I took starter positions in a couple stocks in the last month. The descriptions I wrote below took up a bit more space than I expected so I’ve relegated them to their own posts rather than include them in the monthly update. In both of cases the stocks are micro-caps and not without their flaws, so I expect to be following my usual wait and see approach; take a small position, watch the story play out, and add to that position if it does.
The idea for Supercom came by way of this SeekingAlpha article, which does a pretty good job of describing the idea. I say pretty good because I think the article exaggerates the thesis somewhat. And given the market’s own tendency to exaggerate when it comes to SeekingAlpha thesis with small cap stocks, that might be a reason not to chase this one. I bought the stock at $4.68 and only 3 days later I’m up over 10%.
Supercom produces RFID’s for and electronic ID’s for public safety, healthcare and homecare, animal and livestock management. They also produce electronic ID’s, used by countries to manage citizen identities. The company recently acquired a close competitor, the Smart ID division of On Track Innovations. The stock shot up in the summer after news of the transaction because of the expectation of synergies which should result in improved financials. Below is a table that I stole from another SeekingAlpha report. It demonstrates the degree to which the combined company will benefit. Read more