Big OTC Experiment - Second Quarterly Review

Mar. 08, 2018 2:04 PM ETASHG, DTRX, FNDM, GANS, GLUX, HRZCA, IGOI, IHRC, MAAL, MAKE, MMTRS, PARF, PRAC, SORT, TAUX, VPGI, WXMN4 Comments
Jan Svenda profile picture
Jan Svenda
1.92K Followers

Summary

  • In August 2017, I started building database exclusively focused on the OTC market. My initial thesis was that the market is least efficient and thus valid investment opportunities are present.
  • Below you can see the performance analysis of all the stocks I highlighted so far. It seems that the thesis holds true.
  • More than twice as many stocks went up by at least 20% rather than decline 20%. Only 26 stocks went down more than 20% and most of these were speculative.
  • In comparison, 67 stocks went up by more than 20% and there were picks with sufficient volume, solid financials, and clear catalyst.
  • There are valid challenges in the space, but I believe that by diligently covering the market, one can spot opportunities that are truly differentiated to the rest of the market.

In August, I decided to start building an OTC database which should alleviate one of the main problems of the space and that is idea generation. If you found an interesting stock in the OTC haystack, you are halfway there as there is no way to screen the space efficiently.

Thus, by having access to a large database of OTC stocks that run a sensible business and potentially showcase investment opportunity investors should be able to streamline the research process and let the database do some of the work for them.

In my first quarterly review, I showcased why I like the OTC market and why I believe there are valid investment opportunities out there. I believe the sector is inefficient due to several features which are by some perceived as risks or are understood as insurmountable challenges. This creates opportunities for the diligent investor.

This serves as my 'thesis' for working on the database and the associated newsletter which provides investors with research on many of the stocks added to the database.

Via these quarterly reviews, I would like to 'test' the thesis by looking at the underlying performance of all the stocks added to the database.

After the data analysis, I also decided to showcase what I feel are the 'stereotypical' OTC opportunities. This way investors can better understand what drives the performance of some of these stocks.

I am also in the midst of preparing an online presentation (through a live stream) about my experience in the OTC space. If you are interested in attending, please sign up for a mailing list which will announce the details of the event.

Data Analysis

The first quarterly review has supported my original OTC thesis that the market is a valid place to search for interesting and actionable investment opportunities. There

This article was written by

Jan Svenda profile picture
1.92K Followers
I am an investor and analyst focused on two fields. Deep value in the Over-The-Counter (OTC) space and short-selling on the listed markets. The first focus has involved me running my own newsletter for the past two years. Compiled database of research and stocks can be found on my website - https://jansvenda.com/. I am now working on various special situations within the OTC space. The short-selling focus is for now confined to my own research and weekly analysis of Short ideas for Seeking Alpha PRO+ community. From time to time I also contribute to Safety in Value's marketplace 'Microcap Review'.

Disclosure: I am/we are long GANS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (4)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.