Boole Microcap Fund

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.

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.

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.

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.

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.

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.

February 9, 2025

Build-A-Bear Workship (BBW) runs a “make-your-own stuffed animal” business and also licenses its brand.  The company is transitioning to being primarily a brand monetization business that continues also to be a retailer.

(h/t HiddenInSight, Value Investors Club.  Please see the following (you may have to register but its free): https://www.valueinvestorsclub.com/idea/BUILD-A-BEAR_WORKSHOP_INC/3416620533)

BBW’s licensed store business entails BBW licensing its brand and store concepts to third parties (theme parks, hotels, etc).  This business is a franchise model: BBW has zero capital commitment or operating risk, but has the same profit per unit for BBW as running a store themselves.  This business is expanding quickly.  It’s already exceeded 130 units and could more than triple by 2028.  Licensing/Franchising is 7.5% of today’s revenues but ~36% of profits.

There’s plenty of space for U.S. growth, but the international opportunity is even larger.  Over half of new third-party stores will be opened internationally including new partners in Colombia and France.  It’s also noteworthy that international partners are established toy/kid retailers whereas U.S. partners tend to be hospitality-based operators.  As a result, international partners are typically multi-unit operators whereas some U.S. partners are single-unit operators.

There have been zero third-party closures in 21+ months even as other licensed/franchised retail establishments have been seeing significant closures.  Also, the ROI for partners often exceeds 100%.

There are several reasons investors have overlooked Build-A-Bear:

• • Investors who invested in BBW at the Covid lows have seen 2500%+ gains already, and they assume the story is over
  • Licensed/franchised sales add little to total revenue, and so its earnings potential is overlooked
  • Build-A-Bear investors lost significant money in 2007 and again in 2015, and so they don’t look at the stock anymore and therefore don’t see the transformation

Because BBW is becoming primarily a licensing company, its earnings quality should continue to improve.  Investors are likely to realize this eventually, causing the stock to move much higher.

Because the company produces roughly $50 million in free cash flow per year, it will continue to buy back more stock, recently announcing a new $100 million buyback program (20% of the market cap).

Build-A-Bear has trademarks that legally prevent competitors from using a similar “build your own stuffed animal” retail concept.  As for other toy/entertainment options, customers seem to like BBW for the unique experience of building one’s own bear.  Also, the company has continued to sell ~8 million bears per year for over 25 years despite the collapse of mall foot traffic.

By 2028: Third-party stores may exceed 400, producing a net income of $52 million.  Meanwhile, retail net income should hit $30 million.  So net income for 2028 should be at least $82 million.  EBITDA should hit $126.3 million.  Cash flow will be roughly $105 million.

The current market cap is $526.4 million while enterprise value is $595.8 million.

And here are the metrics of cheapness based on 2028 estimates (except for P/B, which is current):

• • EV/EBITDA = 4.72
  • P/E = 6.42
  • P/B = 4.09
  • P/CF = 5.01
  • P/S = 0.81

ROE is 42.9%, which is excellent.

The Piotroski F_Score is 6, which is decent.

Insider ownership is OK at 6.2%.  Cash is $25.2 million while debt is $102.1 million.  TL/TA (total liabilities / total assets) is reasonable at 55.0%.  The dividend yield is 2.1%.

Intrinsic value scenarios:

• • Low case: If there’s a bear market or a recession and/or if consumer spending declines and/or if there’s a decrease in mall traffic, earnings could drop and so could the stock.
  • Mid case: By 2028, Build-A-Bear should have a P/E of at least 15.  That would mean the stock is worth $88.36, which is over 130% higher than today’s $37.82.
  • High case: Arguably, by 2028, due to its capital-light licensing business, the company should have a P/E of 20.  That would mean the stock is worth $117.82, which is over 210% higher than today’s $37.82.

 

 RISKS

• • If there’s a bear market or a recession, the stock would probably decline.
  • A drop in consumer spending would cause earnings to drop.
  • Mall traffic continuing to decrease would hurt earnings.

 

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.

February 2, 2025

Here is my investment thesis for InPlay Oil Corporation (ticker IPO in Canada and IPOOF in the U.S.), which is a Canadian oil and gas company based in Calgary, Alberta.

Their corporate strategy is as follows: “Disciplined light oil growth developing high rate of return assets to generate strong free adjusted funds flow with conservative leverage ratios while maximizing returns to shareholders.”

InPlay Oil has an excellent management team that has consistently delivered production and cash flow per share growth while reducing debt.  They have grown production at 15% a year the past 8 years and they have grown adjusted funds flow per share at 30% a year the past 8 years.  Furthermore, they have boosted reserves by 74% over the past 8 years.

Sustaining capital for 2025 is expected to be 25-30% less than 2024 because the company invested $20+ million in infrastructure the past 2 years.  The company also implemented strong hedge positions at favorable commodity prices to mitigate risk.

InPlay Oil is consistently more efficient (lower cost) than most of its peers in finding reserves and adding producing barrels.

The company also has a history of successful, highly accretive acquisitions.

The market cap is $105 million while enterprise value is $146.2 million.

Here are the metrics of cheapness:

• • EV/EBITDA = 2.94
  • P/E = 5.89
  • P/B = 0.51
  • P/CF = 1.70
  • P/S = 0.95

ROE is a bit low at 9.1%, but it’s improving.  The Piotroski F_Score is 7, which is good.

Insider ownership is 25.3%, which is excellent.  Debt is $40.4 million.  TL/TA (total liabilities to total assets) is 40%, which is solid.  The dividend yield is high at 10.1%.

Intrinsic value scenarios:

• • Low case: If there’s a bear market or a recession and/or if oil prices decline, the stock could decline.
  • Mid case: NAV based only on total proved reserves is $4.18 per share, which is 260% higher than the current stock price of $1.15 per share.
  • High case: P/CF is 1.70 but should be at least 8.00.  That would mean a stock price of $5.41, which is over 370% higher than today’s $1.15 per share.

 

RISKS

There could be a bear market or a recession and/or oil prices could decline.

 

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.

November 24, 2024

BIOREM (BRM.V / BIRMF) has a mission to engineer, design, manufacture, and distribute the most innovative and effective air emissions abatement technologies in the world.

The company was established in 1990.  They are based near Guelph, Ontario (Canada) but they operate in 23 countries around the world.  BIOREM has done over 2,000 installations.  They have 50+ employees with an average tenure of 10-12 years.

BIOREM offers a full range of engineering and technical solutions.  The company is transitioning from being a capital equipment vendor to providing more services, such as upfront engineering, site work, or after sales market.

These are the areas the company works in:

• • Municipal Wastewater: collection system & headworks; liquid phase treatment; solid treatment.
  • Solid Waste Management: compost; anaerobic digestion; transfer stations; recycling facilities.
  • Industrial: pet food; chemical production; petrochemical; food & beverage; agribusiness; semiconductor; surface coatings; wood products.
  • Renewable Energy: biogas desulfurization; biogas conditioning; emissions abatement.

Here are the results from the third quarter of 2024 in Canadian dollars:

BIOREM reported record quarterly revenues for the third quarter of $14.9 million, an increase of 103% over the previous quarter and 170% higher than the same quarter in 2023.  Year to date revenues totalled $28.1 million, a 117% increase over the $13 million reported for the first nine months of 2023.  The increase in revenues is largely attributable to the increase in order bookings and continuing delivery of projects from the Company’s large order backlog.

The company commented:

During the quarter the Company booked $6.6 million in new orders resulting in an order backlog of $48.4 million on September 30, 2024.  This compares to an order backlog of $57 million on June 30, 2024 and $54.5 million as of September 30, 2023.

The Company expects order bookings to continue to grow and delivery of projects from the order backlog to continue generating strong revenue and earnings growth over the next 12 months.

“In the third quarter, delays related to industry-wide issues with construction projects eased somewhat, allowing BIOREM to catch up on orders in the Company’s backlog,” said Derek S. Webb, President and CEO. “Even as project deliveries accelerated, BIOREM’s sales funnel, outstanding bids, and order backlog remain robust with no signs of softening over the near- to medium-term.”

“Population growth and the need for significant increases in housing construction throughout North America is driving demand for municipal and industrial infrastructure projects that require air emission abatement systems.  BIOREM’s experience and performance in delivering both large and small successful air emission abatement projects makes them uniquely positioned to benefit over the long term from this growth cycle.”

Here are figures are in U.S. dollars: BIOREM reported EPS (earnings per share) of $0.12 on a fully diluted basis.  EBITDA is $2.18 million.  Cash flow is $3.17 million.  Revenue is $10.73 million.  The market cap is $31.1 million, while enterprise value is $28.5 million.

And here are the metrics of cheapness based on annualizing the most recent quarter:

• • EV/EBITDA = 3.27
  • P/E = 4.38
  • P/B = 4.36
  • P/CF = 2.45
  • P/S = 0.72

ROE is 59.7%, which is outstanding.

The Piotroski F_Score is 7, which is quite good.

Insider ownership is 16%, which is good.  Cash is $7.3 million while debt is $3.9 million.  TL/TA (total liabilities / total assets) is 59.0%, which is OK.

Intrinsic value scenarios:

• • Low case: If there’s a bear market and/or a recession, the stock could decline.  That would be a buying opportunity.
  • Mid case: BIOREM should have a P/E of at least 10.  That would mean the stock is worth $4.80, which is over 125% higher than today’s $2.10.
  • High case: Arguably, the company should have a P/E of 15.  That would mean the stock is worth $7.20, which is over 240% higher than today’s $2.10.
  • Very high case: If BIOREM can continue to grow its revenues and backlog, while also transitioning towards services instead of just capital equipment, the P/E could reach 20.  That would mean the stock is worth $9.60, which is over 355% higher than today’s $2.10.

 RISKS

• • If there’s a bear market or a recession, the stock would probably decline temporarily.
  • If the company does not continue to win new business, revenue and earnings would decline.

 

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.

November 17, 2024

The Shiller P/E—also called the 10-year P/E or the cyclically adjusted P/E (CAPE)—recently exceeded 38.  This is in the top 0.5% of history.  The CAPE has only been higher one time—December 1999, when it reached 44.

However, according to John Hussman’s most reliable P/E ratio, the S&P 500 index today is at its most overvalued level ever, including December 1999.  John Hussman writes:

MarketCap/GVA is the ratio of the market capitalization of nonfinancial companies to gross value-added, including our estimate of foreign revenues, and is our most reliable gauge of market valuation (based on correlation with actual, subsequent 10-12 year S&P 500 total returns in market cycles across history).  The current level of 3.3 is the highest extreme in history, eclipsing both the 1929 and 2000 bubble peaks.

See: https://www.hussmanfunds.com/comment/mc240923/

The long-term average CAPE for the S&P 500 index is 17.  But even if we assume that the CAPE should be 20, that is still 47% lower than today’s CAPE of 38.

So the CAPE is likely to decline to somewhere in the range of 20 to 22.  This means that the S&P 500 index is likely to decline 40% to 50% over the next 3 to 5 years.

Warren Buffett, arguably the greatest investor of all time, has raised $325 billion in cash at Berkshire Hathaway.  So Buffett clearly thinks that market is overvalued.  In fact, Buffett says that total market cap to GNP is “probably the best single measure of where valuations stand at any given moment.”  Currently, the total market cap to GNP is 201%, one of its highest levels in history, comparable to December 1999.

When did Buffett last have so much cash as a percentage of Berkshire’s portfolio?

• • 2007 before the Great Financial Crisis
  • 1999-2000 before the internet bubble popped

 

INFLATION MAY PICK UP AGAIN

The consumer price index (CPI), which measures price growth across a basket of goods, ticked up to an annual pace of 2.6% in October – from 2.4% in September, which had been the slowest rate in more than three years.

Importantly, the 10-year treasury yield has increased from a recent September low of 3.649% to 4.445%.  The great macro investor Stanley Druckenmiller said just recently he trusts market prices more than he trusts professors.  The 10-year treasury is predicting that inflation will start increasing again, forcing the Fed to stop lowering rates and possibly to start raising rates.

If, in fact, inflation keeps increasing and the Fed has to keep rates high, that would probably be a catalyst for the S&P 500 index to start a 40% to 50% decline over the next 3 to 5 years.

That said, the catalyst for a bear market could be any number of things, including inflation inceasing, a possible recession, or something else the market is not currently considering.

 

BUBBLE HISTORIAN JEREMY GRANTHAM

As bubble historian Jeremy Grantham notes, there has never been a sustained rally starting from a 38 Shiller P/E.  The only bull markets that continued up from levels like this were the last 18 months in Japan 1989 and the U.S. tech bubble of 1998 and 1999.  Both of those great bubbles broke spectacularly.  Separately, there has also never been a sustained rally starting from full employment.

What happened to the 2021 bubble?  It appeared to be bursting conventionally in 2022—in the first half of 2022 the S&P declined more than any first half since 1939 when Europe was entering World War II.  As Grantham points out, previously in 2021, the market displayed all the classic signs of a bubble peaking: extreme investor euphoria; a rush to IPO and SPAC; and highly volatile speculative leaders beginning to fall in early 2021, even as blue chips rose enough to carry the whole market higher—a feature unique to the late-stage major bubbles of 1929, 1972, 2000, and now 2021.  Grantham writes:

But this historically familiar pattern was interrupted in December 2022 by the launch of ChatGPT and consequent public awareness of a new transformative technology—AI, which seems likely to be every bit as powerful and world-changing as the internet, and quite possibly much more so.

See: https://www.gmo.com/americas/research-library/the-great-paradox-of-the-u.s.-market_viewpoints

Grantham continues:

But every technological revolution like this—going back from the internet to telephones, railroads, or canals—has been accompanied by early massive hype and a stock market bubble as investors focus on the ultimate possibilities of the technology, pricing most of the very long-term potential immediately into current market prices.  And many such revolutions are in the end often as transformative as those early investors could see and sometimes even more so—but only after a substantial period of disappointment during which the initial bubble bursts.  Thus, as the most remarkable example of the tech bubble, Amazon led the speculative market, rising 21 times from the beginning of 1998 to its 1999 peak, only to decline by an almost inconceivable 92% from 2000 to 2002, before inheriting half the retail world!

So it is likely to be with the current AI bubble.  But a new bubble within a bubble like this, even one limited to a handful of stocks, is totally unprecedented, so looking at history books may have its limits.  But even though, I admit, there is no clear historical analogy to this strange new beast, the best guess is still that this second investment bubble—in AI—will at least temporarily deflate and probably facilitate a more normal ending to the original bubble, which we paused in December 2022 to admire the AI stocks.  It also seems likely that the after-effects of interest rate rises and the ridiculous speculation of 2020-2021 and now (November 2023 through today) will eventually end in a recession.

Grantham says to beware of FOMO (fear of missing out), which comes along at the end of every great bubble.  It’s incredibly seductive and hard to resist.

This bubble has crossed off all the boxes.  It’s done all the things that a super bubble typically does.

We had a 11-year bull market (2009 to 2020), the longest in history.

It requires crazy behavior—we’ve had some of the great crazy behavior of all time.

It needs to accelerate at something like 3x the average rate of the bull market.  It has done so.

At the end of every super bubble, the speculative stocks start to peel off and go down (even if the broad market goes up).  This has happened.  40% of all NASDAQ stocks are down over 50%.  This is the beginning of the end of the bubble: speculative stocks go down even as the market goes up. It’s a very rare condition that only previously happened in 1929, 1972, 2000.

Grantham concludes by asserting:

It is likely that we are at the beginning of a crash.

It would be unlikely that the market would not come down 50% from its peak.

And it would be unusual if the speculative stocks did not do worse than that.

 

CONCLUSION

Benjamin Graham and David Dodd, in Security Analysis (1934), wrote:

The ‘new era’ doctrine – that ‘good’ stocks were sound investments regardless of how high the price paid for them – was at bottom only a means of rationalizing under the title of ‘investment’ the well-nigh universal capitulation to the gambling fever.  The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd.  Yet the new-era theory led directly to this thesis… An alluring corollary of this principle was that making money in the stock market was now the easiest thing in the world.  It was only necessary to buy ‘good’ stocks, regardless of price, and then to let nature take her upward course. The results of such a doctrine could not fail to be tragic.

 

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.