October 2023 Position Updates
Hello OpTrackers,
Given it has been several months since my last update, I wanted to revisit prior write-ups and update everyone on performance on the ideas so far.
Additional Commentary
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PCT: I can’t do an update any more justice than John Hemption did in his own blog post, so I recommend you take a look. The short version is that $PCT has tripped a debt covenant and is likely on its way to zero.
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STEM: On my last update I noted this position had moved against me but borrow was still affordable so I recommended continuing to hold. Here we are a few months later and the position is significantly below the initiation price. Time is not the friend of a bad business run by bad management. The original thesis still holds and with more time and more pressure I expect this stock to continue to crack.
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AQMS: They announced a meaningless MOU as science project penny stocks tend to do, but my guess is nothing will ever come of it, because nothing ever does. I expect this company to remain a serial diluter and continue to trade down.
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KLSO: Kelso announced a second investment in $30mm market cap company called TheWorks. It is a leading retailer in the UK for gifts, arts & crafts, toys, and books. They are generally supportive of management here and just view the stock as too cheap. So far, they have been correct.
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I believe KLSO management deserves the benefit of the doubt until one of these first investments comes to some sort of resolution. These small cap activist situations can be highly volatile from Point A to Point B.
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I am encouraged by the fact that a second investment has been announced prior to a resolution at THG, eliminating the risk that it would be a one-and-done vehicle
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Please Note: I track these as a theoretical exercise and anything written on this blog should not be used as investment advice. Please consult a financial advisor before investing a dime of your own money. Additionally, these returns don’t perfectly capture borrow costs (or capture other potential offsets to returns at all) and realized returns may differ materially from the results shown here.
