My first issue may not seem like a big deal. In this day and age there is no excuse for companies not to provide INVESTOR EMAIL ALERTS that make it easier for potential investors and current shareholders to stay informed real time of any company developments. It does not mean I won't take a trade but I would need a really compelling reason to hold it as an investment.
I do not know how you view investing. I become part-owner of the company when I invest. I do not care if I buy ten shares or 100k shares. The level of my ownership is immaterial to me. I have so many companies that pique my interest as potential investment opportunities. I will often take a tiny "starter position" to make sure a company stays on my radar and I follow through with my due diligence on the company. Through the due diligence process, I will determine how big an owner I want to become, if it may only be worthy of a short-term trade or if I should walk away entirely.
The difference between short-term trade and investment? When I am looking at a company as an investment, it does not mean I will just buy shares and sit on them for 20 years. I am investing my money, but I am also investing my time, which is often said: "Time is money."
I commit to researching (financial SEC filings, earnings reports, technical analysis, comprehensive 3rd party research reports, opinionated articles, and social media), interviewing (management, customers, competitors,) testing products or new service. I invest my time sharing the companies story; if I find a company that may be a potential customer, partner, or acquisition target, I forward them to management. I take my ownership in the company literally, and I will do everything within my power to help the company succeed. When I am an investor, I will probably own shares in some capacity for many years. I will not go all in and sit on the position when there are profits. You have to be disciplined enough to harvest some of those profits at appropriate times and try to maintain at least a small core holding position. What am I looking for in return on my investment? I want a multi-bagger 10 - 20 times on my investment wouldn't suck, but the goal is to get a 300-4000 percent return. You may be rolling your eyes and saying something like, Come on, Tim, give me a break. Who wouldn't want those kinds of returns, but how realistic is it?
One example is all I need—this a screenshot of $APPS when I first started researching the company. Notice the dates and price of my entry. There are 3 or 4 additional trade plans that I have posted in AWT that I took over these last few years. I also have a separate long-term hold account that I do not put in the AWT trade plans. However, I do let the members know when I am still holding a core position. I left a ton of money on the table. The last piece I sold of $APPS was around $47. I missed an additional 50 dollar move in the stock. Those types of returns are genuinely achievable, and that is why I am willing to invest my time. I put in an immense amount of time and work as an investor, and eventually, I want to get paid for all my hard work. I am a very patient man, and I don't mind waiting.
I am addicted to searching for the next one, and it has taken me years to refine my approach. It will never be perfect! I am always learning new lessons to apply to my evaluation process. There are so many things that contribute to the stock becoming a 400 to 4000 percent multi-bagger. First mover advantage, small float, intellectual property protection, capital structure, adaptation, longevity, innovation, execution, fiscal responsibility, strong leadership, clear vision, large short interest are some examples. I am not going to break all of these things down. That will have to be for another article
Once I find a company that grabs my attention, the first thing I do is look at the long-term chart. The chart quickly tells me the story of a company just by looking at the price action. If the line of the share price goes from the upper left to the lower right for the last ten years, it's pretty easy to determine they have been a massive disappointment to their long-term investors. However, the chart may be basing sideways within a range for the last year. If there is anything on the chart that makes me think the story may be about to change my next step. Take a quick look at the fundamentals through various sources. If that doesn't look like a total train wreck and they do not have a ridiculously high share count and valuation, I move to step 3, which could include taking a small starter position and then going to the companies website.
ISSUE NUMBER 1
There I will look to sign up for "investor alerts." When I bought my first stock in 1991, I did not have this option. As a matter of fact, if I wanted any information on a company back then, I had to call my broker and ask him to send me a report in the mail. Today, most investors do not take advantage of their resources at the end of their fingertips. Company email alerts consist of company press releases that could move the stock IE.. executive departures, new contracts, new products or services, preliminary earnings, etc. and SEC filings IE.. Form 4 or Form 3 insider transactions, 8k which is a report of unscheduled or material events at a company that could be of importance to the shareholders or the Securities and Exchange Commission 10k annual reports which tell you everything about the company in great detail, S-3 registration filing for a proposed offering of share, and 13D-13G filings for party ownership of 5 percent or higher in the companies total stock issue.
I can not emphasize enough how important this is. You should be signed up for email alerts on every stock you own in your portfolio and any company that you are considering as an investment. The alerts have served as warnings and helped me minimize potential losses. They have also allowed me to capitalize on positive developments countless times over the years. You would be foolish not to use this resource. I want to convey that *** if you are a publicly-traded company and you are not providing this service for potential investors and your current shareholders. You should be ashamed of yourselves.*** I can not see one justifiable reason as to why you wouldn't want to provide it. If anyone has reasoning that they believe does justify it, please email me @ Tim@Alphawolftrading.com > I wish to be enlightened.
I am not writing this article with an intent to throw any specific company under the bus. I also want to be clear that just because I decide not to invest with a company for the long term. It does not mean I won't trade the companies stock for a scalp or a short-term swing ahead of a potential catalyst, but I won't be building a significant position, and I won't be investing a bunch of my time into the company.
I want to share with you actual real events that have occurred with individual companies and how these events influenced my participation as a potential investor.
The email alert service is something that even OTC penny stock companies provide. Not long ago, I had a company hit my radar as their stock was moving with high relative strength and unusually high volume; the share price had a nice spike and was in the process of taking out long-term resistance. It is a thinly traded stock with a very tiny float, but it was trading on a senior exchange. The company has been on the exchange since the 1960s. I dug a little further; the company is in a sector that was starting to heat up with a catalyst on the horizon. They had just reported better than expected earnings, and that was the reason for the spike in the share price. I waited for a pullback of the initial pop, and I purchased a small position at what I considered could be a support area. I went to their website, which by the way, looked like it was designed in 1960. Needless to say, I could not find an email alert service on their site.
I reached out to investor relations inquiring as to whether or not they had the service. Sometimes they have them, but I can't find them on the site; I am starting to think there is a whole secret society of website designers that must be HUGE "Wheres Waldo" fans. Secretly deriving pleasure from knowing it will take someone 45 minutes to find something that should take 10 seconds.
Anyway, with this particular company, I wound up receiving an email from the VP of business development and sales, and it said. "Thank you for your interest. We are a small company and not required by the SEC to provide that type of service."
REALLY????????????
I did respond and acknowledged that I was aware that the company wasn't required to provide that from the SEC. I then asked why they wouldn't want to give that service to their shareholder's potential investors. As the VP of business development and sales, isn't that something you would view as a resource to get their story out into the public? I never received a reply.
I don't know about you, but that is the kind of guy I want running my business development department and heading up sales. (SARCASM ALERT)
Would you like to take a stab at what I did next?
I pulled up the shares I had purchased; I was up like 20 bucks, and I sold them immediately. My due diligence was complete. The company has been trading on a senior exchange for 50 years as a small company with a mindset like their VP. There is a very high probability they will remain a small company for the next 50 years or go out of business. Why would I feel comfortable investing my money there? There are too many other opportunities with companies that comprehend the importance of transparency and keep their shareholders informed to waste my time doing any more research on this company.
As I stated earlier, if there is a catalyst like a new product or service that attracts investors to a stock, I will test the products for myself or order the service and evaluate whether it is worthy of the hype. I did this with a particular piece of wearable tech that was all the rage not that long ago, and I determined from my experience two things, the tech was not accurate enough, and the product was not all that impressive. I felt like it was more of a fad that was taking to market by storm. Until the tech gets much more accurate, the company stock for that product was a great trading opportunity but not one I would have taken as an investment.
Recently, I found a company that introduced a new SAAS that I felt could be the perfect product at the ideal time because of Covid. I bought some shares of the companies stock and planned to build a significant position as an investor. I was excited, not just as an investor. I was genuinely enthusiastic about their product and couldn't wait to use it for Alpha Wolf Trading and a few other projects I had in the works. I immediately also started thing about friends and other companies I have investments with that I would introduce the product to if I experienced strong results using their innovative offering. I signed up for a demo. I was contacted immediately, and my appointment was set.
I was very impressed with the initial response time. I was contacted again by the person that would be running the demo. His initial contact info confused me a little bit, and I sent him a few questions about the product. Long story short, the person that was going to be giving me the demo turned out to be a Vice President of sales for the company. He discovered that I was a trader/investor before my scheduled demo, and on the day of, he informed me that he was not going to do the demo. He told me that he had been getting a lot of "guys like me" that are trying to do their research on the company but waste his time. He let me know that he was responsible for sales and bringing in revenue. I tried to explain that I was genuinely interested in the product and why. He still refused to do the demo. However, he did offer to send me to investor relations so I could continue to do my due diligence. He was kind enough to let me know that is why they have an investor relations department.
To say I was pissed would probably be a grave misrepresentation. My hair was on fire, and after we hung up, I wanted to dump the stock immediately. I was genuinely interested in the product I wanted to buy it. See how it worked and see how it impacted Alpha Wolf Trading, and this guy refused to do a demo????? I was kind of in shock; I could not comprehend what just happened. It made zero sense to me. I almost dumped the stock!
However, I had already done quite a bit of research on the company; the CEO had an impressive track record and had tremendous success in a different industry. He was in the right place at the right time, and I felt like he was going to do it again. He brought in some heavy hitters to the board of directors and as additions to his executive team. So I decided instead of letting one misguided employee's poor judgment determine my investment thesis, I would share my experience with the CEO. Not trying to get anyone in trouble but just to let him know what had happened. He responded within 15 minutes, sincerely apologized, and offered to personally re-schedule the demo. He offered to be on the demo call informed me I could bring as many people as I wanted. He would have not just the product I was interested in but all three of their new product offerings. He asked if we could wait a week to do the demo because they reported earnings in a few days. There will be information presented on the earnings call, and after being made public, he will be able to talk about it with my team. What more could I have wanted? The CEO showed me that he cared about his shareholders and wanted to do whatever he could to change my perception of how I felt about the company. I did wind up keeping the stock. I added shares after the demo. The story there is still playing out, but I have already locked in some very nice profits. Only time will tell how the rest of the story plays out.
ISSUE NUMBER 2
In the last two weeks, I have taken my time to watch investor presentations by a minimum of 15 companies. Of those 15, I reached out to 7 that I decided to do more due diligence on. 2 have responded.
One CEO gave me his cell number within 15 minutes of me reaching out. He let me know he was available to take my call. I jumped on a call, and we spoke for well over an hour. He provided some color on several questions I had after going through their 10k and a few articles written about the company and its direction. Nothing that hasn't already been publicly disclosed. I could sense his level of commitment and his passion for the business. I try to ask tough questions. I do not pull any punches when speaking with anyone, no matter who they are or their title. He did not try to make excuses and said more than once that it all comes down to execution. There was an air of confidence when he spoke about the executive team he recently assembled and the massive opportunities that will be out there for the company to execute and establish itself as a real leader. Do I always believe everything I hear? Of course, not; there are CEOs and senior executives that are fantastic at selling the sizzle and horrible at bringing the steak.
As I said earlier, this is just a small piece of the work I put into evaluating a company. I have been involved with or followed companies for years where the story always sounds exciting, and the products have real potential, but they can never seem to execute and make money. I have had CEOs that I like who are super smart and have fabulous ideas and vision. Unfortunately, they are terrible communicators or operators, and their ego keeps them from bringing in new blood that has the skill set to take the company where it can go.
Let me ask you > which company would you feel more comfortable investing with for the long term? The one that takes the time to appreciate your interest and is excited to share the vision. Or the company that doesn't even acknowledge your existence?
I understand that I may not be able to speak directly with every CEO or CFO at every company. However, if they can't respond to my email or take my call, at the very least, have SOMEONE -ANYONE get in touch and let me know why and offer to put me in touch with someone else from upper management or investor relations that will answer my questions.
No response at all is unprofessional, irresponsible, and frankly inexcusable. As a shareholder, I want to feel appreciated and recognized as a part-owner of the company. At this stage, countless companies fail when I am in the process of doing my due diligence. Unfortunately, they aren't just losing me as a potential investor. They are losing an entire group of potential investors. I am the guy on the front lines trying to find the hidden treasures out there that I can share with the people I care for and want to help succeed.
If there is one thing that the recent Reddit incident with GME, KOSS, and AMC can teach the leadership of publicly traded companies, there is strength in numbers. At the same time, those particular companies did not warrant the valuations that they experienced through that crazy run-up.
I can also confidently say that there are numerous companies out there that are not on many radars that are underappreciated and undervalued. Just imagine if a Reddit-like crowd got wind of some of those hidden gems.
I do not know why some companies choose to ignore me and, to be precise. I do not just send out one email and call it good. I will make repeated attempts in various ways. I know that some of my emails may go to junk mail, or maybe I typed in the wrong email address.
I have one company that I have called to speak with the CFO twice, and I left the receptionist my home phone number, cell number, and email address. I have sent an email to investor relations and one directly to the company general mail. I have had zero response! How comfortable would you feel investing in a company like that? The funny thing is most investors would spend more time researching a new phone or a pair of shoes than they will before purchasing a stock. Somewhat crazy if you think about it.
I speak with a lot of CEOs and executives across a broad array of industries. If I am willing to spend my time researching and then inquiring about their company to gain clarity and they can't find the time or don't have a system in place designed to acknowledge and engage with new or existing shareholders. Why would I have faith that the company will execute and ultimately achieve success giving the shareholders the reward of a better than average return on their investment?
Ask the AWT members, friends, and family how passionate I can get about a company I believe in after extensive due diligence. I love to help people and companies succeed, no matter how small my role may be.
The first stock I ever bought was Black and Decker in 1991 for just over 16 dollars a share. The company had a horrendous reputation with professional contractors. They acquired the Dewalt company in 1960. Dewalt possessed was high-quality/dependable product with a strong reputation. Black and Decker planned to roll out a whole new line of power tools under the Dewalt name, and I felt that it would be a hit within the construction industry. Here we are 30 years later; Dewalt is still going strong as one of the top cordless/power tool manufacturers in the market today. That experience is what got me started in the markets. The stock tripled in reasonably short order. My next play was Marvel enterprises coming out of bankruptcy at a dollar a share. Disney eventually scooped them up for just north of $50 a share.
If you would like more recent examples of stocks that I have identified early on as successful turnaround plays, take a look at the charts of $MAXR $HEAR $CALX $KTOS $OPRX. I am sharing these with you not because I want to boast or brag. Anyone that has followed me for any lengthy period knows I am very humble. I am not trying to sell a lifestyle or claim that I only have winners and never have losers. I have my fair share of both, and I always try to learn something that I can apply to the next trade or investment I am looking to take.
The bottom line is this if you are going to invest in a company and become part owner. You have a right to be able to speak with the executive team, and you should. Take some time to get to know the executive team. Get a feel for how passionate they are about the business. Get a feel for if they recognize their shareholders as partners and not just a way to raise capital so the company can continue to pay their high salaries, grant them free shares, and pay their large bonuses for lackluster performance. You as an owner should be able to speak with someone in the executive team and express your concerns and hold someone's feet to the fire when they fail to execute? It isn't unreasonable to expect open communication lines with the executive team of any company you are a shareholder.
Before you go all-in on the next great stock tip you hear about, try reaching out to the company. Try signing up for investor alerts and see if you can get some dialogue established with upper management, and if you can't, you may want to reevaluate before pulling the trigger.
I hope you pulled something of use from this article that helps you along the road to ultimate success.
I hold no stocks with symbols placed in this article and have no intention of taking a position in the next 72 hours. This article is my opinion and not a solicitation, recommendation, offer of any kind and should be viewed only as a personal opinion.
