I am back with a quicker general discussion post! I had some things I wanted to get my thoughts down on which didn’t warrant full articles. Topics today:
- SIRC/ALPP – silly price drops
- SIRC – the positive effect of rising energy prices
- SKAS – increased buying activity leading into 10k
SIRC/ALPP – Silly Price Drops
I’ll keep this one short, but I dropped a tweet today about this. SIRC and ALPP both got killed today. SIRC dropped around 15% and ALPP dropped close to 8%. This was some absolutely bizarre price action in my opinion…
Whenever we think about stocks heavily dropping like this without two things happening: serious index drops like the NASDAQ (~2%), and/or specific company news, I generally tend to ignore the movements. Today’s moves were so over exaggerated it’s almost hard to ignore, especially with SIRC.
We have to remember that the market can act funny in general, but for microcaps these moves can be extremely over exaggerated or due to liquidity. I think as an initial point, these companies partially dropped because the NASDAQ dropped about 2%, which ALPP is a part of, and SIRC will hopefully soon be trading on. These companies always tend to over correct index moves even though the company is doing fine.
Second, on the liquidity front, especially for SIRC we saw some odd spikes in selling activity. SIRC is not yet on a major exchange and is not always the most liquid stock. It seemed like much of today’s drop was related to someone unloading a hefty amount of shares around open. This comes with the territory of trading on the OTC.
So think of this, again, as a nice “buy the dip” opportunity. Liquidity isn’t really that important for company performance, and long-term we should see SIRC’s liquidity pick up with uplists. So I’m not worried here.
For ALPP, they are trading on the NASDAQ and tend to have very strong liquidity. So I am not chalking this up to a liquidity issue. I suspect it’s just an over-correction from the NASDAQ beating that’s been happening these last few weeks/months.
All in all, these are more systemic issues and are nothing related to SIRC and ALPP themselves. I wouldn’t be concerned, I would still stick it out long term.
SIRC – The Positive Effect of Rising Energy Prices
I am going to sound like captain obvious, but if you’re a SIRC investor and seeing rising energy prices, you should be excited. Yes, it sucks paying double for a tank of gas and seeing your heating bill doubling.
But I am firmly of the opinion that fossil fuel generated energy will itself be the end of fossil fuels. Society right now is generally built around exploiting fossil fuels, we’re really good at it and as long as the price is right, the incentive isn’t always there.
But when non-renewable energy companies jack up the price of a barrel of oil, natural gas, etc., the one thing holding back renewable energy, price, is gone. The more obnoxious non-renewable energy companies get, the more quickly we are going to move away from them. I see it as short-term profit taking instead of trying to cling to fossil fuels for another 10-20 years.
When all is said and done after this spike in energy prices is (hopefully) over, I think the developed world will have finally mentally moved on from a fossil fuel mindset. Yes, we’ll still be using it for some time, but I think the developed world will have had that societal change of heart that spells the end for investment in fossil fuels.
This, obviously, has major implications for SIRC especially now that it is planning to exponentially expand its EV charging business. SIRC should be able to seamlessly ride this wave, and the longer these commodity price hikes continue, the higher and higher that wave will be for SIRC to ride.
I personally think that SIRC business model will be slotted perfectly into this energy revolution and even just inertia will carry it along to new heights. Couple that with competent and growth-oriented management and we get a very solid bet out of the OTC.
SKAS – Increased Buying Activity Leading into 10k
For those of you that don’t know, SKAS is my largest microcap position and sort of a “hipster” favorite of mine in the investment world. They are a COVID re-opening play which provides aircraft services, such as operating a Manhattan heliport and providing services to aircraft at a Kansas regional airport.
This stock is generally quite illiquid, but there are pick ups in buying activity from time to time. This is currently happening, and we’ve been seeing a relatively high uptick in volume in anticipation of the 10k release at the end of the month. We’ve also seen that the company now has a new greater than 5% owner, which was just filed within the last few weeks.
Given the US, and especially New York, generally opening up these last few months and the end of the moronic Trump/Biden travel bans up until Oct/Nov. last year, I think more people are taking notice. They got absolutely destroyed in 2020 and early 2021 from COVID, but they have now strung together some profitable quarters and seem to be moving in the right direction.
I personally hope this stock stays unknown for selfish reasons, but I think the word is about to be out. I’m expecting another strong Q4 2021 with the 10k, and as we move into FY 2022, I’m expecting them to return back to their pre-pandemic levels of revenue and profitability. Or at least very near it.
The company is almost completely tied to travel and tourism. So barring a major COVID variant making its way around, I am extremely bullish and think we could easily see a share price over 4-5 dollars by the time Q3 2022 earnings are released.
If people are interested, I’d be happy to drop some more DD on them. But I suspect they’ll stay a more unknown stock to retail for some time :).
That’s all I’ve got for today, thanks for reading!
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DISCLAIMER – AT THE TIME OF WRITING THIS ARTICLE I HAVE A LONG POSITION IN $SKAS AND I DO NOT HAVE A POSITION IN $ALPP AND $SIRC. THIS ARTICLE IS NOT FINANCIAL ADVICE AND IS INTENDED ONLY FOR EDUCATIONAL PURPOSES. I AM NOT A FINANCIAL ADVISOR. AT THE TIME OF WRITING THIS ARTICLE, PERSONS AFFILIATED WITH THE COMPANY ANALYZED ABOVE MAY BE PROVIDING MONETARY COMPENSATION AS MONTHLY PATRONS THROUGH MY PATREON. THIS COMPENSATION IS NOT PROVIDED IN RETURN FOR ANY SERVICE, WRITING ABOUT A PARTICULAR TOPIC, AND/OR FAVORABLE OR UNFAVORABLE OPINIONS. MY PATREON SUPPORTERS HAVE NO INFLUENCE ON THE CONTENT OF MY ARTICLES.
