Making the Rounds of the Microcaps

 | Jun 01, 2015 | 12:00 PM EDT
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Following up on my previous column, here are updates from my meetings with CEOs at the Marcum Microcap conference in New York. As a bonus, I added quick previews for a few of the companies with whom I will have private meetings at the LD Micro Conference this week in LA.

Acme United (ACU)

ACU continues to drive growth (sales rose 19% in the first quarter 2015) with innovative niche products. CEO Walter Johnsen always has a hot product to discuss when we meet, and this time it was Cuda fishing knives and tools. With products using German stainless steel, retail availability at places like Bass Pro Shops, Cabela's (CAB) and Wal-Mart (WMT), and a host of celebrity (in the fishing world, anyway) endorsers, I'm guessing Cuda will be a hot product for fishing season.

True Drinks Holdings (TRUU)

CEO Lance Leonard has shepherded TRUU through a period in which the company had insufficient working capital to fulfill large orders from warehouse clubs like Sam's while maintaining existing customers. Raising $4.5 million from Silicon Valley player Vinny Smith and his Toba Capital have cured TRUU's financing issues. TRUU now has zero debt and Smith controls more than 40% of the shares. Now TRUU can fully execute on its plan to grow awareness of its Aquaball product, a sugar-free beacon of healthy hydration in a kids' drink market full of sugary junk. It's time for Leonard to get the message out and get TRUU to cash flow break-even in the third quarter, as he has predicted.

Lomiko Metals

CEO Paul Gill has assembled a very interesting play on graphite/graphene. Graphene, as you've probably read, is a key raw material for 3D-printed applications. Lomiko owns interests in graphite mines, but also stakes in graphene producer Graphene Labs and its related superconductor start-up Graphene ESD. So they're present at both ends of the value chain, and the key is the conducive properties of graphene, which could allow 3D-printed materials to replace many applications that currently use costlier and heavier metals. Trading at a princely 4 cents per share on the OTC, Lomiko shares represent a low-cost way to buy a call-option on the uptake of 3D printing.

One Horizon Group (OHGI)

CEO Brian Collins was undoubtedly the star of Wednesday's sessions, as OHGI shares rose 168% -- a huge move even by microcap standards -- at one point. OHGI issued a release Wednesday morning noting that its Aishuo app had been downloaded 3.5 million times in China since its launch in late February. Also, crucially, OHGI announced that Aishuo is now able to accept Union Pay, Alipay and WeChat Wallet. The path to monetization for OHGI's premium mobile VoIP services in China is complete.

I'll be highlighting the following points in my meetings with the relevant managements at LD Micro:

Second Sight Medical Products (EYES): I was the first to publish financial research on EYES on the day of its IPO in November, and I am no less convinced in the game-changing nature of its Argus II retinal implant. At this point, it's a matter of day-to-day execution on Argus II, and my conversation with CEO Bob Greenberg will focus on worldwide growth in implanting centers, winning approvals from regional Medicare administrative contractors, and the nuts-and-bolts details of bringing sight to the sightless.

Applied Minerals (AMNL): Like Lomiko, Applied Minerals is really a play on uptake of a material -- halloysite clay in AMNL's case -- which has a broad range of weight-saving and strength-enhancing potential commercial applications.

Newtek (NEWT)/Customers Bancorp (CUBI): Both companies are at the cutting edge of the economy, with a focus on small business lending. With so much noise coming from the Bureau of Economic Analysis and its ridiculously volatile GDP readings, it's hard to know exactly how the U.S. economy is faring. Thus, it's incredibly helpful to talk to managements at NEWT and CUBI and get the view from the front lines.

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