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THE SMALL CAP SHOW
Recorded: Dec. 8, 2025 Duration: 1:04:21Space Recording
Short Summary
In a recent discussion, experts highlighted significant developments in the crypto and tech sectors, including the U.S. government's approval of NVIDIA chip exports to China, anticipated rate cuts by the FOMC, and bullish sentiments surrounding small-cap stocks. Notable mentions included Kodak's strategic pivot towards pharmaceuticals and AMPX's impressive revenue growth, indicating a vibrant landscape for investors.
Full Transcription
Thank you. Thank you. What is up, everyone?
Welcome in.
Welcome in.
It's Monday.
It is 1 p.m. Eastern, which means time for the small cap show, small cap investing here
on Wolf Financial.
One of my favorite shows of the whole week. Some really smart people dig into a lot of
different thematics. They dig into a lot of the macro stuff as well. We've tried to cover all
of it. I'm working on getting some of the other invites out. One big news story that just came
out exclusive. The US is open to export of nvidia h200 chips to china so if
you're looking at a big pop on the video if you're looking at a big pop in the market right there
um that is a culprit right there so commerce to open up exports of nvidia H200 chips to China. Semaphore exclusive is the source of that article.
So very interesting there as we come into this Monday of chop.
Well, a little bit of a kind of chopped down.
We'll see if this maybe, does NVIDIA save the market
or is this just a pump that gets sold here in the back half?
Will be very interesting, obviously.
FOMC coming up on Wednesday.
We'll hear from Jerome Powell.
We'll get the interest rate decision.
All things, all roads seem to be pointing towards that 25 basis point cut.
But we shall see and we shall see what the messaging around that is.
And a bonus thought, do we even care about the messaging that much? We have to
go off of something. But at the same time, Powell most likely on the way out could be his last
meeting as chair, some are saying. So all those pieces are interesting, as well as the holiday
season here. Obviously, we got through Thanksgiving. We got back, had a nice recovery in the market that held with some decent volume last week as we come into this week. So I'll
lead off with that. I'll kind of leave it there and we'll start diving into the panel a little
bit here. Ben, do we have you up here? I don't see a microphone next to your name, which makes
me a little worried. Can you hear me? I can hear you. Perfect. All right. Even better. I'll wait a second to send you that co-host so I didn't just instantly
rug you here. But Ben, excited to dive into it. I was telling everyone, it's one of my favorite
shows of the week, getting a kind of a tab on the bigger picture of things, market sentiment in
general, and then jumping down into some of the different things that each of you guys are watching
with your approaches and stuff there.
So, Ben, if you'll kick us off like normal with some market sentiment here on this Monday afternoon.
Yeah, okay.
So market sentiment, obviously we got the FOMC Wednesday.
We're going to be getting that 25 basis point rate cut, it seems.
basis point rate cut, it seems. And over the last couple of weeks, I think probably, I mean,
definitely over the last seven to 10 days, we've seen IWM dramatically outperforming
QQQ SPY, which is exactly what we predicted and it's worked out generally well.
Now that we're getting close to it, we're seeing some volatility. You know, the other thing to
look at besides interest rates and interest rate expectations is fortunately or unfortunately, Bitcoin. I think we've been
talking about this extensively over the last couple of weeks is that, you know, the Bitcoin
price action is definitely having a huge impact on risk asset breadth. And I see it. I see how
it actually interacts with that 20 DMA. Bitcoin is barely, again, hanging on to that 20 DMA today about since Friday on Bitcoin, big kind of reversal day.
But at the end of the day, it actually hung on to that 20 DMA by midnight.
So, you know, those are the two factors impacting small caps, Bitcoin and FOMC.
And actually, you were mentioning this, the new Fed chair after Trump picks them like when would that i don't even know the
date like when would that take over isn't that like a springtime thing you know april there's
i've heard people tell me that well pal is there until may okay but i've heard people tell me that
in january that can actually be replaced so i have to find out about that because yeah i don't
have a difference yeah i don't have a for sure answer about that because that'll make a big difference.
Yeah, I don't have a for sure answer on that.
But that's why I kind of said I've heard people saying that, you know, this could be Powell's
last meeting, not from a firing perspective, but from a replacement.
Yeah, I heard you say that.
I was a little surprised because I thought it was May.
If that's possible, I got to find out about that because, you know, the market generally
chooses this direction based on the presser,
not based on that 25-bit cut that we'll probably get.
But especially the Q&A and things like that.
If it's here until May, it still has an impact.
If it's January, then it doesn't matter at all.
So we've got to look into that.
Now, as far as the macro goes, but beyond just this week on IWM,
there's a couple things I'm looking at.
One is I'm really starting to get concerned about a potential sell-off January 2nd on
2025 high flyers, SPY QQQ, because you're getting a lot of data that maybe is pointing
to stagflation.
You know, a PC came in in line Friday, 2.8%, still above the target, but the jobs data
keeps coming in pretty bad.
Consumer sentiment data, pretty bad.
You know, is this kind of pointing towards stagflation?
I'm a little concerned about that.
You know, we've talked before, two months ago or so, about this thesis that we'll see the markets hold up until January
2nd because of tax deferrals. But then we just had a period of extreme volatility where there
was a bunch of profit-taking that happened because of that volatility. So then I wasn't sure,
to what extent will we get that swooned down in January 2nd because of tax deferral strategies.
Maybe that comes into play if there's a kind of fundamental concern about the economy and
stagflation. So that's something I have my eye on. On the flip side, until then, I'm going to be
extremely bullish, generally speaking, on small caps, especially select small caps.
Generally speaking on small caps, especially select small caps, last night we had our part one of two Zoom that we do once a year with our community where we're looking at January effect stocks.
This is a period of time of the year which I just absolutely love and I usually kill it.
Basically looking for beaten down stocks of the prior year that have been a victim of tax law selling.
looking for beaten down stocks of the prior year that have been a victim of tax law selling.
And then we do deep dive looking at things with good catalysts and fundamentals. And
that I expect to be good. So even if we have a sell-off in the first week of January on the
bigger caps, because of the extreme pressure on underperforming stocks in 2024, because
people have had big profits, right? So there's going to be extreme pressure on the underperforming stocks in 2024 because people have had big profits, right?
So there's going to be extreme pressure on the underperforming ones right now
causing these artificially lower prices.
So that's something I'm looking forward to is the January effect starting later this month.
You know, and that Santa rally that we often get from Christmas through New Year's.
So as far as small caps, I'm looking forward to that period.
You know, we've got to keep our eye on Bitcoin and FOMC this week, and that'll impact.
And small, you know, IWM, small caps, and all that can have some volatility between now and Christmas.
So, like, almost two weeks away, right?
So still about two weeks of potential volatility,
depending on all of that.
But then I hope to nail it for three weeks
during the Santa rally and January effect.
And I'm concerned about a sell-off
in the 2025 winners in January.
So that's my macro thoughts.
Does the data side of things, like we saw the BLS basically say,
well, we're not going to put out the data reports,
and then they came back later,
and so some of them we're going to put out with the November ones
at some point in January.
Does any of that concern you,
just like they're kind of cherry-picking stuff?
I mean, me personally or the market, this is, you know, I'm not an expert in this kind of cherry picking stuff? I mean, me personally or the market,
this is, you know, I'm not an expert in this kind of stuff.
I only care.
It only concerns me to the extent that it concerns the market.
You know, and I saw some commentary on this last time during the,
it was like right when the government shutdown was ending,
there were some data points.
They're like, oh, we're not going to report this.
And then the market was like damn really big on the headline at the time. And I think the
thinking was, you know, the Fed may make a decision without the complete data. Because of that,
it may cause inflation or something like that. There was some concern like that. So I would
have to kind of just glean what you know
what are the experts thinking about that if it concerns them I guess it would
concern me but I just don't know enough about the topic to say hey that reports
so important we got to have that so I have no direct knowledge of that but
obviously other people are concerned about it it's something I got to keep an
eye on so I got to do more research on that yeah I think the the thought that
kind of came to my mind was like okay okay, if this is what is happening, if there is cherry picking of the data and the market's okay with it,
and the administration is just going to do everything they can to put positive things out there and maybe not put negative things out there,
negative things out there. I just say, okay, well, I just still want to be a part of that train.
I just say, okay, well, I just still want to be a part of that train.
If that's what's going to happen with the market in general, as long as the market is okay with it,
I think I just want to be a part of it. So that piece is interesting. I want to go over to the
Godfather here. Godfather, what are your thoughts around just the broad markets in general,
the macro side of things? Obviously, you heard comments around rate cuts, data, and all that good stuff. So I'd love to get your detailed thoughts around what you're
thinking about, I guess, in general around the markets right now.
Yeah, look, I hate this time of year. Not this time of year, but this time going into a Fed
meeting because I hate focusing on rates because it's just, you know, it's at the end of the day,
it's not that important. Like ultimately, it's not the Fed that controls rates, it's the bond market.
And, you know, lower rates don't necessarily mean higher stock markets and higher rates don't
necessarily mean lower stock markets. I mean, look, we've more or less been in restrictive monetary policy, except for this beginning of the easing cycle that we've recently seen.
And over this last two years that we've been in this restrictive policy, the S&P is now up 73% through three years, through that time period.
So, you know, case in point.
But look, we have to focus on this because this is what's in front of us. And I'm going to make a call here that's
relatively short term in nature. And it's going to answer the question that you just asked of Ben,
among a few other things. So if I look back at this November 20th big bearish engulfing candle reversal that came with the Williams comment about, you know, short term rates or further cutting room to cut in the near term, which essentially, you know, took the Fed fund futures from, I think, under 40 percent chance to where we're at today, like 90% chance.
We've seen an absolutely massive run in the market. During that timeframe, IWM is up 10%.
So that's in three weeks. We've seen an equally massive move in the US dollar,
like 122 basis points, which is big. And what's really interesting is that the 10-year hasn't moved much. In fact,
it's up six basis points over the same timeframe. So if you look at the last two rate cuts,
what did the 10-year do? It was either flat or it went up. Okay. And this is important because just a reminder to everybody that it's not the short-term
rates that matter to the economy.
It's the 10-year, right?
This is the benchmark for borrowing costs for households, for mortgages.
This is the key benchmark for a lot of business debt and government debt for that matter.
There's a ton of funding at that level.
So this is what really matters. So I think that there is risk today and probably through this
week before we get into seasonal effects that will help things around a reversion to the mean
trade. And again, this coincides with what we typically see in
terms of action. We get this tax loss selling that sort of culminates up until about the 24th
of December. And then we get a combination of the January fact and the overlap from the Santa Claus
rally, which is the last five trading sessions of the year and the first two of the new.
five trading sessions of the year and the first two of the new. Going back to my point about the
10-year having gone up during this time frame, there are other liquidity gauges out there
that show you the same thing. People's eyes glaze over when I talk about SOFR repo rates.
Suffice to say, those have actually tightened under the surface. But I mean, just look at crypto. This is the world's largest risk asset. Okay, this is a
fantastic liquidity gauge. It's showing relative tightness in the system. So if you look at the
quant data about, you know, what's actually priced in, there seems to be some suggestion that as much
as 90 basis points has now been built into the market. That's a far cry from the in. There seems to be some suggestion that as much as 90 basis
points has now been built into the market. That's a far cry from the 25. It seems high
to me, but I just wrote the data that I've read about.
And, you know, the...
Sorry, sorry. 90 additional or from the start of this rate cutting cycle?
from the start of this rate cut. Yeah, sorry, that's a good clarification. It's still high.
From the start of this rate cutting cycle. Yeah. Sorry. That's a good clarification.
It still seems high to me. It just basically goes to reinforce my view that I think this
December rate cut is more than fully priced in. And therefore, there's a lot of risk around this
meeting in terms of a reversion to the mean trade. This 10% move in IWM could very well get hacked back before things start to roll again,
you know, into the green. So look, there's a high likelihood that we're going to see dissents
in this meeting. You know, Logan, Hammock, you know, these two women have been on basically,
you know, on record as saying that they don't think we should cut rates here.
You might get a third dissent from Mirren, probably the other way, saying you wanted 50 basis points.
But, you know, nonetheless, the other important thing is we do get dot plots here at this meeting.
And the reason that this is important is because irrespective of who the new Fed chair is, they have to deal with this committee.
Fed chair is they have to deal with this committee. So there will be likely, my expectation is that
there will be some hawkish commentary coming around this rate cut, setting the bar higher
for the next rate cut. That hawkishness could show itself also in the dot plus, and it could show
itself in the high level of descents. So, you know, all of these things could serve to see
the 10-year rate actually rise in wake of this 25 basis point cut. Now, it's important to look,
I went back and looked at December, the December meeting last year, and they cut 25 basis points
in December last year. The 10-year promptly rose 40 basis points. And what did it do to the markets?
Well, in the month of December last year, the IWM was off 8.5%. Okay. Forget about your Santa
Rally. Forget about your tax loss selling, your January effects. I guess most of those gains you
would see in January. But even the year-end bump, the last five trading sessions wasn't enough to keep the IWM from an eight and a half percent loss.
SPY lost two and a half percent and the Q's lost almost a half a percent.
These are big moves in December.
December. We could see a repeat of this. So the other thing is, it's a question about how long
We could see a repeat of this.
do we have to wait then for the next rate cut? Because as soon as a sell the news event happens,
the market's already looking to, where do I get my next bit of juice? And if you look at the Fed
funds tool, you got to go all the way out till April. And even April, it's like 37% chance of another 25 basis points in March, 40% in April.
It's 20 in January and I think somewhere around 25 or something in February.
I'm not sure on that one.
I missed that data point.
But look, this is a short term call.
But my point is this. I'm going to go through a few small cap picks, but I think that whatever small cap name is on your radar, you did not want to buy it this week.
Maybe post-fed we get a reaction that's totally not in keeping with my thesis here.
But I think you're at a high degree of risk buying it now, tomorrow,
or before the presser. So you wait. And I think, honestly, you get a better chance to buy these
things cheaper the closer you get to Christmas. Again, just because tax loss selling shows up
inordinately in small cap names because they're retail dominant. The institutions have already had their, you know, a tax loss selling season because they're on October year ends. You know, smaller companies,
more retail involvement, you know, all the rest of that. So how do you play this?
If the 10 year goes up in the wake of this rate cut, which is what I think happens,
in the wake of this rate cut, which is what I think happens,
then crypto is going to sell off.
Gold is going to sell off.
Mortgage names are going to sell off.
Homebuilders are going to sell off.
IWM is going to sell off.
IWM is a terrible index for playing this as a kind of a pure play
because 18% of the index is made up of financials,
which will actually benefit from a steepening of the yield curve. But nonetheless, we know it's highly sensitive
to rates and it will go lower if the 10-year goes higher. And mortgage names as well,
here's the other thing. It's not just about where the 10-year is for mortgage rates. It's about
where the MBS spreads have come. And mortgage-backed security
spreads are now somewhere in the 200 range, 200 basis points to the 10-year. That's come down
from 300. So there's even more room there to potentially widen again. So I am currently short NAIL. I am currently short IWM. Small positions, tight stops.
But this is my thesis going into the Fed. And this is my stance for this week's small cap show.
Be very, very careful. I just don't think there's a lot of upside, either from a seasonality basis or because of this risk in the market.
And look, I joked in the discord about, you know, it would not be surprise, surprising to me to see Trump come out and make an announcement that he is appointing Fed chair to be Hassett, you know, during Powell's presser, especially if Powell's going off on a hawkish
basis, even though he said this decision wouldn't come until the new year.
So I think that you're hearing more of this narrative into the market saying, look, there's
risk to potential policy mistakes, or there's a risk to reduce confidence in a new Fed chair's ability
to control long-term inflation or manage fiscal stability at a time when stimulus is being added
to an economy that seems to be growing relatively fine. This is where you could see the bond vigilantes take over. Now, I admit
that I'm as perplexed as I'm sure a lot of you guys are about where we're actually auditing the
economy, because you see the survey data, the ADPs and the Challenger and all the rest of this,
and you know that jobs are weakening. You know that the incoming jobs data, when we get it,
it's going to show more weakening. And there's lots of narratives, you know, talk about the fact that consumers are
hearing the wall. But yet the other side of things, it hasn't hit corporate earnings. In fact, you
know, you hear about billions of dollars and of incremental over last year in terms of Black Friday spending. You know, maybe more of that's just on BNPL and more credit card debt.
But for now, at least, you know, the evidence seems to suggest that the consumer is remaining relatively strong.
We can debate whether that's all, you know, the upward sloping part of the K or not.
But nonetheless, there's some confusion there.
But I think this is what
needs to be focused on this week. Get your list and I'll go through some of the names on my list
of interesting small cap names, but resist the urge to buy any of them until I would say,
you know, next week or optimally as close to Christmas Eve as possible.
as close to Christmas Eve as possible. Oh, and to answer your question, I do think that risk is
elevated further, given that we just learned that the October and November PPI numbers won't be out
until January, because it just gives these potential dissenters more cover, you know,
for their dots and for a dissent saying, you know,
an absence of information, we're data-driven, blah, blah, blah.
So, yeah, I think it just sort of elevated my concerns with respect to
all the things that could be interpreted as hawkish despite priced in 25 basis point cut.
Yeah, it is super interesting.
And yeah, it's like, okay, do you take shots here?
Do you wait for, you know,
do you try to get positioned here ahead of things
and cut if you're wrong?
Or do you just wait,
try to see what the market's going to do
as we go through the week?
I think that's maybe the question of the day,
question of the week.
We'll see obviously how that plays out there and everyone's different approaches.
Dougie Fresh, I want to give you a chance to hop in here and see if there's anything you're looking at as far as the broader market.
I know you look at the charts a lot, and you can look at these charts.
They're very constructive right now.
So I'm just curious, anything in that perspective and then anything else that was
touched on there that you maybe want to add some commentary to yeah charts are pretty wild today
i'm not gonna lie not a whole lot even going on it's kind of a little bit slow at the moment but
iwm just barely up now it's only up like 15 cents so it's been kind of pulling back i guess maybe uh
the queues started going up i'm not even sure to be honest with you. But the Qs have been down.
They're still down all day.
The SPY's been down.
It is a weird day.
And then that Nvidia news just came out, which I did not mind because I had a bunch of options on that.
So that looks good.
But yeah, Nvidia news with the chips to China is probably the only thing going on in the market that looks pretty decent at the moment.
Rate cuts Wednesday, like you guys mentioned.
So the market's obviously waiting for that.
Are they already priced in is the thing?
Because, I mean, you have poly markets sitting here and it tells you almost exactly what's going to happen.
We're at 94%.
I mean, everybody can see it.
So everybody knows there's a 0.25 decrease coming December 10th on Wednesday.
So is it already priced in is the thing.
I can't really tell to
be honest with you it's kind of a weird market right now the iwm has moved 10 since they went
from less than 30 to 90 uh on rate cut that's it's priced in my friend it is priced in i think
it's gonna be really interesting to watch the 10-year auction tomorrow ahead of the Fed, because this will tell you what the bond market is thinking.
And then, of course, you've got the 30-year, which follows the day after the Fed.
And if you look at 30-year Treasury yields, they're showing an inverse head and shoulders.
They're right at this key 4.8%, which has been like a resistance or support level going back to like November of 2023.
That could extend up into this sort of $5 psychological level.
That's my take.
Again, I reserve the right to be wrong.
The market may react differently.
But I don't think there's any doubt that it's priced in.
It's just a question of how will the market react to that?
Yeah, no, I kind of agree.
I agree with you because, I mean, like I said, everybody can see it.
It's not hard to tell that the point two fives coming.
So it's more or less the reaction from what pal's talking about at the end, like Ben was talking about at the beginning.
The questions and answers, because I think it is priced and it's sitting there everybody knows it's about to happen
so what's the reaction with pal and i didn't hear that either and so that was interesting what you
were saying at the beginning could it be his last meeting i have to look into that i was kind of
looking around as we've been talking haven't really been able to figure out a confirmed answer
about anything for that so So that's interesting.
But I could see that possibly happening and him getting replaced at the beginning of the year of some sort.
So, yeah, it's an interesting market for sure.
I don't think it's going to take a nosedive.
I think crypto might be the most interesting thing right now.
And with Bitcoin, I think Bitcoin's trying to get into a bullish channel again.
It's been bearish
for a little while, obviously since about October, maybe even a little bit before that it started to
get in there. But now it looks like it's trying to turn around. So it's going to be really
interesting how that reacts on Wednesday. I think that's going to be a bigger story than most of it.
And a lot of it's going to follow. But crypto looks pretty good right now. I have to say it
doesn't look bad to continue its way up and stay bullish.
So we'll see what the reaction is.
I think we're more or less just waiting for a reaction on Wednesday.
Everyone knows the rate cuts coming.
So that's what it looks like to me at this moment.
Yeah, I'm going to try to find some more concrete information on that.
It was just something that was shared on some different spaces.
So I was looking at it going, okay, if there's a chance that actually in January he can be
replaced and he would just serve out his term through May, but he would be replaced as chair
in January, I think things could be much different.
So we'll see if
I can dig in a little bit deeper. Speaking of digging in a little bit deeper, I appreciate
all those comments around the big picture of things. But I am curious, as always, if there's
any certain names that you guys have dug into that are maybe sticking out to you right now,
anything hitting an inflection point, earnings reports that have come out, maybe thematics
that you guys are tracking here that are interesting, maybe some opportunities
that you're finding in these markets as I see the Russell making a new low day here,
pulling back, giving back some of that news pop just a few moments ago.
Ben, let's start with you.
Okay, so I'm going to have to give an update on Kodak.
We've been talking about this, I think, for the last couple of shows.
I'm going to put something up in the nest in just a bit.
But if you can, if you guys can pull up a daily chart of Kodak,
I'm going to walk you through.
You're just going to talk about inflections.
There have been multiple back-to-back-to-back inflections or major catalysts on Kodak, which is keeping me in this
trade. It's probably my biggest position all year. I'm still at max size on this. So let's go back to
earnings report on November 7th. It was actually the night of November 6th. So as a stock, I've
been tracking for over three years, waiting for some catalysts to hit.
On November 6th, you had two major catalysts in after hours there.
You had a dramatic shift in earnings through, I think, mostly through cost cutting and a little bit of revenue growth on Kodak.
So they flipped to like $28 million in operating profit year over year from something like
$1 million the prior year.
So it was a massive, massive shift to profitability.
And in that same ER, they said, hey, we're now close to unlocking that $1 billion pension surplus, which is a
project they've been working on for three years. So they had, from pension, they invested money,
and they invested it well, and they had this extra money there, so they had to go through
this restructuring process to unlock that money and give it back to the company. It was a very
long legal process. So as part of that ER,
which was kind of hidden at the time, there was no press release on it. It was not in the title
of the ER. It was in the body of the press release. They said this pension unlock is going to finish
by the end of the year, right, by end of December. And we're going to get $100 million more than we
previously thought. So previously, you know, there's a bunch of taxes and things I going to get $100 million more than we previously thought.
So previously, you know, there's a bunch of taxes and things I have to pay.
So they were going to get like $500 million.
They said that's now up.
We're going to now get $600 million after all the taxes into our coffers.
So piled in, obviously, that night.
We had a ton of money and been monitoring it since.
It exploded for two straight days and I got
most of that gain. Then a pullback, you can see here, to the 20 DMA around November 18th.
So I forgot when I got in, but when I got in a big way, I may have gotten small positions
back there near the 20 DMA, but then go to December 3rd, okay, on the night of December
2nd it probably was, they had a press release that the pension reversion is closed, and
that now got the cash into their coffers, and it was something like $608 million, a
little $8 million bonus compared to the latest guide right so now
i took that to be a very positive catalyst because the cash is actually there it's no long yet people
expected it to come but it's different when it's actually there um it you know they're also paying
off a lot of the debt with that it de-risks it it uh makes potentially the the the stock available
to certain funds that maybe had rules against
certain amount of debt or whatnot. And it also meant that there's now the immediate chance of
buyback announcements, of acquisitions, all kinds of things. So even though it was,
you can say it was expected, it's still an event that it happened. And I think also happened early
because they were guiding to the end of the year, and that happened at the beginning of December. So you see the stock was already on the way up,
probably back towards the highs of 880, 890, but then that news hit a little bit early,
so now you get your second surge starting December 3rd. Okay, I got two more, two more
inflection points to tell you about this stock here. This is crazy. Then what happened? Then the
next day, or maybe it was two days later,'m sorry was it Friday no I guess it was the next
day on Thursday December 4th okay now this company I've been over the years
trying to reach out to investor relations interview the CEO and things
like that and they don't answer you all right there the IR they just don't care
it seems like you know they're completely you know don't answer you all right they're the ir they just don't care it seems like you
know they're completely you know don't do any outreach or anything on top of that they don't
even do q a there's there's no q a in their earnings report there's no analyst there's no
retail they don't even open it up for questions so they've been like totally closed uh to to any
kind of outreach for years.
The only contact I ever had,
I was able to contact a director on LinkedIn like three and a half years ago
to just confirm that they were,
because there were stories and rumors out in the media
or I don't know if it was in the media yet,
it was just on X or whatever,
that they're looking to unlock this pension.
So I spoke to the director and he said,
yeah, what you heard is true.
We have this big surplus and we'd like to unlock it. Great. Now, that was the closest I was
ever able to get in touch with anyone at Kodak. Now, what happened on Thursday? On Thursday,
they were on Fox News in an interview segment with the CEO on site, okay, on site at Kodak,
which meant that Kodak wanted this interview.
They coordinated it.
They brought Fox News over to their campus in New York.
It could, I forgot the name of the park now.
It's their big campus in upstate New York.
And they did this interview, and it was played on the Marriott Bartholomew show,
and the stock popped.
They played it again in the afternoon, and apparently I didn't see the afternoon one,
but Kevin O'Leary commented on the afternoon and said, yeah, he loves the pivot to Pharma.
Okay, that was your catalyst on Thursday.
Yes, on December 4th.
Yes.
Okay, now what happened?
Now we got another huge catalyst. In fact,
maybe the biggest of them all just kind of hit here, which few people know about. Um,
I'm going to take, let me, let me take this tweet that I put in, uh, and here it is. I'm
going to put this in the nest. Let's see. Um, small cap show. All right. Check this out. Friday after the close, there was a massive insider buy, which most of the market missed and the algos missed. Why? Because it was not a direct purchase of common shares.
what this was and you'll understand it was basically the same thing as a direct purchase
of common shares. So Kennedy Lewis, which is the fund that sits on the board of Kodak and the
person I told you I spoke to the director on LinkedIn is the co-founder of this fund, Kennedy
Lewis. So Kennedy Lewis bought 1 million preferred shares, which actually I didn't even know existed,
but they do, so it impacted the EV calculation a little bit, but there's 1 million preferred shares, which actually I didn't even know existed, but they do, so it impacted the EV calculation a little bit.
But there's one million preferred shares outstanding.
They bought all of them from Southeastern Asset Management for a premium.
The face value of these preferred shares are $100 million.
They paid $101.5 million.
These preferred shares, stay with me, okay?
These preferred shares mature on May 28th and just a few months from now and at May 28th they'll either get a hundred million dollars from Kodak or they have
the option either now or before either anytime I think they have options do it before so between
now and May 28th they can either take a hundred million cash or they can convert that 100 million cash to 9.5 million common shares, right? Why would
they pay 101.5 million cash to get 100 million from Kodak five, six months from now? Now,
there's some dividends, so it actually comes to like a little tiny bit more than that.
If they took the cash option, the dividends plus the cash, they would get a return of 0.36%
between now and May. So obviously what
they're doing here is they're paying $101.5 million for 9.5 million common shares. And if
you do the math, it comes to $10.65 without the dividend or whatever. Maybe it's more like $10.56
if they're going to wait till May and collect the dividend. So they're buying 9.5 million shares of common shares at 1056.
This is effectively an insider buy by a fund on the board.
$100 million insider buy Kodak at $10.50, 9.5 million shares, just happened Friday after the close.
And a lot of people are not aware of it yet.
A lot of people are, which is it yet a lot of people are which is
why the stock is up eight percent today okay so um by the way Kodak has a short position of over
10 percent and uh more important is probably be the days to cover there are here let me just check
on the short interest you have 6.7 million shares short the volume today is just 1.64 million. The stock is at a four-year high.
Put it all together, and I think this thing is going to at least $10.50.
Because, you know, the director, they could have come on the open market and bought shares cheaper, right?
Why didn't they?
Well, right now, they can buy shares at $9.50.
Or Friday, they could have bought at $9.18.
Why didn't they do that?
They went and bought these preferred shares, effectively buying stock at $10.18. Why didn't they do that? They went and bought these preferred shares effectively buying stock at $10.50.
Why did they do that?
They did that because they knew that if they go in the open market to buy 9.5 million shares, the stock would rock into like $15.
Okay?
So in any case, this is like a perfect storm for my methodology in terms of the four pillars, catalyst, sentiment, fundamentals, and technicals.
They're all checking off. Technicals, by the way, with the score you're high and the short
squeeze that may be developing, you also have this end-of-year effect, which could be like
the reverse of the January effect, where there's tax deferral happening. So I kind of expect,
you know, continued strength in Kodak. Maybe you see a sell-off, a bigger sell-off January 2nd for people who are up on it big.
So you got the technicals.
You got, you know, now great sentiment with the director doing the insider buy.
You also have improving sentiment with the shift to pharma, which retail loves the shift to pharma, so does Kevin O'Leary.
It's just a perfect storm.
And the fundamentals is the EBITDA is probably around maybe a little over five
here, 5.2, 5.3.
I think it deserves to trade an EBITDA EBITDA at 8 to 10.
So this is a very, very high conviction position that I had in size coming into the weekend.
I increased my position pre-market at $8.90.
I added call options this morning, and I have an immediate price target of this.
Over the next few days, my targets are $10, $10.50, then $11.20. Those are my three targets on Kodak.
And I have other stocks, but that's the one I'm focused on, and I talked a lot, so I'll pause right there.
and just to uh kind of reiterate this story with kodak they they're like it's full pharmaceutical
right like i mean i guess maybe they still do some of the other stuff i haven't really checked on
that let me jump in a second on the fundamentals they're just starting to pivot you don't mind
yeah so look 70 of the revenue is still the legacy print business,
which has zero growth.
Although they obviously must see growth there
because in the most recent quarter,
they talked about doubling their film capacity.
So maybe that returns to growth.
The other godfather, I didn't realize this either.
Kids actually use them Kodak, Polaroid cameras now.
Tons of kids are charging for it.
That's licensed. So they got great revenue from that high margin but that they just licensed their name up for that yeah okay they
make five million bucks in pure profit licensing their name anyway the other 30 is the chemicals
business and that um that includes um you know this this uh mix to uh to do more uh pharmaceutical
so what's important is that they are certified,
and that's the big thing. So the CapEx is in place. It's a certified facility.
They're producing relatively low margin pharmaceutical product now, but they're
certified with the CapEx that they've done to expand that into new growth verticals,
including higher margin pharmaceutical production. So that side of the
business is growing at 15% in the most recent quarter. But that's the lever that they're really,
you know, pulling for growth. I'm not sure how much growth they expect out of print, but,
you know, enough to justify doubling film capacity. I don't know what that really means. But,
you know, clearly, they're not going to get the multiple on that from the market.
So I looked at this from a pure fundamental standpoint, because I think Ben's done a great job on the pillars of sentiment, technicals and catalysts, which are all, you know, screaming green in their favor.
And I wanted to look at the fundamentals.
If I give them 15% growth rate for the entire business, suggesting that chemicals at 15 is probably underselling and print at zero is probably going to grow with this new capacity.
This thing at $9 was trading at under five times EBITDA for next year.
It's a little bit more than that today, but still, you're around like five times.
That's pretty cheap. So on a pure valuation basis, I can see a revaluation into
the sort of $12 to $15 range. This has legacy history of being a meme stock. You know, clearly
valuations could blow out if the market takes hold on
this. So that's where it stands on a full stop fundamental basis. By the way, that works
out to like 18 times earnings, which again, could be low in terms of earnings. So the
multiple could be low as well. And on an EV to sales basis, it's like 0.6 times.
So it's not at all demanding, you know,
despite this move from, you know, the sevens into the nines.
I'm taking a show me position
because I actually want to see growth in those businesses first.
But, you know, the market is forward looking
and it probably will move.
And I think part of this move is anticipation of seeing that growth.
In addition to what Ben mentioned with respect to you know better IR and more visibility and we don't have
any analyst coverage on this so I suspect that that's probably coming next and you know that
alone you get somebody out there other than me saying this thing is you know fundamentally worth
1250 to 15 and it moves there probably. Hey Godfather, I wanted to get
your take on, you're a little more lukewarm on this last week than I was. I'm wondering if the
transaction that I spoke about Friday after the close, how do you look at that? Does that change
your thinking here at all? Yeah, so I went through the numbers just to double check everything you've said.
And from the filings that I read, it seems exactly the way that you've portrayed it.
It looks like a clean transaction.
I guess you always have to ask, well, for every buyer, there's a seller.
So why did Southeastern sell?
If all of what we're
talking about is a parent, you know, why would they sell? But, you know, who knows? Maybe it
didn't fit their bill. Maybe it was a legacy position. Maybe the new portfolio manager,
like it could be a million reasons. So I think you just, you know, I think that the buy side of
it is probably the more meaningful side of the transaction to focus on. And I think considering that they are a board member, which makes them an insider, I think is the right side to focus on.
And certainly suggest to me, as it does to you, that there are more bullish elements here as opposed to trying to focus on your reasons for somebody to offload.
Awesome.
But your math is absolutely correct in terms of the value.
It looks like they could pick up two payments of two PrefShare quarterly
dividends, which would lower their cost base.
Yeah, by like a dime or something like that.
Yeah.
Yeah. Cool. Awesome. or something like that. Yeah.
Yeah, cool.
Awesome.
Thank you so much.
Who's next?
I'm back to you.
I'll just continue with the godfather there.
I appreciate that.
Yeah, so look. Ben, and go ahead.
Based on my previous thesis,
I'll reiterate short-term traits here.
And again, it's short-term because at the end of the day,
I do believe
that, you know, the new year stimulus measures will start to take precedence over the Fed. And,
you know, to the extent that the Fed stays hawkish, you know, Trump will do what he can do.
And that is offset monetary policy with more fiscal. And we've heard it from Hassett's mouth, hey, we are going
to pull some more levers. We are going to do more economically bullish policy actions. And, you know,
you've heard me say this in pretty much every small cap space this year, you know, that activity
increases as we go through 2026 and get closer and closer to the midterms.
So, and again, I do think that we will get some seasonal effect.
It may be more muted than other years, but I still think there will be some seasonal effect here.
And so, yeah, you want to get into these small cap names that you think you are either beaten down or you like the fundamentals of,
I've got my list and I'm waiting to buy and add to them some of the names that are on my list
are names like AMPX. This is a battery company that no one comes close to in terms of power to
weight ratio. You've heard me talk about this before. ConsenSys has a top line growing 172%.
This is technology out of Stanford. It's being taken up by pretty much every drone company, every eVTOL company, satellites, you name it EV to sales in 2026. But you got to look at their
peers that trade at similar growth rates. You know, I think this 172 on terms of top line
growth could be understated. I think it could end up being something closer like 200.
This is year over year growth, 26 over 22. That's based on what we actually saw them
put forth in the most recent quarter and the commentary that they had with respect to their backlog and converting those into POs. So if I look at the ENVXs, the EOSCs, and the SCSs of the
world, which are all far lower quality companies, in my opinion, they're trading an average
valuation of 14 times. So this suggests a fair market value for ANPX of around 17.
And by the way, if it trades there, there are listed warrants. These
are legacy SPAC warrants. They're 1150 strikes. They're good till September 27. If AMPX trades at
17, the warrants would be 850. And that's just using the current implied know, both with the respective prices, which by the way, is low relative to
historic. I can't square that circle, but in any event, it doesn't matter. We'll just use
what the market's telling us. Imply vol is. So that's an 80% return. So look, it's been a
moneymaker. I've consistently been buying this thing in the low to mid fours, selling it above
five, even had some sales close to six.
And it's just sort of been bouncing around in that range.
But it's going to break out.
It's going to break out probably, you know, with the catalyst of reporting another blockbuster quarter.
But just super quality company.
It's a company that, you know, it's a theme.
Batteries are obviously a theme, but it crosses over into drones.
It's robots.
It's all of these things. Like that name a theme. Batteries are obviously a theme, but it crosses over into drones. It's robots. It's 18% top line grower that trades at a 1.6 times
EV to sales multiple. Nice profitability. So their PE is actually 14 times. Next year,
dirt cheap. EV EBITDA around 13. And again, this factors in all the additional payments that they would have to make
for Stellar Blue, which they don't have to make yet. So arguably, it's even cheaper. I've just
added all that to the enterprise value, suggesting at some point that's either going to have to come
out of future equity or additional debt. So I'm being very conservative there. They're seeing
great business growth in their in-flight connectivity product and some of their other satellite-based stations.
They cross the gamut, not just broadband customers, but government, defense, enterprise, aerospace, mobility, cellular, antennas.
Again, touches a bunch of key themes.
Bull, we talked about this one.
Again, trading at 5.7 times EV to sales, this is Webull. B-U-L-L,
Hood's at 22. Even Sleepy Schwab is trading at 6.8. Just to get to Schwab's multiple,
and don't let me compare Bull's growth rate to Schwab's. Bull should be at at least $11 and 15% higher than where we are today.
To trade an average of the peers, it should be fairly valued around 15 for a 56% move from here.
This is, you know, top of the list on, you know, most people that are doing serious research on January effect stocks and for good reason.
Personally, I think you'll see this name trade in the 20s in 2026.
A couple of physical AI names that you've heard me speak about before, but there's a lot to be
said about this theme. It's essentially bridging the gap between this intelligence that we've
created through these LLMs and putting this to work in the real world, you know, combining, you know, LiDAR with these things and, you know, allowing for inference at the edge, whether it's sitting on a security camera or, you know, monitoring a traffic light or, you know, in your EV, you know, real time assessing, you know, upcoming stoplights and various things like that.
coming stoplights and various things like that. BZAI, here's a company, it just gets no respect
in this market. It's trading at a 40 RSI. It's basically at a 52 week low, trades under two
times EV sales. They're going to post 250% revenue growth. This is like a classic, classic tax loss
name. There's just, I don't see any downside here in the low twos. So, and I'm not sure what's
going to take for the market to get hold of this. I think management has a great deal of
credibility. I think that the short report that came out on this thing was all but debunked.
Another name that you heard me talk about last week, so I'll just touch on it briefly, is OUST. And again, this is combining both the software stack as well as hardware that allows for intelligence for robot eyes.
Think about industrial automation processing.
Think about ADAS or automated driver assist.
All of these kind of technologies. OSS, which I'll mention because I know it's a new StockTalk small cap name, they are in this space as well,
essentially providing ruggedized housing to facilitate having inference at the edge in
physical AI in environments that are, you know, whether they're
defense or other industrial. So it's a big theme. I think it's a valid theme. I think it'll be an
even bigger theme going into 2026. So those are just a few of the names. But near term,
I'm sitting on my hands waiting for good entries in all of these names.
on my hands, waiting for good entries in all of these names.
In the meantime, I'm just doing a tactical market trade on my view that we see a negative
reaction or some reversion of this 10% gain we've seen in IWM.
And like I said, I'm playing that right now through short nail, through short IWM.
Another name that I'm looking at is going long dust, which would be
short gold. I would not short silver. There's just too many structural things at play there
that will support it. So yeah, that's where I'm at for picks this week.
godfather what was the first stock ticker you said the battery company i didn't
Godfather, what was the first stock ticker? You said the battery company, I think.
ampx adam mother peter x-ray gotcha thank you
all right if there's no further commentary there uh dougie fresh
love to jump uh have you jump in and and let us know what you're watching out there.
Sure. I'll just go through everybody's real quick as usual.
And Kodak, Ben, now that thing. I mean, he's been all over this thing for so long.
It's ridiculous. And yeah, Kodak, beauty.
So be sure to be watching that because Ben just gave you the best breakdown ever on that bad boy.
That's for sure. Godfather, that BZAI, I have to agree. I don't boy that's for sure godfather that bzai i have to agree i
don't think that's going any lower either i think that's going to be a good one you might be dead on
the money on that i'm going to be checking out bzai that blaze holdings i know i traded it before
and that's a beauty down here at 240 just getting on the 20 right there that does look really good
and then i was just looking at the ampx i know that was running like the other day or something popping up here it doesn't look bad at all it's definitely getting
set up we do a bull got a bunch of that so that's a beauty right there and a couple i was looking at
not really that great i mean this week just not really that like godfather said he's just kind
of hanging out waiting can this can and setting up it's just not ready to get popping just yet so
you can keep an eye on that plug plug powers and electrical part company plug and that's just
sitting on the 20 it was going up a little bit i thought it was down for the year we just found
out last night ben that this thing is actually up for the year that's pretty amazing i thought
it had gotten crushed but anyway plug power not looking so bad
and another one data volt i had mentioned has dipped down a little bit uh friday and today
so we'll watch that one pull back you could catch that one around the 120s and then it get popping
back up it's down like six percent today so i'll be keeping an eye on that and they're the ones i've
been kind of just watching on the small cap scene right there. But yeah, I would say your Kodak is going to be a great one right there.
And your BZAI, I do like that.
So I would say they look better than the three that I just mentioned.
So there you go, everybody.
And thanks for tuning in.
And back to you, Em.
Beautiful.
I do want to give Ben or Godfather a chance here for any final words, final comments before we close up the space today.
I always enjoy listening to you guys on the different pieces, creating a watch list, digging into some of these names as you guys put them on my radar.
I'll just say quickly, two other names that are worth watching here.
They're both TakeOver Spec Plays.
We're all over the C1.
This is a Rule of 50 software company
that actually benefits from AI.
They're not cannibalized by AI.
There are rumored to be at least three parties involved
in taking this thing private.
I've done my own independent work on this,
looking at historic TakeOver multiples,
six ways to Sunday, and I just can't get to less
than 30 bucks a share on that. So it's a question of when, not if, in my opinion, that goes.
The other one that I haven't yet done my own work on, but also seems to be getting some love in the
market and $30 type numbers thrown around on it is this digital bridge, DBRG, which SoftBank was recently
rumored to be involved in. I have small spec positions in both of those, actually a large
spec position in C1, small in DBRG. Obviously, these will be completely independent of my views
of where the market goes over this next week or so. I just wanted to look at the earnings calendar. It's not stacked this week,
but there are a couple of key things to watch just in terms of read-throughs to the various
sectors. You got Toll Brothers after the market today, to the extent that people have an eye on
housing. I certainly do. We got AVAV for some commentary on drones. Aftermarket on Tuesday, BRZE, which is another small cap name that I think fits solidly the best analysts out there. He's at DA Davidson.
And then we got Adobe and Oracle aftermarket on Wednesday.
Read-throughs into software, which, of course, has been decimated by AI.
And then, you know, Oracle, not much else needs to be said there.
Battleground stock synopsis to the extent that they are AI chip design related.
And then, of course, the biggie is Broadcom Aftermarket on Thursday for another look at what's going on in AI cap spend and TPUs and everything that
competes with NVIDIA, of course. And then two other names, retail. And retail is always in
focus at this time of the year. Costco know, Costco and, uh, and Lulu,
which is, seems to be on every single person's, uh, January effect list. And I will note that,
uh, retail names, when they show up on the January effect list often perform better than other names.
And that is because you get a sentiment effect, a positive sentiment effect around retail at this time,
because everybody's talking about how busy it was when they
were at the mall and things like that.
So I think that Lulu is interesting that it shows up
on all of these January Effect names lists,
and the fact that it's obviously high profile
and it's deeply into the retail sector.
So my final comments.
Always a pleasure, Godfather.
Ben, anything from you?
Yeah, I'll just add a little bit more on what we're doing with story trading
with the January Effect list.
Like I said, we had a Zoom last night.
If you weren't there or if you're not a member yet,
you can see the recording of that show last night. If you weren't there, if you're not a member yet, you can see the recording of that show last night, plus a PDF of the PowerPoints available and AI summary is available as well.
This is an ongoing collaborative thing we're going to be doing over the next couple of weeks. I just
added BZAI to my list. I didn't have it to do due diligence on Godfather. I like that name.
So, you know, we'll be doing more due diligence
over the next couple weeks,
and we'll have another Zoom two Sundays from yesterday.
That'll be our second and final Zoom on the January effect,
and we're actually going to lock in, like, top 10 picks
along with kind of ideas and guidance how to trade them.
So, yeah, this is my favorite trade of the year.
And, you know, if you do it right, you can make a whole year of gains in just three weeks,
which honestly I pretty much did last year in those three weeks.
And I do it pretty often.
It doesn't always work, but I would say it probably works 70% to 80% of the time.
You can always have some macro events or a black swan or something that kind of throws it off
kilter so nothing's a guarantee but it's a very very rewarding collaborative
process we're doing inner discord and again it's all the it's all there
recordings and documents and everything so even if you missed it last night, that's available for you if you join our community.
I think there's a great link in the bio up there.
If you want to check that out a little bit further,
if you go to that story trading bio,
you can see the link there to the discord
and some of the other great things that the team's doing.
I really appreciate you guys coming on each and every Monday.
So sharing some of your thoughts, pieces of what you guys are doing. Obviously,
each person is up to you, but if you are interested in more, definitely a way to get
there and get a whole lot more from the Story Trading team. We really appreciate you guys.
Appreciate all the audience that tunes in each and every Monday. A little lighter show today,
a lot of sit and wait, I think, going on in general.
We'll see what happens. I'm sure we'll have a lot more to talk about next Monday once we get through this FOMC meeting on Wednesday.
And actually, now that I think about that, next Monday, I don't believe we are having a show next Monday. I'll have to confirm that for sure between now and then.
But most of us in the Wolf crew are traveling.
So we'll double check.
I'll check in with Ben and the team.
We'll see what next Monday looks like because I would hate to miss that show with everything going on.
So we'll see how it can work out there.
As always, the show is recorded.
If you missed any of the thoughts shared in the front half of this one or any of the different picks, themes, names that were
thrown out there, you can listen back to this at any time as soon as I close it out. Appreciate
everyone. I will be jumping to, I think, live stream for a little bit. There's stocks on spaces
coming up in about an hour. And then, of course, our stock picks for the week show still going on
this evening.
That one will be very interesting
with this kind of back-and-forth action.
There's been some outperformers for sure.
So we'll see how everyone did.
We'll see you then.
Appreciate everyone.
Godfather, Story Trading, Dougie Fresh
hanging out with me on this beautiful Monday.
Make sure you follow these guys.
Give them a follow.
Improve your timeline on this app,
your experience on this app.
Take care, everyone.
We'll see you guys on the next show.
