Thoughts On The Last Year

A recap of what worked and didn't

My goal with this Substack is to find you the very best deep value stocks that I can. The kind of deep value stocks I focus on are stocks below net tangible asset value, net current asset value and net cash. If you are new to value investing or deep value investing, there is tremendous empirical evidence and examples in practice supporting the strategies. I touch on some of the empirical evidence for deep value here.

The cornerstone of my approach is bottom-up stock screening. When I have a bullish bias on a particular industry and I find a stock in that industry in the stock screener, I put more weight on that stock.

This industry focus worked well over the last year and a half with such stocks I covered here, like Sarcos Technology, which changed their name to Palladyne AI. Palladyne AI (formerly Sarcos ticker STRC) went on a 1,300% massive run in 2024. The strength of the drone industry theme and their partnership with Redcat (RCT) was a big driver of the returns.

Industry focus also worked with shipper Imperial (IMPP), as I anticipated an industry rotation in shippers. I know many people hate shipping companies in general, but the very cheap valuation combined with my thesis on rotation worked well.

The other industry that worked was biopharma stocks trading for less than net cash. I didn’t realize it at the time, but to my knowledge now, there was actually a record number of bio’s trading for less than cash last year. Seer (SEER) has done ok so far since my write-up. Of course, the old SomaLogic buyout helped initially to get my interest in these. I was just looking at it at the right time. I later found Aclaris (ACRS) and Fulcrum Therapeutics (FULC). Aclaris did incredibly well, up 400% after my post here, and Fulcrum is up a bit now also. Quantum SI (QSI), my most recent one here is up a lot too.

Coffee Holding (JVA) has been another standout gainer. This one I simply knew from years back as a company with un-tapped potential. I knew from following it over the years it would tend to find a floor at net tangible assets. It gained 300%.

The industry focus did poorly with my old Ayro (AYRO) pick. That stock has done terribly. To my credit, I did eventually flip my bias on the EV industry all together, especially the charging stocks, as I outlined on my site StockPursuit.com.

Also, one of the alternative/ energy storage ones Fuel Cell (FCEL) hasn’t done well, down -52% since my posting. Frey Battery (FREY) is doing well and currently participating in the still hot energy storage theme that finally came around.

Allied Gaming (AGAE) and Acacia Research (ACTG) haven’t done well. I still believe Allied Gaming is worth more than rough liquidation value. I think the oil and natural gas segment Benchmark of Acacia Research is still compelling also.

Some Lessons Learned

One of the lessons from the past year that is that sometimes these stocks can take over a year or two to work. This also resonates with older empirical evidence and successful investors track records. The Palladyne AI took about a year and a half to come around. Also, overall, my use of simple price level technical analysis and momentum served me well.