Archive for June, 2014

Inuvo Still Cheap But Moving Higher While Key Insiders Are Buying

Shares of Inuvo have been steadily moving higher over the last week on higher volume. Insiders have been buying more shares on the open market, including CEO Rich Howe (10,000) and BOD chairman Charles Morgan (25,000). Inuvo trading anywhere below $1 is quite cheap relative to its growth trajectory, as the company’s growing mobile business and its increasingly profitable ALOT business offer the potential for the company to grow revenue and earnings at over 100% year over year. Owning a share of this growth and the earnings stream it is producing costs less than 10x what is likely to be this calendar year’s earnings. It is rare to find a small cap growing at the rate of Inuvo that actually has earnings, is growing at a triple digit rate and has a single digit multiple. It is difficult to imagine a scenario where Inuvo continues to trade in that range for very long. 

Even if the stock advances back to the $1.10-$1.20 trading range it found before concerns of NYSE delisting dragged it below $1, we believe that Inuvo will increasingly be perceived as a prime takeover candidate due to its very low valuation for a profitable company with a 12 month revenue run rate over $50 million. An acquisition of Inuvo at $3 per share would still be less than 1.5x revenue, literally a steal for many other small cap companies in this space that have no earnings and trade at large multiples of their revenue. Such a deal would give investors at today’s prices a gain of over 200%.

By any measure, Inuvo remains dirt cheap.  Groove investors would do well to load up while you can still do it below $1. 

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June 13, 2014 at 12:10 pm 1 comment

Remark Media (MARK) Hits Multi-Year High

Remark Media shares have been on a tear as of late, hitting new 52 week highs in each of the last two sessions and topping out today at $7 before closing at $6.95. The moves have also been on stronger volume, with today’s trading running at about 2x the normal daily average of shares traded. What could be behind the move?

We can think of several things –

1) Anticipation of breakout earnings – Remark’s operating business has long been viewed as secondary to its stake in Sharecare, but that could be about to change. The company has been on an acquisition spree over the last 12 months, acquiring Bikini.com to enter the lifestyle space and most recently adding additional heft to its growing financial media holdings. The last purchase extended the company’s holdings in the tax extension filing segment and will likely lead to a significant increase in transaction revenue. Additionally, its possible that investors are considering that the improvement in revenue shown in Q1 may lead to a similar (if not greater) show of strength in the Q2 report, especially considering that much of the company’s transactional and ad revenue are generated in the days leading up to the April 15 personal income tax filing deadline. Investors may simply be pricing in a very strong Q2 showing.

2) Anticipation of a Sharecare IPO filing – Remark’s shares have long been heavily impacted if not driven by news related to Sharecare due to Remark’s role in developing Sharecare and more importantly, its large holding of equity in Sharecare. All signs point to a Sharecare IPO filing in the near future and we would be shocked if it does not happen over the next few months. When it does, the very high profile nature of the stakeholders and the likely valuation range will surely bring a great deal of attention to Remark’s holdings and its status as the only way for the average investor to get a stake in such a high profile Initial Public Offering.  This is in our estimation the most likely reason for the recent uptick in buying interest. 

3) Additional acquisitions – Remark’s management has made some interesting moves over the last few quarters by acquiring and or licensing unique media assets. We have noticed that the company is increasing its use of stock in these acqusitions and have noticed a pattern over the last few years of the stock price increasing (perhaps on deal talk) in the days and weeks leading up to new deals. Is it possible that the company has another deal in the works?

The trading action over the last few sessions suggests us to us that some buyers are wanting to buy shares now. Patient buyers over the last few quarters could usually pick up shares of Remark at fairly significant discounts to the 52 week highs if they were willing to wait and buy on the bid. While the buyers of the past few days have picked up most of their shares on the bid, the bids have been very aggressive including today’s that started at the open with a bid higher than the previous day’s new 52 week high. It will be interesting to see if these recent buys are indicative of one of the three possibilities mentioned above or something else.

June 9, 2014 at 11:42 pm Leave a comment

Inuvo Announces Official Compliance with NYSE Market Listing Standards

Inuvo reported prior to the market opening this morning that the company has received notification from the NYSE Market that it has regained compliance with all listing standards. This is a very big deal, as the stock had been beaten down to the 60 – 70 cent range from the $1.20-$1.30 range on concerns that the stock would be delisted. Despite good operational news, record earnings and and strong outlook, the stock has never been able to regain its footing due to that dark cloud. This morning’s announcement of official compliance apparently brought many investors back who had stayed on the sidelines to see if the company would regain compliance, as the stock rallied as high as $1.03 on volume of over 1 million shares. The stock closed up 4.71% at 89 cents after pulling back from the highs and we believe that this represents a tremendous buying opportunity. The negative catalysts that pulled the stock below $1 are no longer an issue for Inuvo and the company’s strong recent performance should result in more investors finding their way to the Inuvo story. The stock remains a tremendous bargain at any price below $1.00 and we think Groove investors would do well to buy as many shares as possible and tell your friends to do the same while INUV shares can still be had sub $1.00.

June 3, 2014 at 1:55 am Leave a comment


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