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Disclaimer: This biography is required reading for anyone considering an investment in any of Mark Gomes' selections. It contains critical information about his research and trading methodologies. Mr. Gomes is currently the CEO of Pipeline Data, LLC and a contributing analyst to PTT Research.... More
My company:
PTT Research & Pipeline Data, LLC
My blog:
Poised To Triple
My book:
Faster Than Forty
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  • Glu Mobile And Aerogrow Jumped 20%+ On Wednesday… What's Next?

    In recent months, shares of Glu Mobile (NASDAQ:GLUU) and AeroGrow (OTCQB:AERO) have sold off aggressively, despite delivering consistently strong progress in their businesses. In my latest Instablog article, I explained one of the key reasons for the sell-offs, which has also impacted shares of QAD (NASDAQ:QADA), JAKKS Pacific (NASDAQ:JAKK), and Mattersight (NASDAQ:MATR).

    Those who took advantage of the dislocation in price versus business-performance were greatly rewarded on Feb 4 and 5 when both GLUU and AERO rose more than 20% on positive news releases.

    Glu Mobile

    Glu Mobile jumped more than 20% today after reporting another great quarter. More important than the small jump in share price is the qualitative strengthening of the company's story. Management is unlocking value in ways we have for many months predicted it would.

    We expect Glu's share price to perform well in 2015. The company grew at an astounding rate in 2014 - over 100% YoY. The second half of the year should be especially good to shareholders, since this is when Glu will release the vast majority of its titles. Evidently alert to the needs of shareholders, the company has said it will announce more celebrity games in the first half.

    Q4 revenue of $76.2 million outperformed the midpoint of guidance by 22% and outpaced Q4 2013 by 78% (36% organic). EBITDA of $14.1 million beat guidance by 214%. The company earned $12.2 million, or $0.11 per diluted share vs. guidance of $0.01-0.03.

    With such an explosive Q4, Glu outperformed full year expectations too. Revenue grew 113% YoY to $242 million, bringing four-year CAGR to 37.9%. Full-year EBITDA was $35 million, at the upper end of guidance.

    Management raised 2015 full year guidance from $220-260 million to $245-275 million. This assumes outsized hits, in accordance with Glu's habitual conservatism.

    In our article on October 30th, 2014, we noted how the huge Kim Kardashian: Hollywood app isn't the traditional mobile game: "It's more like an interactive magazine or mini TV station that allows Kim's fans to stay abreast of what's going on in her life. It's media property."

    We predicted Glu would duplicate this model with other celebrities. Kim Kardashian was pulling down tens of millions of dollars. Others would want a piece of the action as well.

    Glu more than satisfied our expectations yesterday by announcing a 5-year exclusive mobile gaming partnership with Katy Perry.

    Its potential is enormous. Katy Perry is even more prevalent in pop culture than Kim. She just starred in the most-watched halftime show in Super Bowl history. She is one of the most popular American singers alive. She boasts more than 170 million total social media followers. By comparison, Kim Kardashian claims only 76 million.

    Were Glu to monetize Katy Perry's fans as successfully as it did Kim Kardashian's, the company could see $100 million in revenue during the game's first full quarter, even assuming no improvements to the monetization platform.

    Katy Perry almost certainly won't be the last celebrity to sign with Glu. CEO Niccolo de Masi said several other potential entertainment partnerships are in late-stage discussions. These will provide the backbone of his prediction that "Glu titles will have the support of over 400 million social channel followers by the end of 2016."

    Consider the significance of this statement in light of de Masi's tendency to promise less than he can deliver. Glu Mobile monetized Kim Kardashian's 76 million social media followers to the tune of $75 million... in only two quarters. What could they do with 400 million... or 500 million?

    Racing Rivals also had a strong quarter, reporting daily revenue records despite being live for more than 15 months (it became a Glu property only in the fall). Even sixth quarters after its initial release, Deer Hunter 2014 pulled in more than $10 million.

    Glu has repeatedly proven it can maximize app monetization, keeping customers engaged for a many months by releasing staggered content updates.

    "Having now reached scale" (de Masi's words) and sustainable annual profitability, Glu will deemphasize growth by acquisition, focusing instead on organic growth to capitalize on its leadership in the celebrity, shooter, racing, and sports genres.

    Glu will add six new teams this year to build on its success in these genres. Three will focus on the celebrity genre. Niccolo de Masi said it is his eventual goal for each team to work on only one game. This gives us at least a hint of the minimum number of celebrity games he expects to launch.

    In both his opening and closing statements, de Masi said, "Full year guidance for 2015 does not assume any Kardashian-size hits. As such, there remains significant opportunity for upside in all financial metrics."

    Glu plans to launch only one title during Q1 2015, during which it expects revenue of $50-52 million-only 6% more than 2014. Three titles will launch in Q2, and ten titles in 2H, with Katy Perry's title launching in Q4. 2H will be strong indeed.


    AeroGrow doesn't report quarterly results until February 17th. Yesterday (Wednesday, February 4th), however, it jumped more than 23%. To understand why, we must dive into its key partnership with Scotts Miracle-Gro, the world's leading marketer of branded consumer lawn and garden products.

    In October 2014, Scotts Miracle-Gro announced the formation of the Hawthorne Gardening Company, a wholly-owned subsidiary "focused primarily on the emerging areas of indoor and urban gardening products."

    One of Hawthorne's main products is AeroGarden, provided by AeroGrow International.

    In its earnings call on Wednesday, Scotts announced that a $40 million pool would be invested into the business. About half is going to "emerging areas like SLS (Scotts Lawn Services) and the Hawthorne Gardening Company."

    Later in the call, Scotts' CEO discussed potential acquisitions. He stated, "I think you will see some important... acquisitions... for the remainder of the year, less than 1% I think by the time we close. So I don't think it's going to add a huge amount to the year... but... it's an effort that the entire corporation whether it's the sort of corporate side or the operating side of the business are very much aligned on these areas of growth. And just to repeat that urban, indoor, hydroponic, crafty naturals are very much a focus area. And so I wouldn't be surprised to see something happen in that space."

    Quite clearly, he was hinting at the notion of acquiring AeroGrow .

    In addition to that bullish news, AeroGrow announced in mid-December that the all new Miracle-Gro AeroGarden 7 LED sold out as the main Gold Box feature on's Deal of the Day on December 14th. This after being declared an Amazon Holiday Best Seller during the 2013 holiday season.

    AeroGarden's success in 2013 is probably why Amazon promoted it heavily on such a big shopping day this year. AeroGarden took full advantage of the opportunity, but investors seemed to ignore the good news, letting us load up on AERO straight through January.

    The market often acts irrationally. AeroGrow's 25% decline in price between January 12th and February 3rd is a good example of this.

    The positive news from Scotts Miracle-Gro today apparently acted as a wakeup call for some investors, who bought in volume and drove the price up. Even after the big 23% day, AERO is still priced as it was from early December through mid-January.

    With a company as small unfollowed as AERO, inexperienced investors can easily get worried when the stock price plummets. This is often a function of volume, and a gap between supply and demand, rather than fundamentals.

    So stick to your guns, and let's see what AERO announces on February 17th. From our research thus far, we believe it will report favorable results.

    Before we close, let us make a final distinction... one we have made many times. The last few months, our stocks have given us a rocky ride. Our companies, however, have excelled by most any measure we could hope for, including QAD , JAKKS Pacific , and Mattersight .

    When a company is executing well, but its stock is diving, it's usually an opportunity to take advantage of the price dislocation. I make this distinction often, and I hope you made it yourself before GLUU and AERO lifted off yesterday. These are excellent companies, and we have every reason to be confident in their futures and our prospects of being rewarded for buying them before the market figured out just how excellent they are.

    Tags: AERO, GLUU, long-ideas
    Feb 05 5:28 PM | Link | 13 Comments
  • Coming Out Of Hiding

    At 2PM today, ahead of Glu Mobile's earning's announcement, I released an article to PTT subscribers. The purpose was to address the movement of my picks in recent months (juxtaposed against their fundamental performance). The powers-that-be at PTT will determine whether that piece gets released to the general public (I hope it does).

    Either way, the following is a note that I posted to the PTT Members' Forum, which I've reprinted below...


    I trust that you all saw the article I sent out today.

    The timing was intentional. I can't force people to follow the rules of the Methodology, nor can I force them to remain patient in the face of declining stock prices. There was nothing I could do or say to change people's minds about me after Matt Margolis' stock (GTAT) went under.

    While I must (and do) accept full responsibility for endorsing Matt (at the time, his track record was nearly-flawless), I can't explain why people would judge my stock-picking ability based on someone else's pick (though I fault nobody who has told me "from now on, just stick to stock-picking, dummy").

    By the way, you can read the whole truth regarding my role in the GTAT fiasco here:

    As a reminder, GTAT was never an official PTT Portfolio pick. However, people are entitled to their opinions and actions. Despite my minimal involvement with GTAT, I accept that I was at the center of why many people got involved with it.

    I (and many of you) have paid a heavy price for that. It is very clear that I should stick to picking my stocks and keep my nose out of other people's business. Hard lesson learned.

    Moving on to my portfolio -- As I've said before, 90% of an elite investor's gains occurs in 10% of the time. That means that we spend 90% of the time in a state of boredom or frustration. This is why the Methodology is so important. It emphasizes the elimination of emotion and focusing on facts… and the fact is, our official picks have all been announcing consistently great news. Looking at the stocks' performance, that may be hard to believe it, but just research it for yourself (or re-read the article I sent today).

    As long as my companies are doing well, I don't worry about what the stocks do. It's a simple equation:

    Progress in the business + a lower stock price = a more attractive stock.

    Many act like it's the opposite, but today's action in GLUU and AERO reveal the truth. Good news drives stocks and good companies report good news. Hopefully today's action helps to get my credibility out of the penalty box and gets our stocks moving in the same direction as the underlying businesses.

    In closing, I want to offer my deepest thanks to everyone who has kept the faith. Today doesn't make up for the past 4 months, but I think we can all agree that it's clear validation of these companies and their prospects... and that's what the Methodology is all about.

    The rest comes in its own time.

    Cheers and Stay Tuned,

    Mark G.

    Feb 04 8:49 PM | Link | 34 Comments
  • Tripling Your Money

    In 2008, I semi-retired after a blessed 14-year career serving hundreds of Wall Street's most well-known institutions. In 2009, I decided to pay it forward by donating five years of time to provide investment lessons and picks to Main Street investors.

    At the end of those five years, I launched PTT Research to continue providing my services to interested subscribers. Thousands have signed up, presumably drawn by my Seeking Alpha performance. Thousands more subscribe to my free weekly newsletter at

    During my "tour of duty", I provided 33 official selections, which have been meticulously tracked via the PoisedToTriple Portfolio Tracker. Of the 33, seventeen (over 50%) have either tripled or been acquired with profits averaging 161%. Seven proved to be bad picks, with losses averaging 17%. Balancing modest losses with large gains is the cornerstone of my investment philosophy.

    There are a few things to understand:

    * Some of my picks are meant to be short-term in nature, but most many require patience to reap great rewards. Indeed, my biggest winner ever declined by more than 30% in 9 months before rising more than 1,000% in the following 15 months.

    The lesson is clear -never judge a stock by how it acts. The value of a company often has nothing to do with the stock's direction (mainly because 95% of investors don't have the 10-year education required to properly evaluate them). In reality, a company's true value eventually gets reflected in its stock price.

    * My aim is to be early, so a wait is to be expected. Investors should also expect to hear a lot of bearish comments regarding my selections. This is because the biggest opportunities are usually unknown, unloved, or even hated.

    Accordingly, I attract numerous detractors who don't understand my method. If they have a professional background, I might challenge them to a public debate. To date, all have declined, citing time or a desire not to get involved in a "dog and pony show". Of course, by having gotten involved in the first place, they have spent time and created a show. Indeed, most haven't done the homework my team has.

    My advice is to check the resume and track record of the detractor. In many cases, you will find an unqualified individual attempting to make a name for themselves or scare investors for their own benefit. In other words, beware of whose words you trust.

    * Speaking of which, my "team" consists of my mentor of 20 years, several junior analysts, and industry experts to whom I allocate a six-figure annual budget.

    My picks are NOT based on current math (i.e. P/E ratios). The value of a stock is determined by a DCF analysis, the gold standard for stock valuation analysis. A DCF analysis are focused on a company's future. Thus, my team focuses on ascertaining the potential future inherent in the company's current strengths and capabilities, coupled with a forward-looking assessment of the markets they serve.

    My selection of HIMX and PXLW (both tripled) were perfect examples. In both cases, our expert consultants helped us determine that their technologies would command the attention of GOOG and AAPL, respectively.

    Skeptics balked and accused me of being a "pump and dump artist". But within months, GOOG announced a deal with HIMX and AAPL was found to be a large PXLW customer (via an SEC filing). Those skeptics disappeared, but new ones seem to appear for every new selection I make. I'm not always right, so some will occasionally prevail... but even a broken clock is right twice a day!

    A strong mind is required to overcome uninformed negative biases and commentary. My resume, track record, Methodology, and research rigor are meant to provide the confidence required to do so. If a detractor (or your own negative bias) isn't backed by 100+ hours of expert-based research, the bias should be deemed suspect.

    * Some of my selections (like GSAT, which also tripled) are not based on the idea of being right about its future. That may sound counter-intuitive, but stocks aren't black and white. They are always gray, reflecting 1) the potential reward for success and 2) the potential penalty for failure.

    In simplistic terms, I believed that GSAT (which was trading at 67-cents at the time) was actually worth $2 based on roughly 50/50 odds success (worth $4+) and failure (with the potential penalty being bankruptcy). FYI, the penalty is why I classified the investment as "Speculative".

    Of course, such a "bet" is worth $2 ($4 * 0.5 + $0 * 0.5 = $2), which was 3x its price at the time. In other words, I was seeking a fair value more so than determining if GSAT's business would succeed or fail. After all, there is no such thing as a sure future, so all stock evaluation is an exercise in handicapping.

    Those who knocked the selection on the basis of pending success or failure were missing the point. Sure enough, the stock went to $2 (and actually continued on to $4+). In fact, even after an in-depth and damning report surfaced against GSAT, the stock continued to trade over $2.

    I still have no comment on whether GSAT will succeed or fail, but continue to believe that $2 is a "fair" price for the coin flip (and I don't like "fair" values -- I seek bargains, so we have moved on).

    * No matter what the situation might be, the rules of my Methodology are critical to your success. The Methodology represents the cumulative knowledge gleaned from my 25-years of experience, personal mentors, and investing legends like Warren Buffett, Peter Lynch, and Benjamin Graham (Buffett's mentor). In fact, the Methodology contains several video lessons from these legends.

    Here's my complete Portfolio track record as of October 31, 2014:

    CORE PORTFOLIO        
    (click for article)
    TickerDateInitial PriceCurrent / Final PriceCurrent / Final ROI Peak PricePeak ROI
    LionbridgeLIOX1/20/20091.233.69200% 7.50510%
    IGOI (1:12 split)OTCPK:IGOI8/6/201018.7256.16200% 62.28233%
    CalixCALX9/19/201012.4521.9176% 22.9784%
    Zhone NetworksZHNE10/24/20102.011.61-20% 6.62229%
    AsteaATEA11/12/20102.256.75200% 7.64240%
    MajescoCOOL9/30/20112.001.6020% 3.4774%
    SeagateSTX11/11/201117.9453.82200% 63.27253%
    Lions GateLGF3/20/201212.1436.42200% 37.81211%
    AttunityATTU4/27/20123.3610.08200% 12.00257%
    LantronixLTRX7/9/20121.821.69-7% 3.3182%
    RainmakerRMKR9/23/20121.040.83-20% 1.3732%
    FacebookFB10/29/201218.0654.18200% 80.82348%
    HimaxHIMX3/4/20133.4410.32200% 16.15369%
    Glu MobileGLUU10/24/20133.143.8723% 7.60142%
    Averages 385 days  119%  219%
    (click for article)
    TickerDateInitial PriceCurrent / Final PriceCurrent / Final ROI Peak PricePeak ROI
    Meetme (Quepasa)MEET11/12/20106.588.8234% 15.45135%
    CereplastCERP5/8/20114.923.94-20% 5.308%
    AtrinsicOTCPK:ATRN7/24/20113.262.61-20% 6.1589%
    Pixelworks **PXLW6/3/20133.249.72200% 9.83203%
    TechPrecisionTPCS7/11/20130.401.20200% 1.35238%
    GlobalstarGSAT8/25/20130.672.01200% 4.53581%
    Delia ***DLIA11/26/20131.100.79-28% 1.4532%
    AeroGrowAERO1/30/20144.103.93-4% 10.45155%
    Mattersight ****MATR3/7/20146.055.42-10% 7.8530%
    Averages 199 days  61%  163%
    ** Upgraded to Core, but remains situated in the Speculative tracker where it was initially selected.   
    *** Initiation price adjusted to reflect our coverage relaunch at $0.70 on 2/20/14    
    **** Upgraded to Momentum, but remains situated in the Speculative tracker where it was initially selected. 
    (click for article)
    TickerDateInitial PriceCurrent / Final PriceCurrent / Final ROI Peak PricePeak ROI
    JAKKS PacificJAKK6/9/20147.736.38-17% 9.4823%
    (click for article)
    TickerDateInitial PriceCurrent / Final PriceCurrent / Final ROI Peak PricePeak ROI
    BroadVision (Long)BVSN2/8/201012.6437.92200% 44.75254%
    RealNetworksRNWK2/17/201016.2312.98-20% 19.8322%
    QAD SoftwareQADA3/24/201311.7321.5183% 23.0797%
    Averages 490 days  88%  124%
    ACQUIRED PICKS        
    (click for article)
    TickerDateInitial PriceCurrent / Final PriceFinal ROI Peak PricePeak ROI
    VoltaireOTC:VOLT1/22/20106.10Acquired43% 8.7343%
    NovellNOVL5/21/20106.06Acquired8% 6.538%
    Magma DesignLAVA8/15/20102.77Acquired158% 7.15158%
    Occam NetworksOCNW8/15/20105.41Acquired82% 9.8482%
    Pervasive SoftwarePVSW3/20/20115.36Acquired48% 7.9348%
    Averages 336 days  68%  68%
    (click for article)
    TickerDateInitial PriceCurrent / Final PriceCurrent / Final ROI Peak PricePeak ROI
    Broadvision (Short)BVSN1/24/201244.7517.0062% 7.8183%
    Averages 105 days  62%  83%

    You will notice that my recent selections have yet to perform. That is to be expected. As previously noted, my picks often take time to mature. We continue to provide subscribers with updated information on how our investments are progressing.

    In addition to the above, my picks are usually "small caps" an asset class that has had a tough year. In fact, I warned PTT Research customers of this in November 2013 and July 2014 via my well-known "Stock Market Yellow Alerts". In both cases, investors saved millions by taking our recommended actions to avoid the market corrections that soon ensued.

    It's all a part of the holistic services I seek to provide. At its core is a foundation of education that will serve my readers long after I'm gone. After all, if you give someone a fish, they eat for a day; teach them how to fish and they will eat for life.

    Kindest Regards,

    Mark Gomes

    Nov 02 7:06 PM | Link | 18 Comments
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