Archive for June, 2015

CVSL Added to Groove Focus List

Thanks Groove community for keeping us on our toes.  In our update yesterday we announced that we were adding CVSL to our focus list but the link we provided did not take readers to the completed due diligence report.  Here is the excerpt from yesterday with the link to the due diligence report –

We believe we have found an opportunity (NYSE Mkt: CVSL) that can be a home run without even solving all of the issues that have driven it down this low ($1.09) and it could realistically be a 10 bagger over the next 4-5 years if former Mary Kay Cosmetics CEO John Rochon successfully executes his stated plan. CVSL traded at it’s all time low earlier today ($1.07) and is currently very close to being a pariah – shunned because of sub par operational performance at recently acquired companies, shunned because it is in the direct selling business, shunned because the CEO of its largest division was just fired and shunned due to negative perceptions in the investment community driven by inordinately negative articles about CVSL.

The negatives for CVSL the last 6-9 months have been overwhelming and the stock has fallen 90% as a result. The current valuation reflects a total company value (adjusted for cash/debt) of around $23 million. This is a company that we believe to be on a $160 million 12 month run rate and one who could easily exceed those numbers to the upside with just a little boost in momentum among the true drivers of value for this company – its widespread and diverse 50,000 rep strong sales force. While we believe issues that recent negative articles have focused on not without merit, we also believe that these issues are more than fully reflected in the company’s valuation. While it may be another quarter before we see its bellwether acquisition (Longaberger) turn the corner and start growing again, we think that when it becomes apparent that Longaberger is back on a growth trajectory it will drive the stock substantially higher allowing for a potential “home run” (400% return) from existing levels on just that turn. Click here for the full CVSL due diligence

June 26, 2015 at 1:32 pm Leave a comment

Groove Update – INUV, TZOO, POETF and CVSL

While the Groove does not choose focus stocks whose primary listing is on a foreign exchange, we believe the opportunity presented by one of our own in a very well researched and presented article yesterday deserves a good look by Groove investors for a number of reasons not the least of which is what seems to be a very strong growth story and likelihood that there will soon be a Nasdaq uplisting. The Asymmetrical Tech Investor makes a very strong case for starting to build positions now for multiple reasons and we note that US investors are able to buy shares through the Pink Sheets listing symbol POETF. Read the full article here.

Inuvo Update 
Inuvo announced last week it will be added to the Russell Microcap® Index when Russell Investments reconstitutes its comprehensive set of U.S. and global equity indexes on June 26, according to a preliminary list of additions posted June 12. Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. This is a win for Inuvo management and shareholders, as it will get many more money managers and institutions familiar with Inuvo at a time when the company’s operations are growing and delivering strong results quarter after quarter.

Two months ago on April 17, we pointed out to Groove investors that the recent sell off in Inuvo shares had been way over done, as the stock had fallen from its high of $3.50 to just over $2 /share in a very short time following a negative article written by short sellers. In that piece we mentioned our expectation that the stock would soon re-test its $3.50 multi-year high and Inuvo shares did just that earlier this week touching a multi year high of $3.57 before pulling back to its to a trading range of $3.05-$3.30. This corresponds to a 50-70% return for all Groove investors who repurchased Inuvo shares after our update.

Travelzoo Update 

In our most recent update, we decided to remove Travelzoo from our focus list. We hope that Groovers were able to take advantage of the several days following that where the stock was still trading in the $13.25 – $13.43 range to reduce their holdings to the degree that they took their risk capital off the table and continued holding only the shares that represented “house money”. Since that time TZOO shares have traded down by over $2 per share and settling into a range between $10.80 and $11.75, approximately $1.50-$2.50 below the price it was trading at when we suggested Groove Investors take their profits off the table.

Replacing TZOO on the Focus List – CVSL

Since the removal of TZOO from our focus list, we have been surveying the landscape for stocks that better fit what we have traditionally sought to unearth for the Groove community – below the Wall Street radar micro cap opportunities that have enormous upside potential despite current issues causing them to be shunned, out of favor or in some cases, simply overlooked. We believe we have found an opportunity (NYSE Mkt: CVSL) that can be a home run without even solving all the issues that have driven it down this low ($1.09)  and it could realistically be a 10 bagger over the next 4-5 years if former Mary Kay Cosmetics CEO John Rochon successfully executes his stated plan. CVSL traded at it’s all time low earlier today ($1.07) and is currently very close to being a pariah – shunned because of sub par operational performance at recently acquired companies, shunned because it is in the direct selling business, shunned because the CEO of its largest division was just fired and shunned due to negative perceptions in the investment community driven by inordinately negative articles about CVSL.

The negatives for CVSL the last 6-9 months have been overwhelming and the stock has fallen 90% as a result. The current valuation reflects a total company value (adjusted for cash/debt) of around $23 million. This is a company that we believe to be on a $160 million 12 month run rate and one who could easily exceed those numbers to the upside with just a little boost in momentum among the true drivers of value for this company – its widespread and diverse 50,000 rep strong sales force. While we believe issues that recent negative articles have focused on not without merit, we also believe that these issues are more than fully reflected in the company’s valuation. While it may be another quarter before we see its bellwether acquisition (Longaberger) turn the corner and start growing again, we think that when it becomes apparent that Longaberger is back on a growth trajectory it will drive the stock substantially higher allowing for a potential “home run” (400% return) from existing levels on just that turn. Click here for the full CVSL due diligence report.

June 25, 2015 at 11:51 am Leave a comment


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