. Yes, that’s almost 15 Billion Dollars.
    You may recall that TPCS mentioned on their last conference call that they do work on parts for aircraft carriers. My guess is hatches. Anyone know how many hatches are on an aircraft carrier?

    Contracts For Jan. 31, 2019

    NAVY
    Huntington Ingalls Industries – Newport News Shipbuilding, Newport News, Virginia, is awarded the detail design and construction (DD&C) efforts for nuclear-powered aircraft carriers Enterprise (CVN 80) and unnamed CVN 81 under the following contract actions: (1) A $14,917,738,145 fixed-price-incentive-firm target modification to previously awarded contract N00024-16-C-2116 for DD&C efforts for the future USS Enterprise (CVN 80) and unnamed CVN 81. The current contract for advance procurement funded efforts has been in place since 2016. (2) A $263,096,868 cost-plus-fixed-fee modification to previously awarded contract N00024-16-C-2116 for associated research and development efforts. (3) A $31,097,671 cost-plus-fixed-fee modification for additional level-of-effort in support of maintenance of the CVN 78 class specification, design efforts, feasibility and tradeoff studies, and scoping and estimating. Work under this contract will be performed in Newport News, Virginia (62 percent); Sunnyvale, California (5 percent); Coatesville, Pennsylvania (3 percent); Wellsville, New York (1 percent); Cincinnati, Ohio (1 percent); Milwaukee, Wisconsin (1 percent); and various locations below one percent (27 percent), and is expected to be completed by February 2032. Fiscal 2018 and 2019 shipbuilding and conversion (Navy) funding; and fiscal 2019 research, development, test and evaluation (Navy) funding in the amount of $889,830,279 will be obligated at time of award and will not expire at the end of the current fiscal year. This contract was not competitively procured, in accordance with Federal Acquisition Regulation 6.302-1(a)(2)(iii) – only one responsible source and no other supplies or services will satisfy agency requirements. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity.

    Remember the subs are coming….don’t miss the boat!

    GLTA

    Liked by 1 person

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