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SMALL CAP INVESTING
Recorded: June 30, 2025 Duration: 1:22:30Space Recording
Short Summary
In a dynamic discussion, crypto enthusiasts explored bullish market trends, highlighting significant growth potential driven by strategic partnerships and innovative projects like Gatekeeper Systems, which recently secured a $23 million contract, signaling strong financial prospects.
Full Transcription
Thank you. Thank you. Hello, hello.
What's going on, Ben?
This is actually Sam.
I'm filling in for Emp today.
Right, right, I heard.
Okay.
I wasn't sure if you guys were talking earlier.
I saw these emojis, but it was silent.
So did you guys start yet?
No, no, I just was bringing everyone up.
Okay.
Okay.
So let me know. Em told me to take over the moderating today, so I could do that whenever you want. Yeah, I think we can go ahead and
jump right into things. I'll keep bringing everyone up, and then we can go ahead and
get started. Okay, awesome, great. All right, so uh man another week here godfather is coming up um
it's been it's been incredible i guess you know i'll just start with my macro
view and then we'll go around uh the table here um i'm i'm like as bullish as i've ever been
i'll be honest with you uh i'm not concerned about valuations i think think IWM is over the 200 DMA, and the 200 DMA is super, super important.
You know, when QQQ SPY went over the 200 DMA after that initial China deal, I predicted all-time new highs on QQQ SPY and were there.
You know, if you look at the chart pattern, in fact, let me see if I can find this chart that I posted on my account last night. Hold on here, because this is really interesting. Just give me one
second. Let's see. Here it is. Okay. Let me put this in the nest. Okay. So I put a chart
in the nest of where I think this can go. When we're in the depths of this tariff pullback,
I had made a prediction or just made an observation that it felt very, very similar
to the COVID crash. And I anticipated that we could have a V-shaped recovery.
And that's what happened. Once it went to the 200 DMA, then I forecasted the all-time highs on spike QQQ.
But this can be just the beginning.
Just tap into that nest, zoom into that chart.
You'll see what happened with COVID.
And this looks exactly, exactly the same.
And, you know, you could make theses or fundamental arguments for why that could happen.
I understand there's probably concerns about valuation. You know, Trump's on a roll right now. I think sentiment's really high.
Inflation has been in check. You know, series of win after win after win with Trump geopolitically,
domestically. And I think everything's just going to be seen through rose-colored glasses. So, you know, interest rates are going to come down.
It looks like consensus now is September.
We're expecting a rate cut, you know, which is probably driving this IWM move.
So I just love the environment we're in right now.
And I think, you know, the way I trade, I know there may be a different view from MoneyMark in terms of valuations and maybe even the godfather now.
But it harkens back to a moment.
I don't remember.
You'll remember this, Mark.
When Air, when we first rode that big 10 bagger in Air from like $2 to $25, I remember there
was a time in there that you came back in but you initially
pieced out around 16 because you were concerned about fundamentals. I'm like there's no way
I'm selling this. It's above the key moving averages. I just held it until it broke. Actually
the candle, it was a closed red candle. At first I was like the candles were just beautiful
and then I had this like closed red it was actually closed green candle which meant it
closed the day lower than it opened the day even though it was up for the day
and that was my signal to get out so I just think my perspective is I think
people can lose a lot of money trying to time the top and worry about valuation
so like you know in my morning note I put out each day I've been I've been
given a green market signal since last Monday.
And pretty much every day I've ended my macro note with the words carpe diem.
And that's how I feel.
So I'm extremely bullish right now.
I'm not worried about valuations.
I have a lot of faith in my ability to quickly pivot on a dime.
I've done it many, many times.
So even if I did think markets were
overvalued, I'm there to look at the technicals. I'm there to find the catalyst that would spark
that sell-off and spark that realization into, oh, we're overvalued. I don't know if we are.
I don't really care if we are. But I'll be able to see that and I'll be able to pivot very quickly. I'll be able to sell 20%, 30% off, raise cash, get some hedge.
So I'm 100% invested right now in my long-term account, and I'm comfortable with that.
And I've been pushing a lot harder in my short-term account, more swings, more call options, and I'm happy with that.
So I could not be any more bullish right now.
So that's my take, and we'll go around the horn. Let's start with money work. You know, that's one area where I always like I'm aspiring to be more like you.
So I'm a fundamentalist, right?
I'll look at valuation.
You talk about valuation of stock market and I will tell you it's high.
It's definitely higher than it was before the market tanked.
But I'll also tell you in the same breath that it doesn't necessarily matter because the driving force in the market is liquidity.
necessarily matter because the driving force in the market is liquidity.
And so when you've got a good feel for market momentum and sentiment towards
certain names and the money is flowing, if the money's flowing,
it's going to keep flowing until something big makes it stop.
Right. It could be the feds.
It could be any number of things that can
can derail the liquidity train but right now it's flowing and one thing I think
everybody should pay attention to is the dollar okay I'm actually I've been
overseas for the last couple months I spend every summer in Europe and even in the country of Moldova, which is the next country over from Ukraine.
The Moldovan lei is just accelerating, accelerating, accelerating versus dollar every single day.
How's a currency of a small country like this, you know, with threat of Russian invasion and all that
currency going up, well, it's simple because the dollar is going down. And so all assets priced in
dollars, as long as the dollar keeps going down like this without a fundamental consequence,
all of their assets priced in dollars is going to go up. So you've got crypto, you know, you see Bitcoin going up,
crypto going up, stocks going up.
Everything goes up in an environment where dollars are going down
unless there's something wrong with the actual environment.
So that's what we're dealing with right now.
So stay tuned. you hear me no we didn't hear you hello can you hear me yes yes sir yeah yeah okay perfect um
yeah you cut out for me there look uh on the macro side, it's a continuation of what we've seen here, right?
This melt-up continues.
I see Tom Lee was talking about 6,600 for the S&P for year-end.
That's very likely.
It all comes down to earnings at the end of the day.
And there has been, despite tariff and whatnot, a continual upward revision to forward earnings estimates.
And I saw Warren Pies on CNBC on Friday saying that forward earnings estimates are now at all-time highs.
I haven't independently verified that, but if that's true, then yeah, there's certainly scope for the market to make new highs.
We talked last week about these sort of summer corrections, summer swoons, if you will.
You can pull up your QQQ chart and you'll see that, you know, from July 10 to like August 10 last year, the Qs actually went down like 15%. And this is common in the summer. Typically starts
a little later in the summer, sometimes third week
of July, sometimes doesn't start till like first week of September. But we often get what averages
out to be about a 40-day correction, somewhere in the nine to kind of 13% range. So, you know,
this market certainly could do that from a, you know, need for a breather standpoint. And who knows what exactly the
catalytic event will be for that. But it's very possible. And again, I think it'll be a correction
or summer swoon in an otherwise larger bull market. So taking back to where we are today,
look, it's a short week. There's minimal earnings and economic data.
The geopolitics seems to be settling a little bit here. What's in focus, of course, is the big, beautiful bill, July 4th.
Everybody wants to see, from a standpoint of, you know, extension of the Trump tax cuts, that to go through.
I think there's certainly some hurdles with respect to the debt and, you know, losing health coverage and all the rest of it.
But, you know, we're not here to talk about those contents. But to the extent that they can get that through,
that's one less thing for the market to worry about, I think. The other thing, of course,
is July 9th. And I think it's going to be really a nothing burger. There's some reports of 10 to 12
deals getting done before the deadline. And then there's another 20 countries that include the likes of Japan, Vietnam, South Korea, maybe even the EU.
Look, they're either going to go back to reciprocal reversion on a tariff basis, but for some of these small countries, it's not going to be that meaningful.
And Bessent and others basically said, look, if you're in constructive negotiations, you know, expect to see those deadlines extended. So the market's certainly
looking through that. You know, Trump was on the wires talking about a deal being done with China,
another one being close on India. And so, you know, if it's true, if we do get 10, 12, which
include some of the bigger countries, that could be an incremental positive to this market. So look, I said this last week and I'll say it again. I think that
the setup for the second half of the year, based on what we see for earnings and based on what's
expected in the pipeline regarding regulation and loosening thereof with respect to the banks
and how that impacts ultimately small caps, which is what we're here to talk about today, I think it's positive. I think it's favorable. You're going to see
the supplemental leverage ratio for the banks relaxed. That's good for the KRE. It's good for
these regional banks. The regional banks lend a lot to these small businesses. These are the names
that we're talking about. So this is good. And a lot of these guys benefit from falling dollar as well. So those trends are in place.
coming from that sort of cross-asset strategy quant community,
that despite the geopolitics, despite the tariffs,
despite uncertainty around the big, beautiful bill,
if you actually dig in, realize volatility is again falling.
And there's a ton of money that's benchmarked
in these sort of volatility-controlled funds, if you will.
And the expectation from these
guys, and I mentioned it only because they have a hundred percent track record of success when
predicting this, is that there's an expectation from those volatility controlled funds that
over a hundred billion could flow into stocks over the next month or so. So again, if that's true, and, you know,
I haven't independently verified that, again, you know, it just, it, it stems from,
you know, it, it, it enhances liquidity and, you know, new, new market highs require earnings
support. It requires sentiment and it requires liquidity. And so it's looking like, you know, we're sort of coming up
green on all of those. So I won't belabor it from here. But yeah, I agree with Ben that it's
a green light right now to focus on individual stock alpha and happy to come around on the
second half and drop two picks if I got time. You know what I can add to that?
What you said about the summer swoon,
you do have some of the macro voices out there,
like Hedgeye saying that we are going into a period
where we're going to see the macro data come in,
slower growth in July.
So when we start seeing these measures coming in, growth might see a
slowdown. And at the same time, they predict that inflation will show a tick up. So that could be
the thing that kind of scares people is maybe a little stagflationary scare and give you that
kind of 40-day correction. correction and in the meantime obviously keeping an
eye on the charts the charts look great we'll have Dougie fresh talking and give
us an idea of where we can have a point at which you say hey listen this this
these charts just broke let's get out of the way now you know we've made a lot of
money one thing I will say though is no matter what happens over the summer, from all indications, from my industry sources and everything that I'm gathering, AI there's going to be a lot of small companies that benefit from AI
that didn't benefit in the last wave.
So stay tuned.
We'll talk about some names in a little bit, but thanks for that update.
Yeah, just quickly on that, I am personally of the view
and have been for the bulk of this year that we get a one and done from the Fed. And I'm still surprised to
see the Fed fund futures here at two rate cuts this year. I'm not sure at the end of the day
how big a factor that is in the market, given the other things that seem to be working, i.e.
earnings and liquidity. But yeah, if we see that spike in prices or inflation, ultimately some of
the impact of tariffs starts to show through, it's possible that the Fed fund futures start to
revise closer to my view as opposed to two cuts. And maybe that's it. I don't know. I suspect it'll
be something else, but I would not be surprised to see some some late summer digestion and then get set for a rip-roaring fall.
Well, yeah, I mean, in no small part is you see an interest rates coming down a bit and the dollar coming down in anticipation of Trump's early nomination of who's going to take over the chair of the Fed, right? So people
looking forward to that a little bit and saying, okay, we're less than a year away from that
happening. What's that going to mean for interest rates and therefore the dollar?
Yeah, there's been a couple of very rough Augusts in the last, maybe two of the last
three years, or maybe it was the last
two years, like very, very violent corrections in August. So we'll see if that happens again.
By the way, I know you probably saw this, Godfather, in my morning note, and I'm not sure
this is accurate. I kept it in there, but Morgan Stanley last week said it expects seven rate cuts in 2026.
Somehow that made it into my morning note.
I saw it somewhere.
I don't know if anyone else saw that.
Does anyone see that?
Is that an outlier?
What do you think of that?
Yeah, I saw that as well.
I'm not sure what they're smoking, but I'd love some of it.
I would love some of it too, and who knows?
Maybe we'll get it.
You never know.
This market's crazy.
All right.
Let's see.
Oh, Dougie Fresh.
Let's go.
By the way, we do have some extra time today because Kyle Adams could not make it today.
And also Catalyst Capital could not make it.
So we have some extra time to pontificate or do more than two picks or just delve deeper into your picks.
So go ahead, Dougie, with macro.
So here we go.
Fed rate.
Remember, I was saying like a month ago, I didn't see what the argument was.
And I don't think anybody can see.
I was saying a month ago we were going to see the market hit all time highs.
Boom.
There we go.
Right through that 610 that I was looking at.
Like it wasn't even there.
We're at 616 today on the
spy and I'll tell you what the IWM guys setting up to look really good to get a run so these small
caps are looking pretty good and the reason why I think that's going to happen and you guys were
kind of talking about a little bit of correction and Ben is super bullish I'm bullish with you Ben
I just see a little bit of pullback coming uh this week's a
little bit weird there are some good runners i did see kind of the spy wanting to pull back a little
bit it's hitting that top area i think we are going to get back into that top we didn't get
in there yet but i think we're going to get into that top and run up even higher before it really
pulls back i was looking at that 610 to see if it wanted to hit that and then pull back.
And clearly it didn't even have a chance to pull back.
It just ripped right through it.
And so we're still cruising up there and we're hitting the top.
This week being a slow week with Thursday.
Remember, guys, 4th of July on Friday and the market closes early on Thursday.
So if you have options that expire on Friday, they will expire Thursday at 1 p.m.,
1.15-ish, some of them I think. But yeah, so just keep that in mind. It's a little bit of
a different market with 4th of July on a Friday and the market's closing a little early Thursday.
So I'm being a little cautious this week and just kind of keeping an eye on things. Obviously,
I was watching the spy wanting to pull back and just kind of keeping an eye on it. I do think we're going to get ripping and then talking about
what's going to happen. Yeah, we're going to see a little bit of pullback. I don't know if we're
going to see that full 15% like we generally see in that summer when it pulls back in August.
I do think we are going to see some sort of pullback here. It's going to have to. It has to
reset itself. These things are running up at the highs and all the way at the top. So they do have to
pull back a little bit, just like that little bow and arrow, they spring forward and then you got to
pull them back so that they can go up again. And that's what you're going to kind of see happen.
And this market's going to be ripping guys. You can already see it. And I'm already looking at
that three months ahead. I always look at three months increments, and I was looking up until 4th of July,
which we're about to hit Friday, which is crazy.
And so we got our next three months coming up.
Like I said, just expect a tiny bit of pullback, so watch for some good price action
because if you can catch them right there, holy cow, you're going to be ripping through the rest of the year.
I think it's going to get wild in September, October, November. Christmas time might be like, holy smokes. And again, just remember what's got
to come up. The midterms have to come up and Trump has to have this market ripping. He's already got
it to the all time highs, but now you got to really get it ripping even higher. He just proved
this point that he can snap his fingers and make the market do whatever he wants. And them tariffs, guys, I don't know what all these so-called experts were talking about.
Them tariffs were just a word to use to manipulate the market the way they needed to on the days that they needed to do it.
And he did it perfectly.
I've never seen anybody use it, like just control a market the way they have this presidency, this time.
I mean, it's crazy. He
had four years, four years off, and he came in and he completely understands how to operate the
market at the snap of a finger. I don't get it. Nobody else has ever been able to figure it out.
But yeah, he's got the thing ripping the all-time highs after people were scared out of their
minds that it was going to dip and we were recession. Me, I know on the show, we didn't
think that one bit and we thought it was going to be ripping up. Now we're just going to see how much pullback we have coming up here. And then, yeah, we're going to be ripping guys. And again, with the midterms, he's got to have this market smoking at that point to just basically have it walk away and he can have his last two years to do whatever he wants. And you can see
he's already done everything he's had in mind to do already. And they have some kind of crazy plan.
I've been saying it this entire time. I don't get it, but I just am going to trust the process here.
I'm sure Ben is. Ben, congratulations on that huge day. And our Discord's insane.
And a big day last week for ben i mean he crushed the
market and um we've been just doing it every single day so yeah when you know which way the
market's going to move you can destroy the market so yeah just be a little cautious this week on a
short week and uh we'll see exactly which way it wants to go but i'm telling you get ready for the
end of the year because it's going to be ripping and roaring. I can see it already.
So that's what I see happening.
We got to clip that.
That reminded me of something about Rick Santelli's rants on CNBC.
That was beautiful.
Love that, Dougie.
And you came up to the stage.
You have a minute to talk?
All right, Tom.
Just on a quick little lunch break here.
I appreciate you holding it down, Ben.
Hope everyone's doing well. But, yeah, this is one of my favorite shows of the whole week. So if I had a chance to stick my head in, I was going to stick my head in and check it out. So good to see Dougie Frash, Ben, Godfather, Money Mark, and of course my man Blackout Trades up here as well. So I hope you guys are doing well. I'm just kind of listening in and trying to keep getting alpha even while I'm busy here at the office back home for a little bit.
Someone speaking?
Boy, I know how to kill a room, don't I?
Yeah.
Who's up?
I think blackout trades would be up.
I don't know.
I think Ben's having difficulty over there.
Can you hear me?
Can you guys hear me?
Yeah, now we can.
He's back.
He's back.
I thought Ben just gave me the coldest shoulder in history for a second.
Oh, weird.
He's buying more socks.
All right, Money Mark, why don't you take it away?
Yeah, I got one name to talk about, and it's because some really big news came out.
I've spoken about this name in the past.
It's Gatekeeper Systems.
It trades on the Toronto, but also in the U.S. under GKPRF.
And when I talk about AI and AI enablement, here's a perfect example.
This is a company that used to be just a hardware provider, cameras for buses, right? But now
in the AI era and with the internet technologies that they have at their disposal, they have started collecting that
data. It goes into a backend database and they can do things like monitoring, checking to see
what's going on with the driver. You hear some crazy stories. I'm doing my research on this
company. Crazy stories about drivers checking their TikTok while driving a school bus.
You've got a bus full of your kids, and the driver is TikTok-ing while driving.
Passenger monitoring, if kids are getting bullied in the back, the AI can pick it up.
It knows as the camera is rolling what looks normal and what doesn't look normal. It's
training that allows the AI to say, there seems to be a fight going on in the back of the bus.
The driver seems to be driving erratically. And then also beyond that, so not just the safety
within the bus, but outside of the bus as well, what's going on with the traffic? What's going on
with the cars around the bus.
And if anybody's breaking rules like the stop arm, you know, when the bus stops and the stop
arm comes out, far too many kids, it's tragic in researching this. It was really sad to hear,
especially having a 13 month old myself. The kids come off the bus and they cross in front of the bus and some idiot goes right past the stop arm and kills a kid.
You know, you can't have that happen. They are able to enable cities to ticket, give out tickets to people that are breaking traffic rules around the bus.
So not only do you have higher safety in the school buses, you have higher safety outside of the school buses, especially once the reputation in the city gets out that, hey, watch out, Big Brother is watching.
And whether you like that or not, doesn't matter if the cities choose to go with Gatekeeper, and they are, you're seeing a dramatic change
in the traffic behavior as well as the safety within those buses. Now, what does that mean
for the company? You've got half a million school buses in the United States and Canada,
half a million school buses in the United States and Canada. And Gatekeeper gets like $5,000 per
bus for the cameras, plus $425 a year for the monitoring services. High margin because it's
AI that's doing the job. It's not people sitting in front of monitors. Now that we have AI,
you can have AI monitoring these buses.
They're winning deal after deal after deal. If you go to their website, you'll see they won
something like six deals in seven weeks with regard to these buses. In addition to the half
million buses that need to be outfitted, 10% get replaced annually. Just the buses get worn out. It all adds up to a
$2.5 billion initial installation TAM plus the actual monitoring TAM. You're talking about
$460 million a year of business. And Gatekeeper has a very strong market share.
There's very few players out there.
Their main competitor is a company called Cion
that's owned by a U.S.-based Safe Fleet.
They have a U.S. presence as well,
so they're winning all over the U.S.
You'll see with those deals,
but they also have a primary presence in Canada
and nobody can touch them up there.
Canada's not really happy with the U.S. The U.S. is not really happy with Canada.
That doesn't stop Gatekeeper in the U.S. They're winning all these deals here,
and it doesn't stop them in Canada. In fact, it basically gives them a monopoly.
They've won business with Toronto. They've won business with Philadelphia in the past. And the big news was the expansion that we're now seeing from school
buses to transit authorities. Think the city buses, the metro trains and things like that.
That expands the opportunity by 100% over those numbers that I just gave you. And in that regard, we saw some news drop where the MTA that's New York City
had basically put out a proclamation on their public website that they were picking
gatekeeper systems to outfit all of their trains in Long Island to the tune of $23 million Canadian.
Island to the tune of $23 million Canadian. That's close to the $30 million US. This is a
company that did a total of $37 million all last year, getting $30 million contract with New York.
And that Long Island contract is only one eighth of the trains in all of New York. So if they
execute on this, and they've always executed, I've watched this
company for a long time. I've known the CEO for a long time. The reason they won that New York deal
is Philadelphia was gushing them with praises and just letting New York know, these are the guys.
They save us tens of millions of dollars a year, and they'll do the same for you. So they do well in Long Island and that opportunity
goes from 30 million to potentially 240 because of the 8x number of rails in the greater New York
system. We found that information last week. I broke it on my show on Friday. Stock started
taking off. You've got some reports out there.
I'm giving them a $2.50 price target. Stock is right around a buck right now. I think it can
keep going beyond that because now with Toronto, New York, and Philadelphia, you're talking about
the number one, number three, and number five transit authorities in North America.
number one, number three, and number five transit authorities in North America.
So now who do you think Chicago and LA and whoever's number six, seven, eight, nine,
and 10 are going to be looking to inject this AI solution into their cities to have,
by the way, not just the traffic and the ticketing, which is nice revenue stream
for the cities, it makes the system pay for itself, but there's also an FRA mandate. It's
a national federal rail agency mandate that every rail lead car has to be outfitted with a camera.
It's kind of like a black box for trains, right? You got black boxes on
airplanes, have it for the trains as well. Every train has to have them within, it's got to be by
October of 2027. So just over two years from now. So by the way, that New York deal, that Long
Island deal, it's a three-year deal. It's going to be done in just over two years because they
have to have it done in time for that mandate.
Somebody asked a great question, you know, is that going to be something that Trump rolls back?
Nope. It was a bipartisan deal.
In fact, it had heavy Republican support.
So now you've got not only AI driving the business, the safety and the ROI that the cities are getting by using this solution.
And now you've got a federal mandate that is kicking in as well.
And this is a company, if you look at their financials over the last several years, the
only thing that has given them a bump in the road has been COVID.
Aside from that, this company has been growing aggressively year after year after year.
I'm talking like 40% type growth rates, but now it's inflecting, starting to hockey stick with these major deals
as these cities scramble to take advantage of the FRA mandate that is coming down the pipe.
Now, if you add it all up, you've got a situation where these guys could probably do about $160 million a year in the upcoming years, and the market cap is only $122 million.
So despite the run that we've seen recently, it's just getting started.
The New York contract came out of the blue.
It was a complete surprise.
We were sitting there.
We were waiting for the Toronto deal.
And all of a sudden, New York comes out of nowhere, punches us on the side of the face. And as a result, as people realize what was going on, the stock starts
running. And then the Canadian authorities reached out to the company and said, hey,
there's abnormal trading in your stock. What's going on? And it forced the company to disclose,
yes, there's this New York deal that we've been chosen for.
And that happened this morning.
So big news in our community.
Great pick.
If you want to look at AI, there's many ways to skin a cat.
And this gatekeeper, GKPRF, is definitely doing a number with that one.
doing a number with that one.
If you guys have any questions, let me know.
If you guys have any questions, let me know.
Yeah.
Mark, wow, as I'm watching BMNR
go over 30, that was a big
winner to do this morning.
Anyway,
GKPRF. I'm looking for this
news. I don't see it anywhere.
I'm checking
Benzinga Pro and also Yahoo Finance.
All right. I'll see if
I can dig that up for you.
When was it announced?
No, you're missing the point, Ben.
It hasn't been PR'd by the company yet.
Because the Transit Authority is a public agency,
it actually came out in their minutes
that their board has approved this contract to Gatekeeper.
Bingo.
So there's a logic right now between when they approved it
and when the gatekeeper actually has the signed contract in their hands
and press releases it, hence the opportunity.
So what were you talking about, Mark,
when you said the Toronto Exchange contacted them for clarification or something
and they responded?
Where's that?
Right.
I'll find that for you.
I actually had that sent to me, so can't I don't I didn't link you know I didn't see a press release come out or something out I
might be that might that might be as that might be as quiet as as this this
deal was so just give me a couple minutes right and I will put in the
jumbotron of the spaces here I'll dig
up that information in regard to their response to the exchanges okay so it
looks like on Thursday June 27th that's where I get some people who had access
to the right data I don't know if you got it that early but Friday morning I
found it Friday morning you found it okay Friday morning you found it. Okay. So some people found about that.
The thing ran from like $0.60 to $1.
What's the value of this contract?
You said it's $20 million a year?
It basically comes down – it adds up to $30 million.
$30 million Canadian.
They did $37 million last year.
It's a three-year deal, plus there's monitoring involved.
So there's going to be the ongoing monitoring.
This is just the onset of the deal.
And then you're going to have ongoing monitoring that goes on after that.
And that's the thing that's really getting exciting about this story is because of the AI monitoring,
this goes from a company that was just selling cameras, which is a commodity business.
But because they made the heavy investments, you could see on the stock chart how the stock has had its ups and downs.
Some of those downs is because the investments they decided to make.
Typical camera companies didn't decide to do this.
Gatekeeper did.
And now they're one of the only companies out there that have the combination of the types of cameras that transit authorities and school systems want to have, but also the technology to do all those AI, do all that AI functionality that you see going on.
And so all of a sudden they go from a commodity camera provider.
And a few years after I started following them, now they're winning New York City.
I mean, it's not.
So the stock's-rated so far
from 67 cents to a dollar right and it's not a way to quantify this to basically say hey it deserves
to re-rate xml i know we talked about the two dollar fifty price target you think you could do
more than that but in terms like an immediate re-rating you know like where do you think this
is going to settle in by the time everyone finds out about this deal?
Well, you'd have to ask Dougie Fresh about the chart, right?
But in terms of valuation, I was running some numbers.
And I'm thinking that these guys are going to get to a dime of EPS in relatively short order.
So you've got a company with a recurring revenue stream in the monitoring,
the actual hardware business showing dominance, winning the number one, number three, and number
five transit authorities in North America, right, at a time where there is a mandate that is forcing years of installation to take place over the next two years and three months leading up to October of 2027.
So you're going to see an inflection.
And, you know, there's going to come a time, let's say 18 months from now, where the market gets overly exuberant because you're going to have all this pull in of demand and sales
over the next two year period and then that third year is probably going to be a lull.
They're going to still have all the-
I think-
Go ahead.
Yeah.
I'll try to help in the way I look at things.
So it looks like last quarter they did 4.27 million in revenue. After this deal, how do you think their quarterly revenue will be impacted in the second half of the year?
Well, what are you kind of expecting for Q3 and Q4?
The second half is going to be off the charts.
I mean, it's not just the New York deal because they still have, you know, they got to sign the contract and stuff.
New York deal because they still have, you know, they got to sign the contract and stuff.
From what I hear in the field, though, by the way, it's like it would take an almost
an act of God for that to not go through.
From what I understand, they were considered the number one player.
And, you know, they were they weren't the number one priced player.
So they came they went back to him and said, listen, you've got the best solution that
we can find, but you're a little bit higher than some of these guys. Can you give us a little bit of a cut on the break, on the price, and we'll go through? And they always leave room for that.
About a 30-day period, that contract get finalized, and then things get started.
There is a sense of urgency.
So you've got eight quarters on a $30 million deal.
You can do the math on that.
30 million Canadian is what they report in.
So you can do the math on that.
But in addition, if you go to their website, just take a look at how many deals they've
won in the last seven weeks.
It's like state after state after state after
state. They're falling like dominoes for these guys. They're going to have all the business that
they can handle. So that's where I say I can see them doing a dime of EPS, not too distant future,
but with their growth rate accelerating pretty greatly. I mean, they were already at a 40% rate of growth.
They're going to be at 50 plus. So what do you value a company that gets this AI shine,
putting up a dime of EPS with 50% plus growth and a recurring revenue stream going out in the future,
showing dominance in these major markets? You tell me, right? We're still in the phase of
trying to discover what's going to happen here because we just hit an inflection point.
And like what happened with air back in the day, it was hard to know exactly where things were
going to settle in. And I ended up getting out before you did. So I'll probably, you know,
I might end up doing the same thing in this case by the time it's all said and done.
Can I just add a few things on this move?
Yeah, please.
So look, I've been aware of this name being Canadian, you know, for two to three years,
looked at it several times, you know, stock chart up until recently, you know, it kind
of was a little bit above or a little bit below sort of 50 cents Canadian for a long
time is going nowhere.
There's an opportunity cost stock, in my opinion.
I think you've got a great term for what you call that time, wait time is going nowhere. There's an opportunity cost stock in my opinion. I think you've got a great term
for what you call that, wait time stock or whatever.
But I listened to your show on Friday
and I put it through my process as a result of that.
Great find by the way, on the Long Island Rail.
So here's a couple of things to add.
From a mandated standpoint, what's going on in Canada,
just in Canada, Transport Canada, which is the equivalent
of your guys' FTA, Federal Transport Authority, is mandating perimeter visibility systems on all
school buses in Canada by November 1st, 27. So there's a budget already in place for this. It's
$200 million. There's 65,000 buses in Canada. They are, as Mark said, the leader.
They have both technical differentiation as well as customer service differentiation and a track
record, which a lot of guys don't. And to Mark's point, you're going to see some multiple expansion
here because it used to be a fairly low margin, you know, sort of 40% gross
margin, single digit, you know, on the operating line based on hardware. But they've got some 57,000
of these mobile data collectors installed in the, you know, with all these buses and so on,
they're working with 60 transit agencies, 3,500 school districts, all the rest of it. A lot of these older cameras are now being retrofitted with the new technology,
and they're adding in this monthly recurring subscription revenue, whereby you've got AI
assisted video management. So the analytics, the storage, all of that, think of Axion.
Okay, the technology now is there on this. And also to Mark's point, these systems often pay
for themselves because they become revenue generators. Your school bus effectively becomes
a cop car in terms of monitoring activity around it and the ability to issue traffic violation
tickets, et cetera. So the company has seen some volatility in its revenues,
partly because it's relatively small,
and it has in the past won some large contracts.
In fact, if you look at the most recent quarter,
it shows revenue down year over year,
but that's only because they had a big contract
in the prior year period.
If you X that out, the actual organic growth is more like 20%.
So you're continuing to see that on the top line.
In addition to what Mark was talking about at the FRA, which is the Federal Railroad
Administration, the FTA, there's rumors of them going the way of what we're seeing out
There's rumors of them going the way of what we're seeing out of Transport Canada.
of Transport Canada.
And irrespective of that, individual states have mandated for their own transit systems these monitoring.
And you can see it in the contract wins, right?
They just press released one in Oregon.
But the states have note that have all sent business gatekeepers where California, New York, Massachusetts, Washington, Illinois, and Oregon, as I mentioned. So this ties into that sort of doubling of the
TAM that Mark mentioned. So I've got them right now on their run rate, most recent quarter,
no growth scenario is trading at four and a half times. Obviously, that's not realistic
because we know the real growth is in excess of 20. If you add in, and I don't know what the
cadence is going to be of this Long Island real contract, but I think just from a sentiment
standpoint, you're going to get some multiple expansion. Anyway, I run through all of the
numbers. And by the way, this company is operating cash flow positive. They have 10 million in net cash. They've got seven and a half million in undrawn lines of credits with balance sheets in sweet shape. They got lots of room to, you know, both from a working capital standpoint, as well as, you know, opportunity to add on inorganically.
inorganically, I get to $2.40 Canadian as a sort of a one-month target price.
Or sorry, one-year target price.
That's using my process.
So I hope that's additive.
And I'll touch on Gatekeeper since you guys are.
The chart actually does look great.
You can see it popped up the last two days on your news right there, Mark. Nice call on that one.
But yeah, just look for a little pullback, but it is going to continue to go up.
And I would say it might even hit, you might be dead on the money there.
God bother with it getting another dollar in the next year because it looks pretty bullish to continue its way up there.
And I live in the Philly area. I am familiar with that.
I don't take the
public transportation but i do know people that work in it and yeah the system is crazy guys and
i know they are uh giving out traffic tickets and all kinds of stuff just from this system alone
and they said it has been uh pretty wild to see what goes on on the buses because the technology
is so good that they can you because again you have a lot of homeless people goes on on the buses because the technology is so good that they can you because again
You have a lot of homeless people that go on the buses and they cause issues and this thing apparently picks up everything
So I have heard about it knowing people that work in the transportation
So yeah, I've heard it's pretty wild what goes on and this system is pretty good
So that's what I see happening from the chart base yeah you know what's what's
crazy about go ahead yeah i thought i thought this was only school buses but no you know
he's talking about the septa septa buses and that's the public right yeah septa has it yeah i know some
people that work for it that was the second that was the second half of what i what i was talking
about ben is that i started out with the school buses, but now that it's the transit stuff and most of what Godfather talked about is those, you know, you got some mandates going on in the U.S. as far as that goes, and then some other mandates in Canada.
It's just, you know, being in the right place at the right time after making the right investments to make yourself something other than a camera company.
the right investments to make yourself something other than a camera company um by the way uh dougie
back in 2020 this stock uh ran in an 11 month period from 8 cents to a dollar 12. so we're
still not even at you know the the highs that it hit back four years ago, as far as that stock goes. So it has shown a propensity to be explosive.
And I would not be surprised to see a dual listing here in the US and the stock only
needs to get up about 25% from here and outperform the Russell to get into the Russell 2000 next
year if they can check all the boxes.
So there's a lot of positive things to look forward to.
By the way, Godfather, what are you, AI, man?
Like you learned all that over the weekend?
Like I said, I've had some familiarity with this company over the years,
but I just sort of dusted off from my old notes
and took your lead and did what I do.
If that's some familiarity, I need to talk to you more often.
Yeah, he's familiar with every stock in every sector. It's unbelievable. That's some familiarity, and I need to talk to you more often. Yeah, he's familiar with every stock in every sector.
It's unbelievable.
That's insane.
Godfather put that out in our Discord.
He put the thesis out this morning.
Actually, initially bought some in my trade account just based on this recent catalyst.
But now after listening to you guys talk, man, it's hard because I'm fully invested in my long-term account.
Man, it's hard because I'm fully invested in my long-term account.
But as you guys were talking, I found some stuff to sell elsewhere,
and I added some GKPRF to my long-term account as well.
So I don't know who Blackout is.
I don't know how you made it up here, but let's give it to Blackout for a second.
Go ahead.
You got a question?
Okay.
No, so I was listening to everything you guys are saying.
I really like it and i was
wondering you know you guys are looking at the canadian stock and different kinds of things with
that and i was wondering about the input on energy and semiconductor stocks because as we saw you
know because that's what i usually been looking at for smaller caps um there's a and also some therapeutic companies recently. I was in KLTO this morning and it ran from 1 to 1.4, 1.36 right in the stop out.
And I just think it's interesting that, you know, all these, again, like there's a lot of market information.
There's a lot of different statistics and data and you can spend a lot of time, you know, like researching and diving into those.
spend a lot of time, you know, like researching and diving into those. But again, like I think,
you know, a lot of the way, at least in my perspective, you know, away from those things
in different small stocks is just looking at news about things like looking at companies,
research and data, like a lot of the therapeutic companies are great, you know, like KLTO had this
huge breakthrough, they might be acquiring a different corporation, they have a lot of
different kinds of, you know, stock news and market news. And I've been looking at this on ticker for months. And same with Omex, a critical mineral
seabed mining company. A lot of these unheard of stocks, or not unheard of, but really small stocks
people don't pay attention to, I think have a lot of upside potential, just the simplest
legislation or news, especially with all the wars and different kinds of things.
One of my areas I love to look at is military-grade graphite.
So China produces 100% of it and refined 100% of it with all their connections.
And since the war, it goes up in price.
And then different kinds of companies, basically the United States says,
okay, we need more of this mineral.
And then they look for different companies to do seabed mining.
It got approved in April, 2025.
It's the first thing approved in about 20 to 30 years for seabed mining,
because it was not really allowed for a lot of the time or really, you know, condoned.
And I think, you know, that pump, I got in at 0.77.
It ran to 1.3 recently.
It's still, you know, I think it's still bullish.
And honestly, that's just some simple,
tinier plays. So I was just wondering, based on some insight and some feedback,
if you guys do a lot of statistical investing and a lot of the investing that takes time to research
and go into the different kinds of markets and strategies, what do you think about a lot of,
there's a lot of hype, there's a lot of short-term plays. Do you look at those or do you look at the smaller positions you put in a little at a time,
long-term research? Ben, that might, that might be a good question for you to answer. I just
wanted to tie a bow on the gatekeeper because we hadn't finished that part of the discussion yet.
In the jumbotron, you can see the link to the disclosure that gatekeeper had to make
regarding the New York win,
and then just adding to what the godfather said about their fiscal conditioning.
The CEO has made it a point to not do dilutive raises.
He's actually bootstrapped this company and been growing the company off of its own profits.
So I just wanted to tie the bow on that.
And Ben, I don't know if you wanted to answer Blackout's questions there.
I'm not sure if he was one of the panelists or a member of the community.
Yeah, actually, I got a message from MP who was invited to the show.
Actually, Blackout, if you don't mind, just real quick because we're running low on time since you're new to this show.
Just like 30 seconds about your background, who you are, and I'll answer your question after that.
Yeah, sure.
So I'm Noah's brother.
I ran a hedge fund from August to December
called Sage Tech Capital.
I did the research for it.
We finished 36% of market cap
as a small cap investment fund, which is really nice.
I work with Austin and I work at Gov
and I do a lot of the research for stuff in IR
for companies called Investing Authority and Virtus Media.
And basically, I do small cap stock plays and penny stock pumps.
And one of the things I love to do is focus on the energy market and then hop in here and there and get feedback on different kinds of hype and what people look for in their plays and stocks. So just here to chime in and learn some more and definitely expand my horizons to what kinds of things professionals are looking at and what I can do to be better at investing.
Sure. Absolutely. Well, look, everyone on the panel here has a different approach.
Godfather knows and Dougie Fresh are analysts in our Discord. Godfather is more fundamental
oriented. Dougie Fresh, technical oriented. but it's a lot of overlap with Godfather
and I in our Discord, which is why I invited him to join our Discord and work together.
Although he's awesome in fundamentals, he also looks at catalysts and sentiment and technicals.
And what we do at Story Trading, I have a process based on our four pillars. And the four pillars are catalysts, sentiment, fundamental,
and technicals in that order. So I'm open to any kind of, you know, interdiscord,
we're looking at short-term ideas, long-term ideas, intraday trades, investment ideas,
small cap, large cap, micro cap. I don't discriminate at all. As long as, you know,
there's a story there that is sparked by a catalyst. And that catalyst, you know, I don't discriminate at all, as long as, you know, there's a story there that is sparked by a catalyst.
And that catalyst, you know, I feel can cause an immediate re-rating in the stock.
You know, the way I look at things is markets are efficient.
One day we'll have another debate with Money Market about that.
But, you know, yeah, the implication of markets are efficient is when you have a delta of information, you have a delta in price.
And that's what I look for.
I always look for that delta of information that's new to the market that can cause a rapid re-rating in the stock.
And that's where my focus is in.
And through that process, a lot of times you find things that are long-term investments as well.
term investments as well. Like right now, it just happened on this show with GKPRF, right?
Like right now, it just happened on this show with GKPRF, right?
I was interested in GKPRF because we have that new news up there at the top in the nest on New
York. So I'm like, all right, there's a delta of information. I want to take advantage of the delta
and price quickly for a quick win in my trade account. But now here in the process, we discovered
this can also be suitable for a long-term investment so you know i have separate accounts for long-term investing and trading um and uh you know that's that's basically
how it is and i bought that stock in both accounts today so i don't know if that helps blackout or if
anyone else wants to chime in yeah blackout i'm just a technical trader i look at charts looking for quick pops so penny stocks i
am uh definitely the one to follow for 100 percenters that's for sure because i find them
every single day um but yeah i just go in and out real quick i don't really do too much long term
i do more crypto as long term i think and i also trade crypto as well but yeah i do i don't i'm i trade everything i
save as a chart otcs are a little harder for me the gatekeepers and otc but some of the otcs like
gatekeeper look like a normal chart some otcs the charts look bizarre to me i just can't tell what
the hell it's going to do but this one's a normal chart you can clearly look and see everything on
it's perfectly normal and yeah that's how i trade just to give you a quick idea. So yeah, I'm just a straight technical,
just look at the charts and that's it. The news doesn't matter. The name of the company doesn't
matter. Nothing matters to me except for the chart and I'm pretty accurate with it. So that's how I
do my style. Yeah. And me, I'm probably closer to the godfather than anyone else. I have a
background as being a Wall Street consultant. I was at one time a paid independent consultant
being paid by the funds owned by Jim Cramer, George Soros, and Stevie Cohen, if you saw the
movie Dumb Money. I started my own Wall Street consultancy back in 2004, retired in 2008,
and have been just sharing my research in my retirement for the last 16 years.
Purely fundamentally focused, but with a kind of special sauce that I call risk reward charts.
And it kind of helps guide people to understand how much risk there is involved in a stock
relative to how much reward there might be, how much upside there might be left from a purely
fundamental basis. Sometimes it overshoots the upper downside, but to me that's neither here
nor there. I'm purely focused on risk reward, but learning a little bit more about Ben and
Godfather's advantage on the sentiment side to capture a little bit more gains on that side of the equation.
That's awesome.
All of you have your approaches and different things that have worked out and it's fascinating
to see the interaction between people's different kinds of trading perspectives.
I think there's a lot of gain and different kinds of perspectives on things, but at the
same time, if it's working for you, the deviation of that isn't always necessary.
So yeah, I'm just glad to be on here and learning.
And what are you guys, for the sentiment being,
what are you guys looking at right now
besides the one you've been talking about?
What is your biggest area of investing
that you're focusing on?
Besides, again, AI is very big right now.
Quantum is very big.
But is there anything else you guys are particular about?
Besides, of course, there's therapeutics and everything, but something you're diving in that you think might be a hidden gem, if I say in a certain way.
Well, I can answer real quick, Ben.
For me, I'm a focused kind of person.
Because of the AI opportunity, I just don't want to look at anything else.
The deeper I dive into AI, the easier it is for me to find the winner.
So if you look at my track record, I find a lot of multi-baggers because I get so deep
and understand everything about what's going on that I can find all the peripheral plays.
So that is the quick answer from my standpoint,
is I won't really stray too much from the AI
until the low-hanging fruit's gone.
Ben?
Yeah, look, I don't want to get too, you know, off.
It's already 2 o'clock.
We'll go over a little bit here.
But, yeah, I want to stick to the agenda.
We've got to still go around and get some stocks.
But, look, I don't discriminate
any sectors. I come in every day. I have a watch list of like hundreds of stocks I'm
familiar with. And then for me, it's all catalyst based from there. So I'm looking for news
to these items on stocks that understand that I know. And I'm looking for that catalyst
that I can say, aha, that's going to be a re-rating for the stock. So I don't really discriminate.
Obviously, everyone loves AI. But we got to go around a little bit more.
Sorry, blackout.
Let's just finish going through the stocks.
I do want to mention, and I got to get back to the godfather,
because I think I don't even know if he had a chance to talk about the stock.
He wanted to.
He talked about TKPRF.
But quickly, I want to mention two quick stocks here, small caps.
Mark, I don't know about, like, if you've been looking at AAHR, I got to this late.
It looked like it was June 4th.
June 3rd or June 4th, they presented at William Blair.
And I didn't see it until Friday.
And I got to tell you, I think this has been the most bullish I've heard.
Again, Erickson, the CEO of air in several quarters.
I wish I heard it before.
There's a little background noise.
I don't know who's not muted,
but I wish I heard it before.
But once I heard that this is a stock I want to own into the earnings
report.
I don't know about you money Mark,
but I added common shares and options.
I'll let you quickly talk about air if you want to.
Yeah.
Yeah. I can give you the full scoop there. So it wasn't just a William Brulair conference. It was the earnings call before that.
Well, the earnings call before that, I was on that. And he just wanted to give guidance
because of the tariffs. So that kept people away. I mean...
No. So here's the thing. On that earnings call, right, in April, and unfortunately I was preparing for my trip to Europe.
So I missed a lot of what's going on.
Things got backed up.
But he announced – so we can even take it back just a little bit further and I can keep this quick.
But I had said that the company had entered the AI race a few months ago.
And it was an investor presentation that he gave back then.
It was actually a year ago, just about.
It was July of last year.
And the stock ran from 10 to 20 on that news.
But I knew that it was going to take time for deals to come through.
So we went from a great find into a wait time for the AI stuff.
But then in April, on the earnings call, they said, hey, we had four 10% customers.
Three of them were in AI.
And then you saw the William Blair conference presentation.
The presentation slides, go to the customer slide and see what their prior customer slide looked like.
It did not have NVIDIA, TSMC, Broadcom, all these names.
Yeah, I was told that too.
Someone told me.
I didn't look at it, but someone told me that.
Yeah.
I mean, dude, these names are all popping up on their list.
So you hit the nail on the head.
Now, here's the thing. So I think, and on top of that all, the first run, the run from 2 to 52,
which obviously I missed the last 30 points of that, that run was based on EVs and really one company, OnSemi, right? OnSemi was their major customer in the EV space with that end product going to Tesla. And then EVs slowed down and then the stock collapsed
back into single digits because of that slowdown in EVs. Well, guess what? OnSemi's earnings report,
they came out and said, hey, we're finally seeing the clouds lift over EV.
We're expecting a strong back half of the year.
We've got a great advantage in the marketplace because of the reliability of the chips that are coming out of our factories.
And guess why they're coming out with high reliability?
Because they're using air as equipment.
So now you're starting to see the EVs coming back for air at the time that the AI opportunity started to take off.
And by the way, the AI opportunity dwarfs, absolutely dwarfs the EV opportunity.
So I wouldn't be surprised over the next year or so to see this stock head back into the $30, $40, $50, $60 range.
But you said this quarter coming up, because of the tariffs, there was a little
bit of a hesitation. So there is a chance. No, no, the guide, even if that's not good,
the guide and the commentary is going to be really bullish. And I think they might
reintroduce guidance. They paused it last quarter. Bingo.
So I think the bottom line there is you've got it nailed. And for anybody listening or playing the stock, do not panic on the print. The print is going to represent what happened in the three months ending May. That's ancient history. Ben said the magic words, pay attention to the commentary and the guide on the call.
It's big for this company. What stock ticker is it? A-E-H-R.
That's my baby. That's my first and only seven figure one so far. Hopefully I'll have a few
more, but yes. Yeah, that was great. I waited seven years to make the call on them. I've known gain for about 10. And yeah, I remember that day when they got that EV deal. It was $2.70. We backed up the truck and it was a hell of a ride. We could be getting ready for another one.
If you want to hear something crazy, and this is real, you know me with the math, I see a realistic path of them doing $7 of EPS.
Not this year, but in the not-too-distant future.
Yeah, I've got to find space in my long-term account.
Right now it's just in my trade account, but look, it's funny.
I see Jonah Lupton just jumped on.
I was down in Orlando, Florida when I met him at a conference
and that was in that period
that AIR went from like 2 to 30.
I remember it.
And he remembers that too.
It was in the midst of that.
So yeah, round two might be coming, Jonah, on AIR.
I got to find room for it in my long-term account.
All right, let's see.
We're running late.
Godfather, was there another stock
you wanted to talk about?
Yeah, I didn't get to talk about either of my stocks.
So let me go quick, OK?
I've got one microcap therapeutic stock that reminds me a lot of what just happened with Nectar, NKTR.
You'll see when they announced their results.
It went from trading under cash at $9.50.
It spiked as high as $36, and it's now now 26. I think it goes into the $80 to $100
range. But a similar name to that, in so much as it's trading at 50% of its cash value,
this is a tiny company. It is a micro-cap therapeutics company. It's a $25 million
market cap. They have an imminent near-term catalyst, top-line results for their phase 2b study of their protein in vitiligio, which is basically a chronic skin condition where the body's immune system mistakenly attacks the melanin production and causes these packages or patches of
deep pigmented white skin. And this basically, like Michael Jackson went from being brown to
white. So look, what's important here is that the phase 1b numbers showed a rapid onset of action,
showed a clear evidence of dose escalation, no significant AEs, no treatment-related
discontinuations. That was just 16-week data, and that 16-week data showed efficacy
that bested the standard of care at 24 weeks. The standard of care that's out there is a drug
by Insight Therapeutics, INCY. Their drug is called Opzelerura, something like that.
In any event, it's a JAK inhibitor. And these things have significant black box
warnings that come with them. There are issues with cardiac events. There are issues with blood cots.
There are issues with cancer.
So if you can have a clean safety profile with something that shows similar or better efficacy, which is looking like this can do, the potential is huge.
That insight drug, by the way, despite those black box warnings, did 500 million in sales last year.
And that was up 50 percent from 2023. And it's forecast to do somewhere between 630 and 670 million in sales next year.
So the analysts estimate that this company, again, this is a 25 million dollar market cap.
It's trading at a negative 25 million dollar enterprise value because they have $50 million in net cash.
The analysts estimate that this thing could do as much as $200 million by year two on the market
and could mature in that sort of range that you're seeing from the Insight drug in that sort of $500 million plus a year.
So it has a material potential just in this one indication.
Now, what's also interesting here is that this is the first clinical demonstration of a BAT
inhibitor where they use a 14 to basically bind to genes to prevent the expression of,
you know, certain cytokines that produce inflammation, bad cell growth, all that kind of
stuff. There's broad potential here across a broad range of immune-mediated diseases like
rheumatology, gastroenterology, even oncology. So that's all in the future. But just based on
this readout, which the management is saying mid-year.
It's a 24-week trial.
They completed enrollment on Jan 6.
By my math, that gets you to June 21.
It's usually around six to eight weeks for data compilation analysis.
That gets you the first half of August.
That's when I expect these results to come out.
There will likely be a pre-readout run-up.
There often is.
There is one important thing you need to know about the capital structure here,
and that is that there are 27.8 million warrants outstanding at 225.
The stock only has 17 million shares outstanding.
But if these results are good and and you go through that $225 price,
it brings in some $60 million in cash. So you immediately double the treasury here to
in excess of $100 million. A few things I always look for in these small cap companies,
especially these micro caps, A, what does the balance sheet look like? We've already addressed that. B, you know, what does management look like?
This specific management team has taken two previous, and this is a topical, by the way,
which is like a soft drug design.
So it's targeted for on-site, you know, target site activity.
And then it rapidly, you know, sort of enters the circulation
system. And so you can get maximized therapeutic benefit, and then you minimize the side effects
as it gets digested. So look, they've taken two of these topicals through to FDA approval
in the past, one for acne and one for rosacea. So they've done this before. You've got a slew of biotech,
smart money investors, dedicated biotech funds, Eventide, Acorn, Palo Alto, Parkman Healthcare,
Patient Square, et cetera. They own a third of the float. So you're already talking about
13 and a half million floats with close to 5 million of add-on by these guys.
So I think the real float is, you know, less than 10 million.
So look, the risk reward, I think you're fairly well defined to the downside here, given the fact that you're already trading in a 50% discount to the net cash value.
The 200 day moving average is 211.
That's 45% upside from here. I
think you get there fairly quickly. And like I said, if you flip that 225, that probably becomes
support. And that's 55% upside there. If you get back to the high that's traded so far this year,
you're talking about 3Xing from current levels. So obviously it's contingent upon their results, but based on what we saw out
of phase 1B, it's looking extremely promising and I don't think the market's paying for it
whatsoever. The second name I wanted to talk about is United Natural Foods, UNFI. This is a 1.5. Sorry, I forgot about that first one, just for those who may have
missed it. It's V-Y-N-E, Vine Therapeutics. Correct. Yeah. So UNFI, this was in the press
recently. They reported Blockbuster Q1 results and at the same time disclosed a cyber attack. The stock fell from $31.50, basically down to like $21, $22.
So even now, it's clawed back a little bit in the last couple of days here as they're back to
receiving and shipping products. But we're still down some 28%, which implies in excess of a half a billion
dollars of impairment. I won't get into all of the details of the math that I used to get to
these numbers, but my bottom line is I see an estimated gross profit loss of maximum $50 million in an inventory write down of less than $100 million.
So there's some perishables involved and all the rest of it.
They do have cybersecurity insurance.
What they're going to get from that, I don't know.
But obviously, you know, those impacts become lessened as a result of that.
It's probably going to extend well into 2026. I think they said in the press release that it should cover the
whole thing. Not that they don't get it, but that's what they said. Yep, that is what they said. So
look, my bottom line on this is the stock should be back to 2728. There was a loss of a large
contract that resulted in a termination fee that amounted to
about $50 million in there as well. So that's about a buck a share. So does it deserve to get
right back up to $31.55 again? No, I think $27 to $28 is where it should be trading today.
Two things that happened that aren't being appreciated by the market at the same time here. On the 23rd
of June, CNS Wholesale bought one of their peers, Spartan Nash, for a 52% premium. They paid seven
times 26 EV EBITDA for this company. UNFI is trading at 4.9 times right now. If you put that
Spartan Nash valuation on UNFI, you get 48 bucks a share. The other thing is,
you know, in the midst of, you know, all this focus on the cyber attack, and again, you know,
they're back to doing business again. They reported blockbuster numbers, their first quarter
revenues were up seven and a half percent, their adjusted EBITDA was up 21%. Adjusted earnings were up 340%. Free cash flow
was up 142%. And they pulled forward their leverage target by one full turn, one full year.
So this points to the fact that the free cash flow profile on this company, what we
saw in the first quarter, sorry, in the most recent quarter, which is actually their third
quarter, is continuing to be robust.
Management has held that guidance despite this cyber attack.
So look, yeah, it's a recovery story. It's back to business. You can play this through options and get tremendous leverage. That's how I'm doing it. It's just dirt cheap. Look, this is a boring distribution business. It's got 13.5% gross margins, got adjusted EBITDA margins that are single digits. But when you're doing a top line that's in excess of 30 billion, those become big numbers
quickly and they've shown that in the free cash flow production.
I love it.
I love it when there's like something with a catalyst, you know, it's on this the last
couple of days that could be an immediate re-rating and then you jump in with the fundamentals
and that just gives us all the conviction to have to have you know swing it or have bigger positions so
really good research on that um and for uh who's who's behind the show there i forgot um
am i still here you want me to throw out a few pics real quick yeah i'll just do it real fast
dnn i've gone over these before dnn setting up uranium canada
company setting up it had run up already it kind of flattened out and now it's ready to go up
another leg and then open uh open door technologies o-p-e-n that has been setting up we were looking
at it last week i mentioned it and it's up a little bit and continue a little healthy pullback
today but looks pretty good and another one that had recently run up and it's up a little bit and continuing. A little healthy pullback today, but looks pretty good.
And another one that had recently run up and is running up again today, Plug, P-L-U-G, Plug Power.
So take a look at that one.
It looks like it's going to continue to go up towards that $2.
It's at $1.48 right there.
So there you are.
There's three of them real quick for you.
off them real quick for you and uh back to you ben beautiful by the way that v y n e that the
And back to you, Ben.
Beautiful.
godfather was talking about this was alerted probably below 150 i picked it up around 153
in the discord this morning that's 167 so it pays to be in the discord with the godfather
tap on his profile you can follow the link on his profile get into our Discord. If I have time, real quick, and then Sam can close it out for us.
What I want to give a follow-up,
it's been a huge, huge winner for our community.
SenesTech, FNES, I mean, it's just been a fire hose
of good news after good news.
This thing has bottomed out at $1.30 April 9th,
and now it's $5.
This thing's gone up like four times in the last few months.
By all accounts, this company's reached an inflection point in terms of the product being accepted by the marketplace.
This is the rat control that's the fertility control rather than a poison.
control rather than a poison.
You know, we've been following this very closely.
I know we've been following this very closely.
And they've now basically passed pilot testing in Baltimore, in Hong Kong, and in San Francisco.
And they're starting to ship, you know, greater quantity to all those three areas.
So I think by all accounts, this product, this company is inflected, and they're on
their way to profitability.
Technically, actually, if you can look at it
w fresh it broke this really strong five dollar resistance which i didn't expect it to do so
quickly but uh go ahead dougie what are your thoughts on cnes tech snes it actually is still
cruising along i mean that was a great call i talk about it all the time on my show to be honest
with you and it's been running at the top and looks like it still has some room.
And even when it pulls back, it still goes up.
So I have to agree with you that it's been a really good one right there, Ben.
And yeah, it's gone up like four times since we've been looking at it.
Like since you originally talked about it on this show, that's the first time I ever heard about it.
And I remember you interviewed the CEO and I was like, wow, that's an interesting concept. And it seems to be working
pretty well, that's for sure. And the stock chart has been just running up and doesn't look bad.
Yeah. And just for disclosure, those interviews are paid interviews. My commentary here is not,
but those interviews are paid interviews. But do you have a price target here technically on Senesic?
Honestly, it was like five-something right now.
It just keeps going up.
I'm not sure exactly how high.
I think it will pull back a little bit.
I will tell you this.
I think probably our Discord owns maybe 30% of the company.
I think you're about right on that.
It's a 10 million market cap based on some of the shares people have.
So, yeah, the shares are tightly held.
So, in any case, all right.
That was a lot of fun.
I learned a lot today.
I added a bunch of stocks while people were talking today, especially GKPRF, and I added air to my retirement account
while we were talking, guys.
I had to sell some other stuff to make it happen.
But thanks for that additional information from Money Mark gave me additional conviction.
So not only is it in my short-term account now, it's in my long-term account as well.
Wow, what a show.
People got to go back and rewind this.
It's been beautiful.
Sam Solid, are you there? I don't know how we're going to close out the space. I think he disappeared. Amp, are you there? How do we close out the space? I don't know. Anyone
want to add anything else until one of them gets back? No? Godfather? Moneywork? Doggy no godfather money work doggy fresh so we play music i don't know what to do
no i'm good but uh if you need me to kill some time i'll talk you know you can talk until someone
figures out blackout let's get blackout trades back and he can speak until wolf financial gets
back in here and kills in space okay oh there he is. Can you hear me? Yep. We hear you. I just booted Sam off
and took control of this thing. Appreciate everyone tuning in today. Stock picks later.
I will be around for that. 5 p.m. Eastern. Ben, Money Mark, Godfather, Blackout, Dougie Fresh,
everyone. Appreciate everyone. We will have a little break here.
We'll be back at Power Hour on Stocks on Spaces.
And then I will open up here on Wolf Financial at 5 p.m. Eastern for Stock Picks of the Week.
And we'll see.
I haven't even checked, Ben, so I don't know where we're at.
But we'll save that surprise for later.
Hope everyone has a great rest of their Monday.
Have a good one, guys. Thank you.
