Sitting On My Hands

My Investment Style…It’s Not For Everyone But It Works For Me

I’m often asked why I don’t trade more often. Many of my stocks make big (25-50% or more) moves and I sit on my hands. Hopefully this helps explain what I’m thinking…

TFF Pharma (TFFP) was highlighted in an article on Seeking Alpha Friday afternoon. You can read that article here (TFF Pharmaceuticals: Not A Matter Of If, But When The Shares Will Run Much Higher). Needless to say, the article is preaching to the choir here at TW.

I believe it’s inevitable that TFF’s platform garners major wins in several, if not all, of the product lines they are exploring; vaccines, mRNA and CBD come to mind first. In addition, the internal programs could be partnered off by the end of 2022, with values in the billions. I believe the stock will eventually trade well over $100 and the returns from this level will be huge.

In the meantime, shares of TFFP have been range-bound for a while now. Undoubtedly, we’d all like to see the stock hitting new highs daily, however I’m content to hold my position and wait it out. Kinda like the good old days (i.e. last year) with Atomera (ATOM) when FOMO kept me holding a flatlining stock, confident that the worm would turn. When it did, the move from $8 to $46 took next to no time.

You trade around these stocks at your own risk.  That strategy works for a lot of investors and I’m not knocking it. It’s just not for me.

I like to equate how I manage money to card counting…probably a very apt analogy as the market truly resembles a casino these days.

Someone counting cards makes lots of bets. They are in every hand, winning and losing along the lines of the odds of blackjack. However, when the cards are right, the odds are suddenly wildly in their favor and they place a massive bet. These are the times where you can turn the table on the house and get rich.

Investing in micro-cap feels quite similar to me. I’m involved in about 15 companies right now, each one holds great promise and I’m excited for their future. However, each has risk as well. A company like Aptose (APTO) is a great example. The drugs hold promise but they could easily fail. I like the potential, but the uncertainty keeps me from making a massive bet.

Atomera on the other hand was a situation where the odds were in our favor. The science was being derisked continually. It was just a matter of time before the first client stepped up and inked a deal. I wasn’t going to take a 50% gain when 500% was somewhere in the future. I had no idea when in the future, but I knew it was out there.

Jumping back to TFF, recall that the SA article is titled, “TFF Pharmaceuticals: Not A Matter Of If, But When The Shares Will Run Much Higher“. I think this author agrees with my strategy. The odds are now in our favor and I’m not going to be the one kicking myself for haven taken a profit after the stock had just started its move.

Asymmetrical risk is what every investor should be seeking. That situation in which not only does the upside dwarf the downside, but the risk of the downside occurring has been diminished. When you get these opportunities, don’t let them slip through your fingers.

A corollary to letting winners ride is the old saying that, “if you sell all your winners you’ll only have losers.” There’s a lot to be learned from that statement. The market, generally speaking, knows more than any one investor and there is usually a reason a stock is outperforming or underperforming the market; eventually that reason comes to light.

In what was a pretty ugly week, Anixa (ANIX, +26%) was by far my best stock. The stock has been a monster this year, up well over 100%.

Has it gotten ahead of itself? I don’t think so. Looking at the five year chart, Anixa is just finally breaking out in a big way.

Anixa has two programs that are potential blockbusters. Their breast cancer vaccine has had its IND accepted by the FDA and will begin dosing patients in the next few months. Meanwhile, their ovarian cancer CAR-T program is expected to file an IND any day now. (here’s our last piece on Anixa)

The CEO and the lead independent director have been continual buyers of stock in the open market. Now, it appears that other investors are jumping on the bandwagon.

This stock is very similar to Atomera last fall. We know that the next catalysts are coming and they are meaningful. Meanwhile, the stock is very reasonably priced (i.e. cheap) and has big upside potential. It has double so far in 2021…I think it’s just begun.

Lantern Pharma (LTRN) was the other strong performer last week, closing up 10%. I believe this story is being derisked in real time and will likely continue trading higher.

Recall that Lantern is discovering novel uses for therapeutics by using A.I. to determine biomarkers and therapeutic indications.

Drug development is notoriously expensive and time consuming. It is also risky with many failures along the way. Through the use of A.I., Lantern is accelerating timelines, cutting costs and, importantly, finding biomarkers with a much higher likelihood of success.

I believe that the drugs in development at Lantern (particularly LP-184, which I detailed here) are very interesting and make the stock attractive on their own. RADR, the Company’s A.I. system, is where the story is getting derisked. The value of this system grows daily as the number of data points (1.2 billion and counting) continues to expand.

Lantern is currently undergoing a transformation in the stock market. Initially valued based on the drugs they are testing, investors are awakening to their leading edge A.I. capabilities. A.I. is arguably going drive a wholesale change in the way the pharmaceutical industry develops therapeutics. Lantern is a leader in the use of A.I. in drug development and that will drive investors to the stock.

Oh yeah, they also have used RADR to jumpstart their new internally developed Antibody Drug Conjugate program, which could possibly be worth several billion dollars in the next couple years. I’m sure that is also helping drive the stock.

Massive IoT and 5G are happening now and only getting MUCH bigger over the next five years. Do all roads lead to Sequans (SQNS)?

Sequans presented at the Roth Conference this last week (side note, the BEST conference for small cap, I miss it dearly). Here’s a link to their presentation. It’s well worth a view.

In case you don’t want to watch it, here are the Roth analyst’s key takeaways…

We come away increasingly positive as 1. SQNS is fully funded to cash flow break even, 2. IoT demand is accelerating (pipeline and design wins are up 20% in 8+ weeks) and 3. 5G development remains on track with interest (customer and strategic) at peak levels. We maintain our Buy rating as SQNS remains uniquely positioned for a $4B+ TAM (IoT & 5G)

Sequans is guiding towards 50% revenue growth for the coming few years. It’s fully funded and sitting in the sweet spot of both 5G and the Internet-of-Things. As the number of devices wanting connectivity grows, Sequans is one of only a handful of companies capable of providing the chips that enable that connectivity. The future for Sequans is very bright indeed.

I recently highlighted Voyager Digital (VYGVF). The stock has rallied well over 50% in the short time since then. It’s beyond my market cap to cover and, if I were to buy some, it would likely be the end of the Bitcoin rally…but it’s a very interesting derivative play on digital currencies and still worth a look even after the recent move. It has also been a very active name in our premium chat room, with many happy investors.

ParkerVision (PRKR) has backed off a little after its big move higher. This is another stock that I didn’t sell into the recent strength (up 222% year-to-date). Instead, I think it’s likely a better buy now than earlier this year.

It’s only a matter of time in my opinion until we see some of these smaller lawsuits start to settle with the Company. After Parker’s success in the recent Markman hearing, the numbers favor settlement in these cases; why spend $5M in legal fees on a court case that looks increasingly unfavorable when you can settle for less now?

In addition, the moving of the Qualcom case to July seems like a very firm date. Vaccines are everywhere and Florida is already opening up massively. The moving target now is stable and provides investors with something concrete to focus on. In my mind, Parker is an easy double into July with plenty of additional upside if the court case goes well.