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Corporate Solutions Whether you are a large or small firm, GeoInvesting will cater to your needs and create a sound process for corporate diligence. Our specialty is Portfolio Protection – in fact, every aspect of what we do boils down to various ways that your M&A process or investment... More
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  • Ocean Bio-Chem - How The GeoTeam's Information Arbitrage Helped Its Premium Members

    For the last couple of months, we've made it known that we were pounding the table on Ocean Bio-Chem (NASDAQ:OBCI), using our premium platform several times to discuss why we were bullish on the company.

    During yesterday's trading session, The GeoTeam relayed another detailed note to its premium members regarding the finding of CEOLIVE.TV Mike Elliot's little known interview with OBCI's CEO, shown on Youtube. We made it no secret that we were adding to our already large position in the company, and reiterated our bullish outlook on OBCI in light of the information discussed in the interview. We believe the market is digesting the positives from the interview and will take the stock's price higher.

    Below is our note.


    Ocean-Bio Chem (OBCI) - Information Arbitrage Hidden in Interview Video with CEO

    Ocean-Bio Chem is another information arbitrage opportunity we've found. Buried in the commentary of the company's video interview [CEOLIVE.TV's Mike Elliot] cited in its press release today, we found some extremely bullish notes that we want to inform our members of before the rest of the market fully prices them in.

    The GeoTeam has been covering Ocean Bio-Chem (OBCI) since September 25, 2014, when we disclosed to our premium members that they had made an acquisition of OdorStar Technology. In the process, they acquired Performacide, a product used as a hospital disinfectant that initially caught our attention during the Ebola scare. From there, we learned this product could potentially take on a life on its own outside of Ebola, and the more we looked at Ocean Bio-Chem, the more we liked it.

    The company has a core business that's been operating well enough to keep them profitable, but not growing. We think the company's newest growth cycle has arrived, catalyzed by:

    • A drop in oil prices, which should spur demand for its core boating products (an assumption we talked about in our e-mail to premium members yesterday).
    • New products being pushed through a well-established distribution network.
    • High hopes for its new disinfectant product, Performacide.
    • The realization that the assets on OBCI's books are under represented.

    We disclosed our long position to our premium members in the beginning of October. Heading into 2015, we're extremely bullish on Ocean-Bio Chem for a number of factors, including:

    • As of the last quarter, the company has $19.5M in equity and little debt
    • The company has an enterprise value of $28.9M, almost $4M less than the revenue produced in the trailing 12 month period
    • The company has a growing cash position, last quarter reported as $1.8M
    • The company has been consistently profitable, posting net income of $903 Thousand or $0.10/share last quarter

    Today, the company put out a press release linking to an interview video with the company's CEO and CFO. The interview leads us to believe that 2015 is going to be an extraordinarily bullish year. The confidence exuded from the executives in the video is palpable.

    We encourage our members to use the following link to watch the interview, as it is cued up to a key question asked at 13:40. There's roughly ten minutes of the interview after the 13:40 mark that's worth watching. For our members' convenience, we've written out some of the key points:

    • The decline of oil, a detriment to some other companies, will have a dramatically positive impact on marine and RV markets, the two main drivers of OBCI's business. The company sells cleaning products for boats and RV's, as well as fuel additives.
    • Fuel costs peaked at $4 to $5 per gallon which means a boat with 4 engines might consume enough fuel on a weekend to run up a $1,000 bill. Current prices are approaching $2.00. It's unknown if prices will remain at that level but it's not likely they'll rush back up to previous peak prices.
    • Demand for marine distribution and boating sales are picking up rapidly as is demand for RVs.
    • Management is very positive on current business conditions and expects to end 2014 with extremely bright outlook.
    • When asked about 2015, they said the year is "almost too good to be true" and that they were "really optimistic." They have 30+ new products including a complete line of RV products that provide cleaning aids and everything else you might need for a RV.
    • They're expanding the marketing and sales department to focus on existing and new market opportunities. They are moving their office space around to accommodate new staff charged with addressing new markets and demand for the company's products. Also, they are looking for more warehouse space.
    • They also noted that their factory, which is listed on their balance sheet at $5M, actually has a liquidation value of over $25M, as it is "state of the art." This, in essence, lends another $20M in equity to the company which would put their book value near $4.38/share.

    A price target of 1.5x book, we believe, would be on the low end of estimates. This calculation would put shares at $6.57. Assuming a no growth scenario, we believe this should be the baseline. From there, we believe it can only go higher. Based on these factors, we continue to be long OBCI and bullish about the company's 2015 prospects.


    Today, the price of OBCI continues to rise, reaching $4.98 (up 15%) in early trading.

    Dec 19 10:02 AM | Link | Comment!
  • THT Heat Transfer Tech Inc. News Arbitrage From China Could Mean Significant Buying Opportunity

    THT Heat Transfer Tech Inc. (NASDAQ:THTI) is a company that we have followed for a couple of years.

    Based on previous on the ground due diligence, including SAIC analysis, we believe THTI to be a legitimate U.S. listed business in China that trades with the same discount that a lot of questionable Chinese companies do. Not only do we believe this presents a buying opportunity, but news uncovered just today out of China also leads us to believe that there's an opportunity for U.S. investors to take advantage of some news arbitrage.

    As we disclosed to our Premium members earlier this morning, this article in the Chinese Financial Media, published just today, states that THTI has engaged in an agreement with a Chinese government backed Nuclear Power Group (Zhong Guang He Ji Tuan).

    The article states the following:

    (click to enlarge)

    Which is translated as:

    On October 24, 2014 THTI and China General Nuclear Power Group signed a heat exchanger agreement.

    The content of the agreement has not been disclosed, but the fact that THTI is working with China General Nuclear Power ("CGNP") could imply a future contract regarding current and future power plants between the two entities. CGNP is the biggest power plant developer in China and has just submitted its application to go public in Hong Kong on the Hang Seng. Its IPO will be the second biggest IPO of any Chinese company outside of China (second only to BABA). The IPO is trying to raise $3 billion.

    In addition, the company's recent revenue guidance of $22 million to $28 million would constitute an impressive 70% gain (at least) from the same quarter last year, where the company posted revenue of $13.7 million.

    With the help of the company's new arrangement, we believe the company could produce EPS of $0.20 this year, which at a modest 15x P/E should put their stock price close to $3.00, representing over 100% upside from current levels. The company's book value per share is $3.15.

    One of the issues with THTI in the past has been the inconsistency of the company's quarterly. We believe that today's agreement could provide a more consistent and predictable growth curve.

    In order to improve valuation past our current assumption, the company could look to address its DSO for receivables, which we see as one potential caveat, should it not improve. We think the company's DSO number may be typical for its industry, but we're continuing our due diligence on THTI and will post updates accordingly. If the company meets its revenue guidance in the coming quarter, we expect the DSO number to decrease.

    While we don't advocate blindly assuming this type of valuation for all U.S. listed Chinese stocks before performing your due diligence, we have personally visited THTI as recently as this summer. Our most recent visit to the company indicated an uptrend in business from our prior visits.

    Tags: THTI
    Oct 30 3:39 PM | Link | 3 Comments
  • A Significant Bullish Catalyst Removed From The Lakeland Industries (LAKE) Story, Not Ebola Related.

    Note sent to GeoPremium members pre-market:

    We have established a short position in LAKE - Recall, on 10/10/2014 we alerted our premium members that we sold our entire long position in LAKE.

    "We first coded LAKE as a GeoSpecial on 2/6/2012 at $10.16 as a possible buyout target because a large competitor (Ansell) established a 9.6% stake in the company. Due to some of the challenges the company had faced during its tenure as a GeoSpecial, the shares had faced downward pressure. However, in the last few weeks we sent our premium members several email alerts stating we have become more bullish on LAKE due to increase EBITDA performance over the past several quarters and the possibility that investors will gravitate toward the company speculating, that it will see increase orders for its commercial protective apparel line. While it's certainly possible the company could receive increased order flow for its products, over $21 per share today, the stock has easily surpassed our top end near term price target of 1.5 times TBV, equating to around $12."

    We consider ourselves lucky that we were able to lock in over 100% gains on the trade. Friday after the close, Ansell filed a 13D/A showing they have sold the majority of their position in LAKE. We think the removal of this very positive catalyst could result in LAKE making its way back to $12.00, or lower. In general, it looks like the ebola trade for protective equipment makers ( LAKE, APT, VSR) is nearing an end as the World Health Organization (WHO) is declaring that Ebola is being contained. Please note that shorting these stocks does not come without risk: Headline risk; Receipt of orders.

    Tags: LAKE
    Oct 20 9:44 AM | Link | 1 Comment
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