The Education of a Value Investor

May 25, 2025

I have now read The Education of a Value Investor, by Guy Spier, several times.  It’s a very honest and insightful description of Guy Spier’s evolution from arrogant and envious youth to kind, ethical, humble, and successful value investor in the mold of his heroes – including the value investors Mohnish Pabrai, Warren Buffett, and Charlie Munger.

Spier recounts how, after graduating near the top of his class at Oxford and then getting an MBA at Harvard, he decided to take a job at D. H. Blair, an ethically challenged place.  Spier realized that part of his job was to dress up bad deals.  Being unable to admit that he had made a mistake, Spier ended up tarnishing his reputation badly by playing along instead of quitting.

Spier’s story is about the journey “from that dark place toward the Nirvana where I now live.”

Besides the lesson that one should never do anything unethical, Spier also learned just how important the environment is:

We like to think that we change our environment, but the truth is that it changes us.  So we have to be extraordinarily careful to choose the right environment….

 

THE PERILS OF AN ELITE EDUCATION

Spier observes that having an education from a top university often does not prevent one from making foolish and immoral decisions, especially when money or power is involved:

Our top universities mold all these brilliant minds.  But these people – including me – still make foolish and often immoral choices.  This also goes for my countless peers who, despite their elite training, failed to walk away from nefarious situations in other investment banks, brokerages, credit-rating agencies, bond insurance companies, and mortgage lenders.

Having stumbled quite badly, Spier felt sufficiently humbled and humiliated that he was willing to reexamine everything he believed.  Thus, in the wake of the worst set of decisions of his life, Spier learned important lessons about Wall Street and about himself that he never could have learned at Oxford or Harvard.

For one thing, Spier learned that quite a few people are willing to distort the truth in order to further their “own narrow self-interest.”  But having discovered Warren Buffett, who is both highly ethical and arguably the best investor ever, Spier began to see that there is another way to succeed.  “This discovery changed my life.”

 

WHAT WOULD WARREN BUFFETT DO?  WHAT WOULD CHARLIE MUNGER DO?  WHAT WOULD MARCUS AURELIUS DO?

Spier argues that choosing the right heroes to emulate is very powerful:

There is a wisdom here that goes far beyond the narrow world of investing.  What I’m about to tell you may be the single most important secret I’ve discovered in all my decades of studying and stumbling.  If you truly apply this lesson, I’m certain that you will have a much better life, even if you ignore everything else I write!

Having found the right heroes, one can become more like them gradually if one not only studies them relentlessly, but also tries to model their behavior.  For example, it is effective to ask oneself:  “What would Warren Buffett do if he were in my shoes right now?  What would Charlie Munger do?  What would Marcus Aurelius do?”

This is a surprisingly powerful principle: modeling the right heroes.  It can work just as well with eminent dead people, as Munger has pointed out.  One can relentlessly study and then model Socrates or Jesus, Epictetus or Seneca, Washington or Lincoln.  With enough studying and enough effort to copy / model, one’s behavior will gradually improve to be more like that of one’s chosen heroes.

 

ENVIRONMENT TRUMPS INTELLECT

Our minds are not strong enough on their own to overcome the environment:

…I felt that my mind was in Omaha, and I believed that I could use the force of my intellect to rise above my environment.  But I was wrong: as I gradually discovered, our environment is much stronger than our intellect.  Remarkably few investors – either amateur or professional – truly understand this critical point.  Great investors like Warren Buffett (who left New York and returned to Omaha) and Sir John Templeton (who settled in the Bahamas) clearly grasped this idea, which took me much longer to learn.

For long-term value investors, the farther away from Wall Street one is, the easier it is to master the skills of patience, rationality, and independent thinking.

 

CAUSES OF MISJUDGMENT

Charlie Munger gave a talk in 1995 at Harvard on 24 causes of misjudgment.  At the time, as Spier writes, this worldly wisdom – combining powerful psychology with economics and business – was not available anywhere else.  Munger’s talk provides deep insight into human behavior.  Link to speech: http://www.rbcpa.com/mungerspeech_june_95.pdf

Decades of experiments by Daniel Kahneman, Amos Tversky, and others have shown that humans have two mental systems: an intuitive system that operates automatically (and subconsciously) and a reasoning system that requires conscious effort.  Through years of focused training involving timely feedback, some people can train themselves to regularly overcome their subconscious and automatic biases through the correct use of logic, math, or statistics.

But the biases never disappear.  Even Kahneman admits that, despite his deep knowledge of biases, he is still automatically “wildly overconfident” unless he makes the conscious effort to slow down and to use his reasoning system.

 

LUNCH WITH WARREN

Guy Spier and Mohnish Pabrai had the winning bid for lunch with Warren Buffett – the proceeds go to GLIDE, a charity.

One thing Spier learned – directly and indirectly – from lunch with Warren is that the more one genuinely tries to help others, the happier life becomes.  Writes Spier:

As I hope you can see from my experience, when your consciousness or mental attitude shifts, remarkable things begin to happen.  That shift is the ultimate business tool and life tool.

At the lunch, Warren repeated a crucial lesson:

It’s very important always to live your life by an inner scorecard, not an outer scorecard.

In other words, it is essential to live in accord with what one knows at one’s core to be right, and never be swayed by external forces such as peer pressure.  Buffett pointed out that too often people justify misguided or wrong actions by reassuring themselves that ‘everyone else is doing it.’

Moreover, Buffett said:

People will always stop you from doing the right thing if it’s unconventional.

Spier asked Buffett if it gets easier to do the right thing.  After pausing for a moment, Buffett said: ‘A little.’

Buffett also stressed the virtue of patience when it comes to investing:

If you’re even a slightly above average investor who spends less than you earn, over a lifetime you cannot help but get very wealthy – if you’re patient.

Spier realized that he could learn to copy many of the successful behaviors of Warren Buffett, but that he could never be Warren Buffett.  Spier observes that what he learned from Warren was to become the best and most authentic version of Guy Spier.

 

HANDLING ADVERSITY

One effective way Spier learned to deal with adversity was by:

…studying heroes of mine who had successfully handled adversity, then imagining that they were by my side so that I could model their attitudes and behavior.  One historical figure I used in this way was the Roman emperor and Stoic philosopher Marcus Aurelius.  At night, I read excerpts from his Meditations.  He wrote of the need to welcome adversity with gratitude as an opportunity to prove one’s courage, fortitude, and resilience.  I found this particularly helpful at a time when I couldn’t allow myself to become fearful.

Moreover, Spier writes about heroes who have overcome serious mistakes:

I also tried to imagine how Sir Ernest Shackleton would have felt in my shoes.  He had made grievous mistakes on his great expedition to Antarctica – for example, failing to land his ship, Endurance, when he could and then abandoning his first camp too soon.  Yet he succeeded in putting these errors behind him, and he ultimately saved the lives of everyone on his team.  This helped me to realize that my own mistakes were an acceptable part of the process.  Indeed, how could I possibly pilot the wealth of my friends and family without making mistakes or encountering the occasional storm?  Like Shackleton, I needed to see that all was not lost and to retain my belief that I would make it through to the other side.

 

CREATING THE IDEAL ENVIRONMENT

Overcoming our cognitive biases and irrational tendencies is not a matter of simply deciding to use one’s rational system.  Rather, it requires many years of training along with specific tools or procedures that help reduce the number of mistakes:

Through painful experience… I discovered that it’s critical to banish the false assumption that I am truly capable of rational thought.  Instead, I’ve found that one of my only advantages as an investor is the humble realization of just how flawed my brain really is.  Once I accepted this, I could design an array of practical work-arounds based on my awareness of the minefield within my mind. 

No human being is perfectly rational.  Every human being has at one time or another made an irrational decision.  We all have mental shortcomings:

…The truth is, all of us have mental shortcomings, though yours may be dramatically different from mine.  With this in mind, I began to realize just how critical it is for investors to structure their environment to counter their mental weaknesses, idiosyncrasies, and irrational tendencies.

Spier describes how hard he worked to create an ideal environment with the absolute minimum of factors that could negatively impact his ability to think rationally:

Following my move to Zurich, I focused tremendous energy on this task of creating the ideal environment in which to invest – one in which I’d be able to act slightly more rationally.  The goal isn’t to be smarter.  It’s to construct an environment in which my brain isn’t subjected to quite such an extreme barrage of distractions and disturbing forces that can exacerbate my irrationality.  For me, this has been a life-changing idea.  I hope that I can do it justice here because it’s radically improved my approach to investing, while also bringing me a happier and calmer life.

As we shall see in a later chapter, I would also overhaul my basic habits and investment procedures to work around my irrationality.  My brain would still be hopelessly imperfect. But these changes would subtly tilt the playing field to my advantage.  To my mind, this is infinitely more helpful than focusing on things like analysts’ quarterly earnings reports, Tobin’s Q ratio, or pundits’ useless market predictions – the sort of noise that preoccupies most investors.

 

LEARNING TO TAP DANCE

Spier, like Pabrai, believes that mastering the game of bridge improves one’s ability to think probabilistically:

Indeed, as a preparation for investing, bridge is truly the ultimate game.  If I were putting together a curriculum on value investing, bridge would undoubtedly be a part of it!

For investors, the beauty of bridge lies in the fact that it involves elements of chance, probabilistic thinking, and asymmetric information.  When the cards are dealt, the only ones you can look at are your own.  But as the cards are played, the probabilistic and asymmetric nature of the game becomes exquisite!

With my bridge hat on, I’m always searching for the underlying truth, based on insufficient information.  The game has helped me to recognize that it’s simply not possible to have a complete understanding of anything.  We’re never truly going to get to the bottom of what’s going on inside a company, so we have to make probabilistic inferences.

Chess is another game that can improve one’s cognition in other areas.  Spier cites the lesson given by chess champion Edward Lasker:

When you see a good move, look for a better one.  

The lesson for investing:

When you see a good investment, look for a better investment.

Spier also learned, both from having fun at games such as bridge and chess, and from watching business people including Steve Jobs and Warren Buffett, that having a more playful attitude might help.  More importantly, whether via meditation or via other hobbies, if one could cultivate inner peace, that could make one a better investor.

The great investor Ray Dalio has often mentioned transcendental meditation as leading to a peaceful state of mind where rationality can be maximized and emotions minimized.  See: https://www.youtube.com/watch?v=zM-2hGA-k5E

Spier explains:

To give you an analogy, when you drop a stone in a calm pond, you see the ripples.  Likewise, in investing, if I want to see the big ideas, I need a peaceful and contented mind.

 

INVESTING TOOLS

Having written about various ways that he has made his environment as peaceful as possible – he also has a library full of great books (1/3 of which are unread), with no internet or phone – Spier next turns to ‘rules and routines that we can apply consistently.’

In the aftermath of the financial crisis, I worked hard to establish for myself this more structured approach to investing, thereby bringing more order and predictability to my behavior while also reducing the complexity of my decision-making process.  Simplifying everything makes sense, given the brain’s limited processing power”!

Some of these rules are broadly applicable; others are more idiosyncratic and may work better for me than for you.  What’s more, this remains a work in progress – a game plan that I keep revising as I learn from experience what works best.  Still, I’m convinced that it will help you enormously if you start thinking about your own investment processes in this structured, systematic way.  Pilots internalize an explicit set of rules and procedures that guide their every action and ensure the safety of themselves and their passengers.  Investors who are serious about achieving good returns without undue risk should follow their example.

Here are Spier’s rules:

Rule #1 – Stop Checking the Stock Price

A constantly moving stock price influences the brain – largely on a subconscious level – to want to take action.  But for the long-term value investor, the best thing is almost always to do nothing at all.  Thus, it is better only to check prices once per week, or even once per quarter or once per year:

Checking the stock price too frequently uses up my limited willpower since it requires me to expend unnecessary mental energy simply resisting these calls to action.  Given that my mental energy is a scarce resource, I want to direct it in more constructive ways.

We also know from behavioral finance research by Daniel Kahneman and Amos Tversky that investors feel the pain of loss twice as acutely as the pleasure from gain.  So I need to protect my brain from the emotional storm that occurs when I see that my stocks – or the market – are down.  If there’s average volatility, the market is typically up in most years over a 20-year period.  But if I check it frequently, there’s a much higher probability that it will be down at that particular moment… Why, then, put myself in a position where I may have a negative emotional reaction to this short-term drop, which sends all the wrong signals to my brain?

…After all, Buffett didn’t make billions off companies like American Express and Coca-Cola by focusing on the meaningless movements of the stock ticker.

 

Rule #2 – If Someone Tries to Sell You Something, Don’t Buy It

The brain will often make terrible decisions in response to detailed pitches from gifted salespeople.

Rule #3 – Don’t Talk to Management

Beware of CEO’s and other top management, no matter how charismatic, persuasive, and amiable they seem.  Most managers have natural biases towards their own companies.

Rule #4 – Gather Investment Research in the Right Order

We know from Munger’s speech on the causes of human misjudgment that the first idea to enter the brain tends to be the one that sticks.

Spier starts with corporate filings – ‘meat and vegetables’ – before consuming news and other types of information.

Rule #5 – Discuss Your Investment Ideas Only with People Who Have No Axe to Grind

The idea is to try to find knowledgeable people who can communicate in an objective and logical way, minimizing the influence of various biases.

Rule #6 – Never Buy or Sell Stocks When the Market is Open

This again relates to the fact that flashing stock prices push the brain subconsciously towards action:

When it comes to buying and selling stocks, I need to detach myself from the price action of the market, which can stir up my emotions, stimulate my desire to act, and cloud my judgment.  So I have a rule, inspired by Mohnish, that I don’t trade stocks while the market is open.  Instead, I prefer to wait until trading hours have ended.

Rule #7 – If a Stock Tumbles after You Buy It, Don’t Sell It for Two Years

When you’ve lost a lot of money, many negative emotions occur.

Mohnish developed a rule to deal with the psychological forces aroused in these situations: if he buys a stock and it goes down, he won’t allow himself to sell it for two years.

…Once again, it acts as a circuit breaker, a way to slow me down and improve my odds of making rational decisions.  Even more important, it forces me to be more careful before buying a stock since I know that I’ll have to live with my mistake for at least two years.  That knowledge helps me to avoid a lot of bad investments.  In fact, before buying a stock, I consciously assume that the price will immediately fall by 50 percent, and I ask myself if I’ll be able to live through it.  I then buy only the amount that I could handle emotionally if this were to happen.

Mohnish’s rule is a variation on an important idea that Buffett has often shared with students:

I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it, so that you had 20 punches – representing investments that you got to make in a lifetime.  And once you’d punched through the card, you couldn’t make any more investments at all.  Under those rules, you’d really think carefully about what you did, and you’d be forced to load up on what you’d really thought about.  So you’d do much better.

Rule #8 – Don’t Talk about Your Current Investments

Once we’ve made a public statement, it’s psychologically difficult to back away from what we’ve said.  The automatic intuitive system in our brains tries to quickly remove doubt by jumping to conclusions.  This system also tries to eliminate any apparent inconsistencies in order to maintain a coherent – albeit highly simplified – story about the world.

But it’s not just our intuitive system that focuses on confirming evidence.  Even our logical system – the system that can do math and statistics – uses a positive test strategy:  When testing a given hypothesis, our logical system looks for confirming evidence rather than disconfirming evidence.  This is the opposite of what works best in science.

Thus, once we express a view, our brain tends to see all the reasons why the view must be correct and our brain tends to be blind to reasons why the view might be wrong.

 

AN INVESTOR’S CHECKLIST

Atul Gawande, a former Rhodes scholar, is a surgeon at Brigham and Women’s Hospital in Boston, a professor of surgery at Harvard Medical School, and a renowned author.  He’s ‘a remarkable blend of practitioner and thinker, and also an exceptionally nice guy.’  In December 2007, Gawande published a story in The New Yorker entitled “The Checklist”:  http://www.newyorker.com/magazine/2007/12/10/the-checklist

One of Gawande’s main points is that ‘intensive-care medicine has grown so far beyond ordinary complexity that avoiding daily mistakes is proving impossible even for our super-specialists.’

Gawande then described the work of Peter Pronovost, a critical-care specialist at Johns Hopkins Hospital.  Pronovost designed a checklist after a particular patient nearly died:

Pronovost took a single sheet of paper and listed all of the steps required to avoid the infection that had almost killed the man.  These steps were all ‘no-brainers,’ yet it turned out that doctors skipped at least one step with over a third of their patients.  When the hospital began to use checklists, numerous deaths were prevented.  This was partly because checklists helped with memory recall, ‘especially with mundane matters that are easily overlooked,’ and partly because they made explicit the importance of certain precautions.  Other hospitals followed suit, adopting checklists as a pragmatic way of coping with complexity.

Mohnish Pabrai and Guy Spier, following Charlie Munger, realized that they could develop a useful checklist for value investing.  The checklist makes sense as a way to overcome the subconscious biases of the human intuitive system.  Moreover, humans have what Spier calls “cocaine brain”:

the intoxicating prospect of making money can arouse the same reward circuits in the brain that are stimulated by drugs, making the rational mind ignore supposedly extraneous details that are actually very relevant.  Needless to say, this mental state is not the best condition in which to conduct a cool and dispassionate analysis of investment risk.

An effective investor’s checklist is based on a careful analysis of past mistakes, both by oneself and by others.

My own checklist, which borrows shamelessly from [Mohnish Pabrai’s], includes about 70 items, but it continues to evolve.  Before pulling the trigger on any investment, I pull out the checklist from my computer or the filing cabinet near my desk to see what I might be missing.  Sometimes, this takes me as little as 15 minutes, but it’s led me to abandon literally dozens of investments that I might otherwise have made…

As I’ve discovered from having ADD, the mind has a way of skipping over certain pieces of information – including rudimentary stuff like where I’ve left my keys.  This also happens during the investment process.  The checklist is invaluable because it redirects and challenges the investor’s wandering attention in a systematic manner…

That said, it’s important to recognize that my checklist should not be your checklist.  This isn’t something you can outsource since your checklist has to reflect your own unique experience, knowledge, and previous mistakes.  It’s critical to go through the arduous process of analyzing where things have gone wrong for you in the past so you can see if there are any recurring patterns or particular areas of vulnerability.

It is very important to note that there are at least four categories of investment mistakes, all of which must be identified, studied, and learned from:

    • A mistake where the investment does poorly because the intrinsic value of the business in question turns out to be lower than one thought;
    • A mistake of omission, where one fails to invest in a stock that one knows is cheap;
    • A mistake of selling the stock too soon.  Often a value investment will fail to move for years.  When it finally does move, many value investors will sell far too soon, sometimes missing out on an additional 300-500% return (or even more).  Value investors Peter Cundill and Robert Robotti have discussed this mistake.
    • A mistake where the investment does well, but one realizes that the good outcome was due to luck and that one’s analysis was incorrect.  It is often difficult to identify this type of mistake because the outcome of the investment is good, but it’s crucial to do so, otherwise one’s future results will be penalized.

Here is the value investor Chris Davis talking about how he and his colleagues frame their mistakes on the wall in order never to forget the lessons:  http://davisfunds.com/document/video/mistake_wall

Davis points out that, as an investor, one should always be improving with age.  As Buffett and Munger say, lifelong learning is a key to success, especially in investing, where all knowledge is cumulative.   Frequently one’s current decisions are better and more profitable as a result of having learned the right lessons from past mistakes.

 

DOING BUSINESS THE BUFFETT-PABRAI WAY

Buffett:

Hang out with people better than you, and you cannot help but improve.

Pabrai likes to quote Ronald Reagan:

There’s no limit to what you can do if you don’t mind who gets the credit.

Buffett also talks about the central importance of treating others as one wishes to be treated:

The more love you give, the more love you get.

Spier says that this may be the most important lesson of all.  The key is to value each person as an end rather than a means.  It helps to remember that one is a work in progress and also that one is mortal.  Pabrai:

I am but ashes and dust.

Spier explains that he tries to do things for people he meets.  Over time, he has learned to distinguish givers from takers.

The crazy thing is that, when you start to live this way, everything becomes so much more joyful.  There is a sense of flow and alignment with the universe that I never felt when everything was about what I could take for myself…

I’m not telling you this to be self-congratulatory as there are countless people who do so much more good than I do.  The point is simply that life has improved immeasurably since I began to live this way.  In truth, I’ve become increasingly addicted to the positive emotions awakened in me by these activities… One thing is for sure: I receive way more by giving than I ever did by taking.  So, paradoxically, my attempts at selflessness may actually be pretty selfish.

 

THE QUEST FOR TRUE VALUE

Buffett calls it the inner scorecard and Spier calls it the inner journey:

The inner journey is that path to becoming the best version of ourselves that we can be, and this strikes me as the only true path in life.  It involves asking questions such as:  What is my wealth for?  What give my life meaning?  And how can I use my gifts to help others?

Templeton also devoted much of his life to the inner journey.  Indeed, his greatest legacy is his charitable foundation, which explores ‘the Big Questions of human purpose and ultimate reality,’ including complexity, evolution, infinity, creativity, forgiveness, love, gratitude, and free will.  The foundation’s motto is ‘How little we know, how eager to learn.’

In my experience, the inner journey is not only more fulfilling but is also a key to becoming a better investor.  If I don’t understand my inner landscape – including my fears, insecurities, desires, biases, and attitude to money – I’m likely to be mugged by reality.  This happened early in my career, when my greed and arrogance led me to D. H. Blair… [also later in New York with envy]

By embarking on the inner journey, I became more self-aware and began to see these flaws more clearly.  I could work to overcome them only once I acknowledged them.  But these traits were so deepseated that I also had to find practical ways to navigate around them.

The important thing is to understand not only human biases in general, but also one’s own unique brain.  Also, some lessons can only be learned through difficult experiences – including mistakes:

Adversity may, in fact, be the best teacher of all.  The only trouble is that it takes a long time to live through our mistakes and then learn from them, and it’s a painful process.

It doesn’t matter exactly how you do the inner journey, just that you do it.

[The] real reward of this inner transformation is not just enduring investment success.  It’s the gift of becoming the best person we can be.  That, surely, is the ultimate prize. 

 

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time.  See the historical chart here:  https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps.  Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals.  We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio.  The size of each position is determined by its rank.  Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost).  Positions are held for 3 to 5 years unless a stock approaches intrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods.  We also aim to outpace the Russell Microcap Index by at least 2% per year (net).  The Boole Fund has low fees.

 

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

 

 

 

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.

CASE STUDY: Paul Mueller (MUEL)

5/11/25

Paul Mueller (MUEL) is a company that manufactures innovative stainless steel processing equipment.

(h/t Maj Soueidan of GeoInvesting)

Here are the industries that MUEL currently serves:

    • Dairy farming
    • Biotechnology
    • Process cooling
    • Food processing
    • Beverage processing
    • Chemical processing
    • Thermal energy storage
    • HVAC and heat recovery
    • Water purification/distillation
    • Pharmaceutical manufacturing
    • Industrial tank and vessel fabrication
    • Specialty transport and logistics (contract carriage)

The company has had a high cash balance and virtually no debt for years.  MUEL recently started buying back stock at a P/E of 8 or lower.  Its first buyback was completed in April 2024 at $80 for $15 million.  The buyback recently announced is for $15 million at $250.

But the company still has $55.3 million in cash and only $6.9 million in debt.

The company has little exposure to tariffs, as most of its activities are based in the United States, including recent facility expansions. (But they do have a manufacturing facility in Vietnam.)

MUEL just reported Q1 2025 EPS of $5.26, up from $4.10 a year ago. Sales climbed to $58.9 million from $50.4 million. Q1 is usually the company’s seasonally weakest quarter.

Q4 2024—reported a couple of weeks ago—showed EPS of $11.89 vs. $4.32 in Q4 2023.  Q4 2024 revenue was $70.4 million vs. $55.7 million in Q4 2023.

More importantly, according to the Q1 2025 report, MUEL’s backlog jumped to $254.5 million, nearly tripling from $95.2 million one year earlier. This is MUEL’s highest backlog in years.

If we translate the backlog into earnings, we get about $42 in EPS, or a forward P/E of 6.9.

One major component of the backlog is a newly announced $120 million pharmaceutical contract, which will be fulfilled through 2026​.  This is part of the company’s strategy to enter new growth markets.

Furthermore, in addition to the $30 million stock buyback, MUEL has launched three capacity expansions in 18 months, adding 131,000 square feet to its manufacturing operations.  This includes a $17.9 million project in April 2025, part of the company’s goal to modularize production by pre-assembling large units.

According to the company, the modular assemblies shift complex construction from the customer’s site to MUEL’s controlled manufacturing environment and result in:

    • Reduced risk: Building and testing large equipment modules in-house minimizes surprises. On-site construction in industries like pharma often involves tight space, regulatory scrutiny, and coordination with ongoing operations. By delivering fully assembled, tested units, MUEL lowers the chance of installation delays, compliance issues, or costly errors.
    • Faster implementation: Modular systems arrive ready to go. Instead of weeks or months of assembly at the customer’s location, installation becomes more like plug-and-play. That translates to shorter project timelines, quicker regulatory signoff, and faster time-to-value for the client.

In the 2024 shareholder letter, CEO David Moore explained the advantages of its new modular assembly capabilities:

The modular assembly of processing equipment allows us to set the vessels, heat exchangers, piping, and controls into structural frames shipped to the customer and installed as one module, reducing the time and risk required to assemble this equipment at the customer’s site. This method is popular in the pharmaceutical industry, where the largest modules are known as superskids, but this practice has applications in other industries we serve.

Moore adds:

The current backlog, combined with investments in equipment and talent, puts the Company in a strong operational and financial position.

Moore concludes:

By producing components like tank heads, manways, heat exchangers, and machined parts in-house, fabricating a wide range of vessels, and performing modular construction in our factory, we significantly reduce the number of vendors, risks, and costs for our customers.

The market cap is $269.8 million while enterprise value is $221.4 million.

Here are the metrics of cheapness:

    • EV/EBITDA = 5.05
    • P/E = 8.95
    • P/B = 3.19
    • P/CF = 4.92
    • P/S = 1.05

For a company with MUEL’s growth prospects—based on its capacity expansions and its backlog—these metrics are quite low.

Insider ownership is 7.7%, which is decent (worth over $20 million).  ROE (return on equity) is 39.7%, which is excellent.  The Piotroski F_Score is outstanding at 8.

As noted, the company has $55.3 million in cash and only $6.9 million in debt.  And TL/TA (total liabilities to total assets) is 50%, which is pretty good.

Intrinsic value scenarios:

    • Low case: If there’s a bear market or a recession, the stock could decline temporarily. That would be a buying opportunity.
    • Mid case: The forward P/E is 6.9 but should be at least 16. This translates into a share price of $667.83, which is over 130% higher than today’s stock price of $288.
    • High case: Arguably, the forward P/E should be 20.  This translates into a share price of $834.78, which is 190% higher than today’s stock price of $288.

 

RISKS

    • As noted, there could be a bear market or a recession that would likely drive down the stock price temporarily.

 

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.

 

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

 

 

 

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.

CASE STUDY UPDATE: ADF Group (DRX.TO / ADFJF)

April 27, 2025

ADF Group (DRX.TO / ADFJF) is a North American steel fabrication company that designs, engineers, and produces complex steel structures. They specialize in connection design, industrial coating, and installation, using advanced automation and robotics to complete high-quality projects quickly.

ADF runs two fabrication plants—in Terrebonne, Quebec, and Great Falls, Montana—plus two paint shops and a U.S. construction division focused on steel erection.

(h/t Jumpman23 on Value Investors Club.  See here: https://valueinvestorsclub.com/idea/ADF_GROUP_INC/0351385969)

The company operates mainly in Canada and the United States, with strong coverage in the U.S. Midwest, Southeast, and West, and Eastern Canada. It serves the non-residential construction market, including commercial buildings (like office towers and recreational centers), industrial facilities (such as pharmaceutical and automotive plants), transportation infrastructure, and public projects like airports.

The company recently completed an investment in robotics and automation at its Terrebonne plant that significantly improved ADF’s addressable revenue opportunity and ability to permanently fabricate higher volumes at a more profitable margin.

ADF Group may make a similar investment in its Great Falls, Montana plant, which would take roughly one year to complete.

Furthermore, the Infrastructure Investment and Jobs Act (IIJA) still has $300 billion to award through 2026.  Management continues to emphasize a strong growth cycle expected over the next three to five years.

Also, the long-term demand for infrastructure investment will continue well beyond the expiration of the IIJA bill.  Moreover, many companies are planning to invest in manufacturing facilities in the United States.  This includes TSMC’s $100 billion initiative to build five new factories in the U.S., Eli Lilly’s $27 billion investment in four new production facilities, and Apple’s plan to open a 250,000-square-foot server manufacturing plant in Houston.

Regarding tariffs, there could end up being exemptions on steel fabrication, given the impact on U.S. infrastructure projects. Even in a worst-case scenario, tariffs would only affect steel fabrication exports from the Terrebonne facility to the United States, which account for 40–50% of total revenues. Other revenue streams—such as design, construction, and installation—would remain unaffected.

Management has indicated that there is flexibility to shift some fabrication work from the Terrebonne plant in Quebec to the Great Falls facility in Montana, providing a way to avoid tariff impacts.

As for guidance, management continues to guide for higher revenues, which appears to be at odds for what the market is expecting. The pro-forma backlog now stands at ~$450 million, greater than where it was prior to the recent sell-off in the stock. More importantly, this reinforces management’s credibility around guidance.

The market cap is $135.63 million while enterprise value is $125.29 million.

Here are the metrics of cheapness:

    • EV/EBITDA = 2.03
    • P/E = 3.42
    • P/B = 1.11
    • P/CF = 3.42
    • P/S = 0.57

These are exceptionally low metrics of cheapness.

Insider ownership is 13.2%, which is good.  ROE (return on equity) is 34.3%, which is excellent.  The Piotroski F_Score is terrific at 8.

Cash is $59.98 million while debt is $45.63 million.  And TL/TA is low at 45%.

Intrinsic value scenarios:

    • Low case: If there’s a bear market or a recession, the stock could decline temporarily. That would be a buying opportunity.
    • Mid case: The current EV/EBITDA is 2.03, but should be at least 7. That would mean a fair value of $14.84 a share, which is 225% higher than today’s stock price of $4.55 a share.
    • High case: The P/E should be 15.  This translates into a share price of $19.96, which is over 335% higher than today’s stock price of $4.55 a share.

 

RISKS

    • There could be a bear market or a recession, although infrastructure spending looks solid over the next three to five years.
    • General tariffs by the U.S. against Canada, and specific tariffs by the U.S. against steel, may stay in place for some time. But tariffs would only affect steel fabrication exports from the Terrebonne facility to the United States, which account for 40–50% of total revenues. Other revenue streams—such as design, construction, and installation—would remain unaffected. Also, as noted, the company could shift some steel fabrication to its Great Falls, Montana, facility.

 

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.

 

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

 

 

 

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.

CASE STUDY UPDATE: Zoomd Technologies (ZOMD.V / ZMDTF)

April 20, 2025

I profiled Zoomd before, but the stock is significantly more undervalued today, so I decided to do this case study update.

Zoomd Technologies (ZOMD.V / ZMDTF) is an Israel-based digital advertising and monetization company that offers a mobile-first user acquisition platform powered by proprietary, patented technology. It provides advertisers with a unified dashboard connected to over 600 media sources and serves publishers as an onsite search engine. This unique position allows Zoomd to act as a one-stop shop for digital campaigns, helping advertisers target high-value users efficiently.

Zoomd’s platform sits atop the digital media ecosystem—integrated with social networks, device manufacturers, ad networks, and publishers—thus minimizing dependence on any single platform like Google or Facebook. With a strategic focus on high-growth sectors such as fintech, gaming, and e-commerce, Zoomd serves prominent clients like Sony Pictures, Crypto.com, and SHEIN, positioning itself as a scalable, privacy-proof solution in the evolving adtech landscape.

The market cap is $34.34 million while enterprise value is $28.67 million.

Here are the metrics of cheapness:

    • EV/EBITDA = 2.48
    • P/E = 4.39
    • P/B = 1.97
    • P/CF = 4.47
    • P/S = 0.68

There are very low metrics of cheapness.

Insider ownership is 29.2%, which is very good.  ROE (return on equity) is 67.5%, which is excellent.  The Piotroski F_Score is good at 7.

Cash is $9.28 million while debt is $3.56 million.  And TL/TA is 38%, quite low.

Intrinsic value scenarios:

    • Low case: If there’s a bear market or a recession, the stock could decline temporarily. That would be a buying opportunity.
    • Mid case: The current P/E is 4.39 but should be at least 10. This translates into a share price of $0.80, which is over 125% higher than today’s stock price of $0.351.
    • High case: Arguably, the P/E should be 15.  This translates into a share price of $1.20, which is over 240% higher than today’s stock price of $0.351.

 

RISKS

    • Tariffs are weighing on the stock in the near term. But it’s likely that the U.S. and China will work out some sort of deal, at least in the medium term, which would lower tariffs significantly.

 

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.

 

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

 

 

 

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.

CASE STUDY: Total Telcom (TTZ.V / TTLTF)

April 13, 2025

Total Telcom Inc. (TTZ.V / TTLTF) is a Canadian microcap company providing remote asset management solutions through wireless technologies. With nearly 55% of its $3.37 million market cap in cash, no debt and solid profitability, the downside is limited. It has three main revenue streams—hardware sales, recurring communication services, and race-day equipment rentals—with total gross margins exceeding 60%. The recurring revenue business has reached break-even, and management expects further growth as new products are commercialized. The company’s real advantage lies in cost-effective, user-friendly integration of its technology, helping clients reduce manual labor, optimize operations, and manage assets remotely with low data usage and high reliability.

The business is capitalizing on emerging trends in satellite communications, environmental monitoring, and white-label partnerships. Management owns over 28% of the company and is aligned with shareholder interests through modest compensation and significant equity stakes. The company’s clean balance sheet and scalable business model position it well for future growth. With market demand rising for remote data solutions due to climate and infrastructure needs, and with satellite communication markets projected to quadruple by 2028, Total Telcom appears conservatively valued with limited downside and strong upside potential if growth accelerates through marketing and strategic partnerships.

The market cap is $3.37 million while enterprise value is $1.49 million.

Here are the metrics of cheapness:

    • EV/EBITDA = 2.82
    • P/E = 15.58
    • P/B = 0.90
    • P/CF = 4.13
    • P/S = 2.35

Insider ownership is 28.8%, which is good.  ROE (return on equity) is 6.3%, which is low but should improve as the company’s earnings improve.  The Piotroski F_Score is decent at 6.

Cash is $3 million while debt is zero.  And TL/TA is 10.9%, exceptionally low.

Intrinsic value scenarios:

    • Low case: If there’s a bear market or a recession, the stock could decline temporarily. With 55% of the market cap in cash, no debt and solid profitability, the downside is limited.
    • Mid case: Net income could reach $500,000 in 2026 assuming $2.5 million in sales and a 20% net income margin. With a P/E of 15, the market cap would be $7.5 million.  This translates into a share price of $0.27, which is over 120% higher than today’s $0.12.
    • High case: With a P/E of 20, the market cap would be $10 million.  This translates into a share price of $0.36, which is almost 200% higher than today’s $0.12.

 

RISKS

    • Tariffs are weighing on the stock in the near term, but the company is looking to expand in places such as Canada, South America, Europe, and Australia. And as noted, with 55% of the market cap in cash, no debt and solid profitability, the downside is limited.

 

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.

 

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

 

 

 

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.

CASE STUDY: Canaf Investments (CAF.V / CAFZF)

April 6, 2025

Canaf Investments is a South African focused public company with four divisions:

Southern Coal – South Africa Southern Coal produces calcined anthracite, which is primarily sold as a substitute to coke in sintering processes.  Southern Coal supplies world leading steel and ferromanganese producers in South Africa.

Canaf Estate Holdings – South Africa Canaf Estate Holdings is a property investment company focused on acquiring, redeveloping and renting properties primarily within the suburbs of the old Johannesburg.

Canaf Agri – South Africa Canaf Agri is exploring investment opportunities in the agriculture sector in South Africa.

Canaf Capital – South Africa Canaf Capital is an investment company focused on providing capital for short-term financing to businesses and entrepreneurs in South Africa.

Of these four divisions, Sout Africa Southern Coal is by far the largest.

Canaf Investments is a tiny company engaged in boring businesses, thus the stock is completely overlooked by most investors.  But the stock is super cheap.

The market cap is $10.01 million while enterprise value is $3.16 million.

Here are the metrics of cheapness:

    • EV/EBITDA = 1.11
    • P/E = 6.26
    • P/B = 1.52
    • P/CF = 2.37
    • P/S = 0.47

Canaf’s metrics of cheapness are exceptionally low.

Insider ownership is 17.6%, which is good.  ROE (return on equity) is 23.3%, which is excellent.

Cash is $8.5 million while debt is zero.  And TL/TA is 20.3%, low indeed.

Intrinsic value scenarios:

    • Low case: If there’s a bear market or a recession, the stock could decline temporarily. This would be a major buying opportunity.
    • Mid case: The current P/E is 6.26 but should be at least 12. That would mean the stock is worth $0.42, which is over 90% higher than today’s $0.22.
    • High case: Current EV/EBITDA is 1.11 but should be at least 7.  That would mean the stock is worth $0.59, which is 168% higher than today’s $0.22.

 

RISKS

    • As noted, if there’s a bear market or a recession, the stock could decline temporarily. This would be a major buying opportunity.

 

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.

 

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

 

 

 

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.

CASE STUDY UPDATE: Geodrill (GEO.TO / GEODF)

March 23, 2025

In July 2024, I talked about Geodrill (GEO.TO / GEODF).  But Geodrill’s situation has significantly improved since then, so I am going to update the investment thesis.

Geodrill is a leading drilling services provider focused on gold (90%+ of revenue) and other mineral exploration for major, intermediate, and junior mining companies across Africa and South America. Founded in 1998 by CEO Dave Harper—who still owns over 40% of the company—Geodrill has grown organically from one rig in 1998 to 102 rigs today, with operations in six countries—Cote d’Ivoire, Senegal, and Mali in West Africa; Egypt in North Africa; and Peru and Chile in South America.

The company is known for its quality and long-standing relationships with top-tier clients like Barrick, Newmont, and Kinross. It has successfully shifted its customer base toward senior miners (now ~90% vs. 70% previously) and more stable jurisdictions, securing multi-year contracts worth ~$200 million, providing visibility through 2027.

With gold prices now exceeding $3,000/oz, miners are reinvesting heavily, benefiting Geodrill’s growth prospects. Harper is seeking a sale at 5x EV/EBITDA, valuing the stock at $4.13—more than double its current price of $2.02.

Geodrill reinvested every penny of operating cash flow into expanding their fleet in the most recent year.

On the most recent earnings call, CEO Dave Harper pointed out that the company has been growing on average about 10% a year over the last 8 years.  Harper said of course the company would encounter challenges—there are always challenges—but that growth should be at least 10% a year going forward (if not more, given gold prices over $3,000 an ounce).

Harper said, “We’ve never been more bullish, never been more bullish, never been more bullish.”

Harper notes that the company drills in locations where gold is heavily mined, where it’s relatively easy to mine, but where other people don’t want to mine.

Harper pointed out the company is “really going to shine over the next four years. This will become a cash cow, mark my words.”

The market cap is $94.8 million while enterprise value is $86.7 million.

Here are the metrics of cheapness:

    • EV/EBITDA = 2.69
    • P/E = 8.03
    • P/B = 0.79
    • P/CF = 4.52
    • P/S = 0.67

Geodrill’s metrics of cheapness are exceptionally low.

The company is planning to pay a dividend again—likely $0.01 per quarter this year and a larger dividend in 2026.

As noted, CEO and founder Dave Harper owns 40%+ of the shares.  ROE (return on equity) is 7.9%.  This is a bit low but will move higher because margins should continue to improve, given high gold prices.

Cash is $19.5 million while debt is $11.4 million.  TL/TA is 26%, which is excellent.

Intrinsic value scenarios:

    • Low case: If there’s a bear market or a recession, the stock could decline temporarily. This would be a major buying opportunity.
    • Mid case: As noted, Dave Harper owns 40%+ of the shares and is looking to sell at 5x EV/EBITDA. This would mean a stock price of $4.13 per share, which is over 100% higher than today’s $2.02.
    • High case: EBITDA could reach $50 million by 2027.  At an EV/EBITDA of 6x, the stock would have an intrinsic value of $6.04, about 200% higher than today’s $2.02.

 

RISKS

    • As noted, if there’s a bear market or a recession, the stock could decline temporarily. This would be a major buying opportunity.
    • Gold prices may fall.
    • There could be political instability in Africa or in Peru/Chile. This has rarely been an issue for the company in the past.

 

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.

 

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

 

 

 

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.

CASE STUDY: Pyxis Tankers (PXS)

March 2, 2025

Pyxis Tankers (PXS) is a disciplined, growth-oriented shipping company with a modern eco-fleet that positions it for long-term success. With a focus on mid-sized, eco-efficient vessels, strategic chartering, and a strong financial foundation, the company is well-positioned to capitalize on opportunities in the shipping industry.

(1) Pyxis Tankers operates a fleet designed for versatility, low operating costs, and fuel efficiency. The company currently owns:

    • Three medium-range (MR) product tankers
    • 2.2 dry bulk carriers

This modern, eco-efficient fleet allows Pyxis to remain competitive while ensuring resilience in demand-driven markets. With significant liquidity (“dry powder”) available, the company is actively evaluating the acquisition of up to two additional vessels, further expanding its growth potential.

(2) Pyxis has cultivated long-standing relationships with top-tier global customers, ensuring stability and operational efficiency.

As of January 24th, 2025, the company has secured:

    • 72% of available days for Q1 2025 booked for MR tankers at an average TCE rate of $24,750/day
    • 68% of available days for bulkers booked at an average estimated TCE rate of $15,400/day

With five vessels under short-term time charters and one on a spot voyage, Pyxis Tankers is well-positioned to benefit from rising charter rates, should the market continue to strengthen.

(3) One of Pyxis Tankers’ key advantages is its lean cost structure, which creates operating leverage as charter rates increase. The company maintains:

    • A primarily fixed cost structure, enabling improved earnings potential
    • Highly competitive daily operational costs per vessel, compared to U.S.-listed peers
    • A solid balance sheet with strong liquidity and modest leverage

This disciplined financial management allows Pyxis to remain resilient even in volatile market conditions while continuing to pursue strategic growth opportunities.

(4) The company is led by a highly experienced and incentivized management team, boasting over 100 years of combined expertise in the shipping and capital markets sectors. Key leadership highlights include:

    • Founder & CEO holds ~57% of shares, aligning his interests with shareholders
    • A well-respected Board of Directors, consisting of industry veterans with deep sector knowledge

This level of expertise and leadership stability ensures that Pyxis remains agile, strategic, and disciplined in navigating market cycles.

(5) Despite ongoing market uncertainty, Pyxis Tankers is well-positioned due to constructive demand fundamentals for both the product tanker and dry bulk sectors. Key valuation drivers include:

    • Solid global GDP growth supporting shipping demand
    • Limited vessel supply growth, creating favorable industry dynamics
    • A proven track record of navigating volatile shipping markets

With compelling valuation metrics and a strong financial foundation, Pyxis presents a high-value investment opportunity with significant upside potential.

Pyxis Tankers’ combination of a modern, efficient fleet, strong customer relationships, disciplined financial management, and experienced leadership makes it a standout player in the shipping sector. With continued strategic growth and a focus on operational efficiency, PXS is well-positioned for long-term success in the dynamic global shipping market.

PXS’s market cap is $37.9 million, while its enterprise value is $81.9 million.

Here are the metrics of cheapness:

    • EV/EBITDA = 1.74
    • P/E = 1.27
    • P/B = 0.37
    • P/CF = 2.71
    • P/S = 0.81

ROE (return on equity) is 36.6%, which is excellent.  However, earnings may decline in the short term.

The Piotroski F_Score is 6, which is decent.

Insider ownership is outstanding at 57%.  Cash is $42.4 million while debt is $86.4 million.  TL/TA (total liabilities / total assets) is decent at 44.5%.

Intrinsic value scenarios:

    • Low case: If there’s a bear market and/or a recession, the stock could decline.  Also, the limited fleet size puts the company more at risk for any unforeseen maintenance or damages.
    • Mid case: Pyxis Tankers should have a P/CF of at least 5.  That would put the stock at $6.52, which is 85% higher than today’s $3.53.
    • High case: The company should trade at book value of $9.54.  That is 170% higher than today’s $3.53.

 

RISKS

There could be a bear market and/or a recession, during which shipping rates would likely fall leading to lower earnings and a lower stock price.

Limited fleet size puts the company more at risk for any unforeseen maintenance or damages.

 

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.

 

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

 

 

 

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.

CASE STUDY: Core Molding Technologies (CMT)

February 23, 2025

Core Molding is a manufacturer of injection molded plastics for a variety of products in different industries.  For example, dashboards, radio controls, bumpers, cup holders, truck stairs, snowmobile casings, decking, fencing, trash bins, and playground slides.

Roughly half of CMT’s revenue comes from trucking customers Navistar, Paccar, and Volvo where Core Molding manufactures bumpers, side panels, wind deflectors, and interior plastic components for these customers.  CMT has 5 large customers, each of which accounts for over 10% of their revenue.  But no single customer is over 20% of their revenue.

(h/t pcm983 of Value Investors Club.  See (you may have to register but it’s free): https://www.valueinvestorsclub.com/idea/CORE_MOLDING_TECHNOLOGIES/3525719676#description)

Core Molding runs its main facilities in Columbus, OH, and Matamoros, Mexico.  The company also has facilities in South Carolina, Minnesota, and Ontario.

CMT must maintain good relationships with its customers.  The large customers use just-in-time manufacturing.  Most orders come into CMT a few days before they are expected to be shipped or delivered to the client.  The finished product assemblers rely on many small- to mid-sized businesses to deliver goods quickly.  As a result, companies such as CMT tend to have their facilities close to the final product assembly factories.

In early 2018, CMT acquired Horizon Plastics but the acquisition was difficult to manage.  The CEO/Chairman who oversaw the acquisition left in late 2018 and the new CEO David Duvall took two years to fully integrate Horizon Plastics.

Management is highly transparent and approachable.  The CFO John Zimmer quickly replies to questions and is forthright about the company.  In its financial statements, CMT includes sales broken out by customer.

Core Moldings’s market cap is $118.8 million, while its enterprise value is $98.4 million.

Here are the metrics of cheapness:

    • EV/EBITDA = 3.10
    • P/E = 7.62
    • P/B = 0.80
    • P/CF = 3.06
    • P/S = 0.37

These are low metrics of cheapness indeed.

ROE (return on equity) is 11%, which is OK.

The Piotroski F_Score is 6, which is decent.

Insider ownership is solid at 11%.  Cash is $42.6 million while debt is $24.3 million.  TL/TA (total liabilities / total assets) is excellent at 33%.

Intrinsic value scenarios:

    • Low case: If there’s a bear market and/or a recession, the stock could decline.  Or if there’s a slowdown in trucking, CMT’s revenue and earnings could decline.
    • Mid case: Core Molding should have a P/E of at least 15.  That would put the stock at $26.10, which is over 95% higher than today’s $13.26.
    • High case: The company should have an EV/EBITDA ratio of at least 8.  That would put the stock price of $30.62, which is 130% higher than today’s $13.26.

RISKS

There could be a bear market and/or a recession and the stock could decline.

There could be a slowdown in trucking, which is cyclical.  The company gets roughly 50% of its revenues from truck manufacturers.

 

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.

 

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

 

 

 

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.

CASE STUDY: FONAR Corporation (FONR)

February 16, 2025

Raymond Damadian is the founder of FONAR Corporation and he is one of the co-inventors of MRI technology.  The other co-inventor is Professor Paul Lauterber of Stony Brook University.  In the 1970s, they discovered how to use nuclear magnetic resonance technology—previously used in the chemistry lab to identify molecules—to form images of the internal tissues of the human body.  This was one of the great inventions in medicine.  Doctors rely heavily on the MRI exam to diagnose a wide variety of conditions, from brain and spine problems to organ problems to bone and ligament issues.

(h/t to anton613 of Value Investors Club.  See (you may have to register, but it’s free): https://www.valueinvestorsclub.com/idea/FONAR_CORP/5954105606)

Dr. Damadian also invented the FONAR Upright Multi Position MRI.  The Upright MRI produces images when a person is standing up or sitting (or anything in-between).  This means a more accurate diagnosis when examining things like the spine or the flow of cerebrospinal fluid—both of which appear differently when a person is standing up.  Also, a weight-bearing position is often the position in which a person experiences pain.

In 2011, Dr. Damadian used the FONAR Upright MRI to produce images of cerebrospinal fluid flow in eight MS patients.  The study demonstrated that leakage of cerebrospinal fluid may have caused brain lesions leading to MS.

There are many other conditions where the Upright MRI can provide a more accurate diagnosis, including abdominal prolapses, inguinal hernias, scoliosis, fallen cerebral tonsil disease, and Arnold-Chiari syndrome.

The MRI equipment business includes large manufacturers such as Hitachi, Siemens, General Electric, and Philips N.V.  It’s a highly competitive space.

The CEO of FONAR is Timothy Damadian, the founder’s son, who started working at the company in 1985 and worked his way up.  He became CEO in 2016.

FONAR was the first MRI company in the industry, introducing the world’s first commercial MRI in 1980.  FONAR’s business has two segments:

    • The medical equipment segment, which sells the Standup MRI.
    • The physician management and diagnostic services segment, which manages MRI scanners in New York and Florida. The bulk of the company’s revenues comes from this segment.  The company offers office space, repair and maintenance, medical record management, personnel management, IT services, management services, billing and collection, credentialism, compliance, and purchasing, among other things.

FONAR  introduced the Open MRI in 1980, the benefit being that the patient—who may be claustrophobic—does not have to be enclosed for the duration of the exam (30 to 60 minutes or longer).  Later on, the company invented the Upright MRI, which is even more useful.

Important Note: The demand for MRI scans continues to increase.

FONAR’s market cap is $104 million, while its enterprise value is $90.8 million.

Here are the metrics of cheapness:

    • EV/EBITDA = 3.45
    • P/E = 11.61
    • P/B = 0.62
    • P/CF = 7.36
    • P/S = 1.03

Note:  The company is buying back stock, which is good because the stock appears materially undervalued with EV/EBITDA of 3.45 and P/B of 0.62.

ROE is 8.1%, which is low.

The Piotroski F_Score is 6, which is decent.

Insider ownership is low at 2.4%.  Cash is $54.3 million while debt is $41.2 million.  TL/TA (total liabilities / total assets) is excellent at 26.8%.

Intrinsic value scenarios:

    • Low case: If there’s a bear market and/or a recession, the stock could decline.  If the reimbursement rates from Medicare decline, that could cause the stock to fall.
    • Mid case: FONAR should have a P/B ratio of at least 1.0.  That would put the stock at $26.21, which is over 60% higher than today’s $16.25.
    • High case: The company should have an EV/EBITDA ratio of at least 8.  That would put the stock at $37.68, which is 130% higher than today’s $16.25.

 

 RISKS

    • If there’s a bear market and/or a recession, the stock would probably decline.
    • If the reimbursement rates from Medicare decline, that could significantly lower earnings and thus the stock price.
    • Healthcare laws often change, and they could change in a way that adversely affects FONAR.
    • With its ownership of super-voting B and C shares, management controls the company without having a majority of the economic interest in the company.

 

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.

 

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

 

 

 

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.