Roth Recap

I had the extreme pleasure of spending the last three days in Dana Point at the Roth Conference. This is annually The Best Small/Micro Cap Conference in the country; and that’s before considering the entertainment, which is always outstanding.

Roth has tried to cut back on the number of attending companies and limited guest passes pretty much to investors on their client list. This made the event slightly less crowded (in my opinion) than prior years, but certainly didn’t impact the quality in the least.

With quite a large number of Tailwinds’ companies presenting, and many of our readers in attendance, the three days were time very well spent. Here’s a brief recap of some of the meetings that I attended.

Cryoport (CYRX): I remain convinced that the moat around this company is impenetrable. They are the only solution for regenerative therapy shipping and there will likely be 5-7 new drugs approved this year, which are the next big catalysts. In the next few years the stock, while not cheap, has one direction to go.

Digital Turbine (APPS): a name from my past (I lost here years ago), these guys seem to have turned the corner. They are generating cash and their “one-touch” product could be a very big success. It’s all about partners, and they seem to be launching fast. APPS likely continues to do well. It’s not one that I’ll be jumping into anytime soon, however.

Veritone (VERI) and Remark Holdings (MARK): This is a Tale of Two AI Companies. The meetings were back to back and they are in the same business, so I’m lumping them together. I sat near a handful of investors who stayed through both meetings, so my thoughts here are/were shared by everyone in the general vicinity. VERI appears to have a rockstar CEO and a list of high-quality US companies like ESPN and CBS. The CEO did a wonderful job of explaining the compelling value add of their products, without getting overly technical. I know little about the valuation here, as I’m new to this, but am going to do more work as they seemed impressive. This was all contrasted by Remark’s CFO who gave a much less insightful presentation. Nobody left the meeting feeling like this Company is a market leader. I suggest you watch the replay of both if you’re interested in either company.

FTE Networks (FTNW): such a great story. Sadly, the CEO missed the meeting due to a family emergency, but their audit chair and CFO were there to pick up the slack. I didn’t learn anything new (read my old pieces if you’re new to the story), but it remains a very high confidence name here.

Vuzix (VUZI): they tell a compelling story. The space is hot and growing. However, can they execute and are the big boys catching them are the two big questions. I sat in the presentation and then had a 1-1. The technology is great, however, it had some glitches when I tried it. I still think Vuzix is interesting, but I left less excited than I once was. As such, I am removing it from the Select Portfolio this morning.

Imageware Systems (IWSY): a very controversial name due to years of underperformance. I was in the presentation and a 1-1. Being new to the story, and not, therefore, jaded by history, I came away very impressed. 2018 is set to be the inflection point for this Company. According to them, expect revenue generated from Fujitsu, IBM, CDW and SAP this year. If that happens, it’s huge. I’m a believer and it’s one of two stocks that I added to immediately post my meetings.

SG Blocks (SGBX): this is the other company in which I immediately purchased shares. Actually, I bought them during the presentation… The key quote, which compelled me to act, was from the CFO who said that, after their marquee project in LA opens in 10 days, “we will become order takers!” SGBX is so cheap with so much upside. Wow…

RumbleOn (RMBL): here’s where opportunity is created for investors. The growth here is so astronomical that no one believes it will happen. Can they get to $100MM in revenue next year? With a proven management team, scalable business model and a disruptive product, the potential exists. Management is convinced they can achieve this target and has a lot of data that suggest they are on track. Meanwhile, investors seem skeptical. I’ve bought some and will be adding. I think they can make it and, if they do, the stock will be higher.

Atomera (ATOM): managed to get into a 1-1 here, which was good as the Company did not present. The stock has been very strong the last few days, so other 1-1’s must have gone well?!? I believe in the technology and it’s all a matter of time before it’s adopted. They have come to basic licensing terms with three fabs, which shows they must be close to even discuss what the terms look like. In addition, expect more fabs to install test equipment into their facilities like one customer has done already. This is just further proof of the value of the technology. One customer and the stock is launched. It’s just a matter of time.

I saw several other companies, but found nothing compelling to say about them, so will cut it off here. I would like to say Thank You to Byron and everyone at Roth for including me in a very productive and enjoyable conference!

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Tailwinds' Disclaimers & Disclosures: For a full list of disclaimers and disclosures, please visit http://tailwindsresearch.com/disclaimer/.

6 COMMENTS

  1. Goodmorning, thanks for your feedback.
    question regarding ATOM: you say:”They have come to basic licensing terms with three fabs, which shows they must be close to even discuss what the terms look like”
    can you please elaborate on that?
    From last investor presentation (slide What’s new march 2018) they say:”Installation of MST in a factory has commenced with one costumer, under evaluation license terms”
    thanks
    mario

    • The management said that they have had conversations regarding licensing terms with several fabs. Basically, the fabs are interested in doing more testing, but that’s expensive. They don’t want to spend money on testing until they know that, if they decide to move forward, the process is available in a reasonable price range. So, they explore the licensing terms, run more tests, then, if happy, work on the licensing agreement.

      I find it very encouraging that they would inquire about the terms as that means they like what they’ve seen so far. Make sense?

  2. Thank you.
    Yes it make sense. In this scenario the hardest part of the investment decision is guessing a reasonable selling price.
    best regards

    • If you mean the selling price of the equipment, it’s an upfront fee and then a royalty. Standard royalties are in the low single digits. Up front fees are likely low single digits of millions.

  3. ahhh..i was talking about the selling price of the stock ATOM 🙂
    let’s suppose that Atomera sign a good license agreement…initial spike but at what price will you consider taking some profit? also considering the possible domino effect with other potential customers…sweat dreams….
    best regards
    mario

    • That’s the thing…if one adopts, likely more follow. The stock would be a less-risky buy after signing their first customer and likely have legs over the long term.

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