The LD Micro Invitational was a madcap ride full of great ideas and thought-provoking proposals. And that was just during the cocktail hour. Seriously, Chris Lahiji and the team at LD put on a highly-value-added show and I was fortunate to have many meetings with CEOs. Space constraints limit my ability to go into detail, but here's a quick overview of my best meetings:
Second Sight (EYES)
Second Sight CEO Robert Greenberg has been working diligently to prepare the business for a rapid ramp-up in demand for its Argus II retinal implant. EYES recently announced the hires of a manufacturing chief from Boston Scientific and a marketing guru from Eye Therapies.
The "Oh my God" factor of watching an Argus II patient regain sight for the first time should not blind the investment community to the fact Second Sight is a manufacturing company. Continuous improvement in manufacturing methods and greater capacity utilization will benefit EYES' gross margins going forward as adoption of Argus II increases in vision-care hospitals around the world.
Applied Minerals (AMNL)
The first widespread application for AMNL's Halloysite clay will likely come in, of all things, cosmetics. AMNL has noted its efforts to form a partnership with a large cosmetic retailer --Halloysite has properties which allow for time-release of cosmetic ingredients -- and I would expect an announcement soon.
Lilis Energy (LLEX)
CEO Avi Mirman is a former banker who has just raised capital to acquire productive oil and gas assets in the company's home area of the D-J Basin in Colorado --a nd perhaps beyond. The last few LD Micro conferences were full of exploration and production companies, but Lilis was the only one on the docket this time. This is the perfect time to be a consolidator in the E&P space, and Mirman will have no trouble finding distressed smaller companies that have strong assets and weak cash positions.
Chanticleer Holdings (HOTR)
CEO Mike Pruitt has a very valuable minority interest in HOTR's 3% ownership of Hooters Inc. It has been widely reported that privately-held Hooters is currently undergoing a sales process led by Piper Jaffray.
So, HOTR is the only publicly-traded way to play that sale, but the company's 14 franchises also offer a participation in the growth of the Hooters brand, especially overseas.
CEO Barry Sloane has Newtek well-positioned to participate in the recovery in the small business economy, which both Sloane and I agree has been frustratingly slow. It is happening, though. And with Newtek's conversion from a C Corp. to a BDC-RIC complete, the company has an efficient capital structure underpinning its growing base of small business loans. The BDC conversion will also obligate Newtek to pay a one-time special dividend of at least $4/share in 2015 and my guess (Sloane can't comment on timing) is that that payment will be made in the third quarter.
22nd Century (XXII)
The key take away from my meeting with CEO Henry Sicignano: Smoking is not declining on a worldwide basis. In the U,S .smoking rates have declined, but have been offset by higher population and immigration. In Europe the rate is down and population growth has not offset that, but in Asia both the smoking rate and the population have grown.
XXII continues to work on Asian partnerships, and Japan and South Korea could happen first, but China is still the ultimate prize, and XXII has introduced special packaging for the Chinese market.
Diamcor Mining (DMIFF)
Diamcor CEO Dean Taylor has the company's Krone-Endora diamond mine ramping toward a move to 24/7 operations this quarter. Diamcor's strong partnership with Tiffany's, which invested $10 million in Diamcor through a convertible note and term loan, solidifies take away. Tiffany's has right-of-first refusal of on 100% of output from Krone-Endora (excluding "large special" stones which Diamcor keeps.)