🧗 OIJ (#19) $874,000 in Investment Watchlists: What's on our Radar?
Professor Yela will give you some homework this week... and a crap load of useful data on company selection and ranking
My dear fellow Hermits 👋
Welcome back to 🧙♂️ The Hermit 🧙♂️
ICYMI:
🧗 Our Investing Journey: Valencia’s Crisis
💼 The Hermit Portfolio: October Update
📈 Investment Thesis: Corticeira (write-up)
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🔗 Sharing our Methodology on How to Rank Ideas
We know people are curious about how we find new ideas. It’s like asking a magician to reveal their tricks, but we’re happy to share a glimpse behind the curtain. While we won’t spill the whole “Coke formula,” today we’ll share some of the secret sauce behind how we process and rank companies to find those hidden gems.
Think of our system as a selective funnel, with multiple watchlists acting as gatekeepers. Each watchlist is like an ambitious student trying to outshine their past self and move to the next level.
Watchlists #5 and #6, though, are more like rival siblings fighting for the top spot.
We’ll walk you through these stages in order, and, by the end, you’ll get a real taste of the companies that have made it to our shortlist.
Know that some lists are more stable, while others are constantly changing to keep us on our toes. That’s intentional, as the competitive environment is dynamic.
And for those who enjoy a global angle, we do have niche lists focusing on companies from places like China and Japan (though some do make it onto these lists). We’ll dive into those in another post. For now, let’s focus on what matters: understanding the process that turns a pool of ideas into ranked opportunities.
So, buckle up as we navigate this analytical maze - no crystal ball needed, just a solid method, a bit of madness, and a few trusty spreadsheets.
This is merely a list of companies. None of the following should be construed as investment advice. Please consult a financial advisor before making any investment decision.
🧮 The Madness to the Method
We're working with a 5+1 tiered system to rank opportunities. Think of it as the dating app for companies - only the most promising make it past the first swipe. The deeper down the list, the higher our conviction, and the more hoops they’ve jumped through to impress us.
A word of caution: making it from the initial look to the final list is like winning a golden ticket in a chocolate bar. Just to crack into List #2, companies must pass a rigorous quantitative filter and a thorough business model check.
The odds? Let’s just say the ratio is about 100:1. For every 100 companies we scrutinize, only one lucky contender survives the gauntlet and earns a spot on the first list.
Now let’s discuss the lists individually:
#1 - Overwatch
This is our go-to overview list and the one we check most frequently. It offers a quick, decisive snapshot of macroeconomic conditions. While it doesn’t directly guide our decision-making, it acts as an early warning system, giving us a sense of the economy’s temperature. In other words, it helps us stay sharp and avoid unnecessary blunders.
#2 - Work in Progress (WIP)
This is our largest and most diverse list - the WIP pool. It includes all the companies we've found compelling over the past few years. Each entry has been vetted both quantitatively and qualitatively.
However, scuttlebutt research is either in its infancy or hasn’t been done yet. Additionally, their valuations must be within a reasonable range. While they may not all be undervalued gems, you won’t find any wild, speculative plays here.
#3 - Work in Progress Platforms (WIPP)
One of my recent focuses has been on niche platforms, so we're in the process of building a dedicated watchlist exclusively for these unique players.
Platforms hold immense power, acting as matchmakers that cut out the middlemen and connect supply directly with demand. They essentially become toll bridges that can scale infinitely. Once a platform gains momentum (especially in smaller, niche markets), it’s nearly impossible to disrupt.
#4 - Candidates
These are our acceptable picks, where at least 50% of the research has been completed. While 50% might not sound like much, it typically covers enough ground to act.
Most scuttlebutt research has usually been conducted, though elements like management interviews might still be pending. By this stage, we’ll have an approximate valuation, a comprehensive understanding of the business model, and, most importantly, a clear vision of where the company is likely headed over the next 2-5 years.
#5 - ACTIONABLE
These are thoroughly vetted companies that COULD be acted on under the right conditions. The specifics can vary greatly - from requiring significant restructuring to simply waiting for a price dip. In any case, full research has been completed, and we’re patiently standing by for the right moment (which, admittedly, might never come - and that’s perfectly fine).
#6 - Holdings
Our portfolio + companies we are buying but have not disclosed yet.
Disclaimer: there may be an occasional error in the company name, we’re not perfect ;D. However, rest assured that the market and ticker symbols are 100% accurate, so, in case of doubt, rely on those as your guiding system.
📋 The Lists
List #1: Overwatch
S&P 500 Index (SPX): Represents 500 of the largest U.S. publicly traded companies, providing a broad measure of the U.S. stock market's performance
Russell 2000 Index (RUT): Tracks the performance of approximately 2,000 small-cap companies in the U.S., offering insights into the small-cap segment of the market
NASDAQ-100 Index (NDX): Comprises the 100 largest non-financial companies listed on the NASDAQ stock exchange, heavily weighted towards the technology sector
U.S. Composite PMI (USCPMI): An economic indicator that combines the Purchasing Managers' Index (PMI) for both the manufacturing and services sectors, reflecting overall economic health
S&P 500 - 200-Day Average (S5TH): Measures the medium-term momentum of companies within the S&P 500, providing clues about sentiment
S&P 500 - 50-Day Average (S5FI): Measures the short-term momentum of companies within the S&P 500, providing clues about sentiment
SPDR Bloomberg High Yield Bond ETF (JNK): An exchange-traded fund that seeks to provide investment results corresponding to the performance of the Bloomberg High Yield Very Liquid Index, focusing on high-yield corporate bonds
CBOE Volatility Index (VIX): Often referred to as the "fear gauge," it measures the market's annualized expectation of volatility over the next 30 days, derived from S&P 500 index options. These options measure implied volatility, also known as expected volatility
Euro to U.S. Dollar Exchange Rate (EURUSD): Represents the value of the euro expressed in U.S. dollars, indicating how many dollars are needed to purchase one euro
Bloomberg Commodity Index (BCOM): A diversified index that tracks the performance of a broad range of commodity futures, including energy, metals, and agriculture
Gold Price in Euros (XAUEUR): Denotes the current price of gold measured in euros per ounce
Gold Price in U.S. Dollars (XAUUSD): Indicates the current price of gold in U.S. dollars per ounce
Silver Price in U.S. Dollars (XAGUSD): Reflects the current price of silver in U.S. dollars per ounce
Global X MSCI Argentina ETF (ARGT): An exchange-traded fund that seeks to provide investment results corresponding to the performance of the MSCI All Argentina 25/50 Index, focusing on Argentine equities
Solana to U.S. Dollar Exchange Rate (SOLUSD): Represents the value of the cryptocurrency Solana expressed in U.S. dollars
List #2: Works in Progress & Open-Minded Picks
NASDAQ
PRTH - Priority Technology Holdings, Inc.
PERI - Perion Network Ltd.
FMAO - Farmers & Merchants Bancorp, Inc. *
DMRC - Digimarc Corporation
LQDA - Liquidia Corporation
CLMT - Calumet Specialty Products Partners, L.P.
ESCA - Escalade, Incorporated
STKS - The ONE Group Hospitality, Inc.
CLAR - Clarus Corporation
New York Stock Exchange (NYSE)
NRT - North European Oil Royalty Trust *
CCRD - CoreCard Corporation
APG - APi Group Corporation
VATE - INNOVATE Corp.
AMEX (NYSE American)
ZDGE - Zedge, Inc.
IDR - Idaho Strategic Resources, Inc. *
VNRX - VolitionRx Limited
MXC - Mexco Energy Corporation
OTC Markets
GLXZ - Galaxy Gaming, Inc.
GULTU - Gulf Coast Ultra Deep Royalty Trust
SCIA - SCI Engineered Materials, Inc.
FULO - FullNet Communications, Inc.
EXOD - Exeo Entertainment, Inc.
AMNF - Armanino Foods of Distinction, Inc.
CRMZ - CreditRiskMonitor.com, Inc.
Toronto Stock Exchange (TSX)
TSND - Tristar Gold Inc.
TVK - TerraVest Industries Inc.
DBM - Doman Building Materials Group Ltd.
SWP - Swiss Water Decaffeinated Coffee Inc.
DR - Medical Facilities Corporation
HMM.A - Hammond Manufacturing Company Limited
QTRH - Quarterhill Inc.
TSX Venture Exchange (TSXV)
FBF - Fabled Silver Gold Corp.
TINY - Tiny Ltd. *
MONT - Montfort Capital Corp.
London Stock Exchange (LSE)
CBOX - Cake Box Holdings Plc *
MOTR - Motorpoint Group Plc
PIER - The Pebble Group Plc
FIH - FIH Group Plc
WINE - Naked Wines Plc
KINO - Kinovo Plc
SOHO - Triple Point Social Housing REIT Plc
CLX - Calnex Solutions Plc
SNWS - Smiths News Plc
GHT - Gresham Technologies Plc
CLIG - City of London Investment Group Plc
BRCK - Brickability Group Plc *
FEVR - Fevertree Drinks Plc
ASX (Australian Securities Exchange)
AMA - AMA Group Limited
5GN - 5G Networks Limited
RKN - Reckon Limited
BME (Bolsa de Madrid)
IZER - Izertis *
OMX (Nordic Exchanges)
AALLON - Aallon Group Oyj (OMXHEX)
SFG1T - Silvano Fashion Group AS (OMXTSE) *
GOFORE - Gofore Oyj (OMXHEX)
INSTAL - Instalco AB (OMXSTO)
AWRD - Awardit AB (OMXSTO) *
STWK - Stillfront Group AB (OMXSTO)
RELAIS - Relais Group Oyj (OMXHEX)
EG7 - Enad Global 7 AB (OMXSTO)
SIX Swiss Exchange
SRAIL - Stadler Rail AG
Euronext
ALPM - Pharmasimple S.A.
CLA - Clasquin S.A.
ALSAS - SAS S.A.
Milan Stock Exchange (MIL)
NRST - Neurosoft S.p.A. *
IWB - IWB S.p.A.
AIW - Alerion Clean Power S.p.A.
ABT - Abitare In S.p.A.
FVI - Fervi S.p.A. *
FOS - FOS S.p.A.
TXT - TXT e-solutions S.p.A. *
NUS - Nusco S.p.A.
CYB - Cyberoo S.p.A.
MQSPA - Monrif S.p.A.
German Stock Exchanges (XETR, FWB, SWB)
MRX - Medios AG (XETR)
CHG - Chemring Group Plc (XETR)
AJ91 - Aumann AG (XETR)
EAD - Erlebnis Akademie AG (XETR) *
SLYG - SLM Solutions Group AG (FWB)
M7U - Mutares SE & Co. KGaA (XETR)
I1F - Infineon Technologies AG (SWB)
GPW (Warsaw Stock Exchange)
TAR - Tarczyński S.A.
SPR - Sperco S.A.
PAS - Polskie Górnictwo Naftowe i Gazownictwo S.A.
BLO - Bloober Team S.A.
OPN - Open Finance S.A.
DAD - Dadelo S.A. *
FRO - Ferro S.A. *
SHO - Shoper S.A.
TOA - Toya S.A.
MBR - Mobruk S.A.
VOX - Vox Capital S.A.
Athens Stock Exchange (ATHEX)
SPACE - Space Hellas S.A.
Singapore Exchange (SGX)
S85 - Sembcorp Industries Ltd
Hong Kong Stock Exchange (HKEX)
88 - Tai Cheung Holdings Limited
Budapest Stock Exchange (BET)
DUNAHOUSE - Duna House Holding Nyrt.
ANY - Antibiotice S.A.
Bolsa de Comercio de Buenos Aires (BCBA)
MORI - Morixe Hermanos S.A.C.I. *
NewConnect (Poland)
YAN - Yanosik S.A.
EGH - EGH S.A.
Bucharest Stock Exchange (LSIN)
0EXG - Exillon Energy Plc
List #3: WIP Platforms
NASDAQ
ANDE - The Andersons, Inc.
UFPT - UFP Technologies, Inc.