🧗 What on our Radar? Investment Watchlist #1

OIJ (#19) 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.

• HDSN - Hudson Technologies, Inc. *

• STRL - Sterling Infrastructure, Inc.

• CLFD - Clearfield, Inc. *

New York Stock Exchange (NYSE)

• GRBK - Green Brick Partners, Inc.

• PUMP - ProPetro Holding Corp.

List #4: Candidates and Former Friends

TSX Venture Exchange (TSXV)

• BLM - BluMetric Environmental Inc. *

Borsa Italiana (MIL)

• LDB - Lindbergh S.p.A. *

OTC Markets

• CHKR - Chesapeake Granite Wash Trust

London Stock Exchange (LSE)

• CODE - Northcoders Group PLC *

• ALPH - Alpha FX Group PLC

• BLND - Blend Labs, Inc. *

NASDAQ

• ULY - UroGen Pharma Ltd.

• DAVE - Dave Inc. *

• ROOT - Root, Inc.

• CLPT - ClearPoint Neuro, Inc. *

• AEHR - Aehr Test Systems

• ORGN - Origin Materials, Inc. *

• TRUP - Trupanion, Inc.

New York Stock Exchange (NYSE)

• ML - MoneyLion Inc.

• CVNA - Carvana Co. *

• QXO - QXO Inc. *

Toronto Stock Exchange (TSX)

• DXT - Dexterra Group Inc. *

AMEX (NYSE American)

• ISDR - Issuer Direct Corporation *

OMX Stockholm (OMXSTO)

• INT - Intrum AB

• PRIC_B - Pricer AB *

OMX Helsinki (OMXHEX)

• ADMCM - Admicom Oyj

Euronext Paris

• LNA - LNA Santé SA

Lists #5 and #6: Holdings and Actionable

NASDAQ

• BLDE - Blade Air Mobility, Inc. ***** (para estudiantes del renting 😉)

• CDLX - Cardlytics, Inc.

• CNTY - Century Casinos, Inc.

• DJCO - Daily Journal Corporation

• GORV - Lazydays Holdings

• PLCE - The Children's Place, Inc.

• PGY - Pagaya Technologies Ltd.

New York Stock Exchange (NYSE)

• COUR - Coursera, Inc.

AMEX (NYSE American)

• UPRO - ProShares UltraPro S&P500 ETF

BME (Bolsa de Madrid)

• ALQ - Alquiber Quality, S.A.

• FACE - FacePhi Biometría, S.A.

Milan Stock Exchange (MIL)

• GIS - Gismondi S.p.A.

OMX Stockholm (OMXSTO)

• GREEN - Green Landscaping Group AB

• RAKE - Raketech Group Holding PLC

Toronto Stock Exchange Venture (TSXV)

• KUT - RediShred Capital Corp.

XETR (Frankfurt Stock Exchange)

• LIK - Limes Schloss Kliniken

London Stock Exchange (LSE)

• TAN - Tanfield Group Plc

🙏 Feel free to ❤️ and comment so that more people can discover and enjoy this Substack 😇