I’m writing to you from the bar in Hotel Monaco in historic downtown Philadelphia — a stone’s throw from Independence Hall — home of the Liberty Bell — and Independence Square, where the Declaration of Independence was first read aloud.
I’m enjoying a beer in honor of our founding fathers…
That is to say I’m taking a quick break from the MicroCap Conference. As you probably know, or could ascertain from the name, Microcaps are companies that have market caps from around $50 million to $300 million. That may sound large to some investors, but considering that most blue chips average billions, these guys are small fish in a big pond.
The conference is for investors who want to take a stake in companies that could deliver the biggest profits they could ever imagine….
These stocks are the only ones that can skyrocket thousands of percent — but are also the most likely to crash and burn.
That’s the beauty of Microcaps — the companies themselves are all over the map, and I love the hunt for hidden treasure.
At these conferences, you see it all, and are introduced to businesses you never knew existed. Some will be life-changing investments, some will never get off the ground.
Here is a taste of what I saw…
This year I saw a scissor, knife, and first aid-kit company that provided the first First Aid kit to visit the North Pole. Acme United (NYSE: ACU), market cap: $66.46 million.
I heard from a biotech firm that was fighting against a rare skin disease called recessive dystrophic epidermolysis bullosa (RDEB) that kills many children every year. Fibrocell Science (NASDAQ: FCSC), market cap: $28.08 million.
I met with a company that makes compact buses that could revolutionize the way that we use public transportation in the U.S. It has shaved five feet off of the standard bus, and will make it affordable and efficient for any kind of bus travel you could imagine.
Grande West Transportation Group (OTC: GWTNF) makes 35-foot buses that cost significantly less than a standard 40-foot transit bus, burn less fuel, produce less harmful emissions, and have a life cycle twice as long as cut-away buses while boasting lower maintenance costs.
Working in the city I have always wondered about the empty buses I see driving downtown. When you have low-income riders paying a couple bucks a day to ride around town, I figured that the margins must be good enough to support it. I was wrong.
But I never really had a solution. Grande West has one, and — like most good ideas — it’s as simple as it is genius.
Most city buses are 40 footers. You’ve seen them, you’ve pitied the drivers, and you’ve most certainly had to back up to allow them to pass you at red lights.
Enter the 35-foot bus. Not only does it offer the obvious advantages and solutions to the problems listed above, but the buses offered by Grande West also burn less fuel and emit less emissions than their big brothers.
While five feet may sound like a negligible difference, the implications are enormous when you scale it up.
These are all legitimate businesses with huge futures. I urge you to take a look at them.
But here’s the one company I think has the best potential for you as an investor…
Have you ever returned home to find a white-hot coil on your stove?
Have you ever been out running errands and had that nagging feeling that you’ve left the oven on?
Or have you ever been so drunk you totally neglected to realize that you hit an extra digit on your microwave while making popcorn?
Your humble editor has been guilty of all three…
And before you judge me for my gross negligence, let me throw some numbers at you.
According to the National Fire Protection Association, stovetop cooking is the number-one cause of household fires and fire injuries in North America. From 2009-2013, U.S. fire departments responded to an average of 162,400 home structure fires that involved cooking equipment per year. This represents 45% of home structure fires, and 33% of all structure fires.
Cooking equipment was involved in an annual average of:
- 430 civilian fire deaths, or one of every six (17%) home fire deaths
- 5,400 civilian fire injuries, or two of every five (42%) reported home fire injuries
- $1.1 billion in direct property damage, or 15% of total direct damage in home structure fires.
- $7 billion in indirect costs
- Ranges or cooktops, with or without ovens, accounted for the majority (61%) of home cooking fire incidents and even larger shares of civilian deaths (86%).
This is a huge problem….
And Pioneering Technology Corp. (PTE: V) has a series of solutions.
Here is what it offers:
The SmartBurner, which allows for easier and faster cleaning with no chance of food falling in between the coils. It saves money by reducing the amount of energy needed to cook food and substantially reduces the number-one cause of household fires — cooking fire.
This company has revolutionized the problem to the point where you could leave a piece of paper on a hot stove and it would never catch fire. This could not only save thousands of lives, but could give many older folks the peace of mind and the assurance they need to keep cooking for themselves.
Here’s how they describe it:
- SmartBurner with its patented Temperature Limiting Control (TLC) technology controls the high end temperature of the stovetop below the auto-ignition point of cooking oils and most common household materials by shutting off the stove element when the temperature reaches above 350°C/662°F. When the element has cooled below that threshold the stove element turns back on again. Think of it like a furnace for cooking. Just as your furnace turns on and off to regulate the temperature in your home, SmartBurner regulates the cooking temperature of your stovetop.
- Each SmartBurner is an electronically controlled solid cast iron plate that replaces the existing electric coils. A patented control unit installed inside the burner controls the temperature of the plate and limits the highâend temperature to 350°C/662°F. The ignition or combustion temperature for most cooking oils and common fibers starts at 370°C/698°F. Most electric coil stoves will reach temperatures well above 700°C/1292°F.
- When the cast iron plate reaches just over 350°C/662°F the element automatically shuts off. As soon as the element has cooled to below 350°C/662°F the thermostat kicks in and starts heating up the cast iron plate again. In this way, the cooking surface maintains a steady, constant and safe cooking temperature. Considering that water boils at 100°C/212°F, the heat that SmartBurner delivers is more than sufficient to cook effectively, efficiently and safely.
Its safeTsensor regulates the microwave, preventing fires and false alarms by shutting down the power to the microwave at the first sign of smoke.
This prevents all sorts of problems, like:
- Building evacuations
- Fire department responses — which are expensive and put firefighters and private citizens at risk.
- Apathy — the third time the alarm trips in the middle of the night people stop getting out of bed or otherwise evacuating.
Our offices here in Baltimore are prone to huge fire evacuations. In the last few months alone, we’ve evacuated the building for a kitchen fire in the floor below, and (ahem) an exploding hoverboard in our office.
These evacuations cost hundreds to thousands of dollars, depending on the size of your building. It also pulls firefighters away when they could be responding to a serious issue.
This company is in good shape to not only save lives, but to make investors a pretty penny.
Pioneering Technology Corp.’s fiscal 2016 saw revenues of $6.8 million, an increase of 55% over 2015’s $4.4 million, and a 70% CAGR since 2013. Fourth-quarter revenue was a record $2.6 million — 120% higher than the same quarter a year ago.
The company was profitable for the year to the tune of $1.056 million of net income — 649% higher than in 2015.
Pioneering has $3.6 million in working capital as of the end of September.
Not too shabby for a company I bet you’ve never heard of. And that is kind of the point — and why you read this letter in the first place…
For those of you too afraid to bet money on microcaps, let me introduce you to someone who is jealous of you…
Warren Buffett once said about small caps: “It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”
When pressed on that statement, he said he would still say the same thing today.
“In fact, we are still earning those types of returns on some of our smaller investments. The best decade was the 1950s; I was earning 50% plus returns with small amounts of capital. I could do the same thing today with smaller amounts.
It would perhaps even be easier to make that much money in today’s environment because information is easier to access. You have to turn over a lot of rocks to find those little anomalies. You have to find the companies that are off the map — way off the map.”
They are on our map…
