Value Investing AudioEye & Aqua Metals - A Few Thoughts |
- AudioEye & Aqua Metals - A Few Thoughts
- Looking for Easy Games in Bonds - Michael J. Mauboussin (PDF)
- Corporate Spin offs (Special Situations)
| AudioEye & Aqua Metals - A Few Thoughts Posted: 16 Apr 2019 05:24 PM PDT Have been doing some digging into two deep value plays that I believe have a significant upside from their current valuations. The first is AudioEye, the premier player within the website accessibility space. Website accessibility lawsuits have entered into the thousands, with the majority of cases having been ruled in the plaintiff's favor in Florida, New York, and California (I would encourage you to look into the Winn Dixie and Domino's Pizza cases). Insider ownership is high at over 30% (one shareholder owns 50%, thus there is a very low public float) and the business is run by Dr. Carr Bettis who continues to purchase shares. The company uplisted to the NASDAQ from OTC during the summer of 2018 and remains cheaply priced for a SaaS based business growing at 100% YoY at 5.7x forward price to sales, 97-98% retention, and a TAM of what seems like $1bn. The company boasts over 1,000 clients including Uber (app+website), the Social Security Administration, ADP, Olive Garden, SoFi, WebMD, and my favorite, Crow Wing County's website. The second play is Aqua Metals. This one is a bit more risky and should be sized accordingly. The company has developed a patented system for recycling lead acid batteries that outputs higher quality lead at favorable economics in comparison to smelting. The environmentally sound nature of aqua-refining has the eyes of major players like Johnson Controls (who has provided formal vendor approval for Aqua Metals) and Interstate Batteries (who has a 7% stake in Aqua Metals and is 49% owned by Johnson Controls, now Power Solutions). Johnson Controls has a stake in Aqua Metals as well. The thesis that has to be bought prior to buying shares is management's (and now Veolia's) capabilities of ramping aqua refining modules at favorable electrolyte recovery rates. The company announced that it has achieved 75% of the target recycle rate of its proprietary electrolyte solution (75% goal provides the company with break even contribution margins) and plans to achieve the 100% recycle rate are currently in motion and have been guided to be achieved by 2H2019. Testing has been extensive in smaller settings and I believe that the company will reach this milestone. The company recently inked a 2 year deal with environmental-health-behemoth Veolia to help with plant operations in Mccarren, Nevada. The terms of the agreement are such that Veolia will station 6 engineers at Aqua Metals HQ and in return will provide a critical ally in achieving an asset-lite operating model of licensing out modules upon achieving previously stated targets. Aqua Metals is issuing 2MM shares to be paid out quarterly to Veolia and Veolia essentially has call options to purchase 2MM shares after year one at $5/share and another 2MM shares after year two at $7.50/share. I wrote this rather quickly and can go into more depth into both equities if anyone is interested or has follow up questions. [link] [comments]  |
| Looking for Easy Games in Bonds - Michael J. Mauboussin (PDF) Posted: 16 Apr 2019 10:21 PM PDT |
| Corporate Spin offs (Special Situations) Posted: 17 Apr 2019 02:44 AM PDT Newbie investor here. Would anyone be kind enough to share resources / books / sources of information and knowledge on how to properly analyse corporate spin offs ? Many thanks in advance. [link] [comments]  |
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