GAN

GAN Limited

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-$12.70 -85.99%
Steve Matt's avatar
$18.6m follower assets
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My $INMD trades
New position!

I'm looking to add a few more promising* small cap companies to my portfolio over time, ideally under $1B but a smidge over is fine as well.

About 20% of my positions are small caps or smaller but several of them are dead weight where my thesis is basically broken but the position is so small and the thesis isn't broken enough that it's even worth selling. Some of these include $DMTK, $BFLY, $NNOX, $BGRY, $BARK, etc. The thesis needs to be really broken or I just have to be tired looking at you to get sold (a la $FUBO, $GAN, and $GRWG two weeks ago).

Anyway, on to InMode. I've had them on my Buy? watchlist got ~a year now but they recently popped up on a screener I ran which prompted me to really dive in.

Transaction Journal Entry:
  • Showed up on FinViz screener of +20% ROE, >10% sales growth last 5 years, >80% gross margin, and >10% inside ownership. They actually don't have >10% inside ownership; down to ~7% at end of 2021, which was ~26% at end of 2020. Slightly concerning and needs to be watched.
  • Services revenue makes up just 12.4% of TTM revenue. Company is building out installed based and services revenue to follow.
  • Incredible margins for a company with TTM rev up 41%, profitable, and FCF/S of 45% TTM. Buying back shares as well.
  • Optionality out the wazoo. Already has a large TAM and are expanding into non-aesthetic medical procedures as well.
  • Services revenue up 84% in 2021 which must continue to grow rapidly which will be evidence of their equipment actually being used by providers.
  • Really wish management provided more KPIs in their 10-Q/Ks. Installed user base only found in investor presentations which don't appear to be archived. # of procedures performed like ISRG?
  • International expansion ongoing. International accounted for 34% of revenue in 2021, up from 27% in 2020 and 21% in 2019.
  • Somehow managed to grow by 32% in 2020. Wild.
  • FCF like crazy, buying back shares already. ROE of 49% in 2021. Is this company too good to be true? Financials are just immaculate across the board.

Valuation metrics at time of purchase:
Trailing P/S: 5.64
Forward P/S: 5.03
PSG: 0.07
P/FCF: 13
P/GP: 7
Price of SPY when $INMD trade was executed: 368.44
Price of QQQ when $INMD trade was executed: 277.42
Thanks for sharing context on your new position Steve. It’s really helpful to have your thoughts on Small caps and how to be mindful of your exposure

I know that @joryko categorises $INMD as a position that is a powerful FCF generator.
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My $GAN $FUBO $GRWG losses
These were small, very speculative positions I opened in late 2020/early 2021. They bombed and frankly I'm just tired of seeing them in my portfolio. My original theses are certainly busted and I'm not worried about missing out on meme stock pumps for realized value in 3 years. I'm ready to move on.

$GAN total return: (87.4%)
Benchmarks
$SPY total return: (4.5%)
$QQQ total return: (14.8%)

$FUBO total return: (33.3%) - Note this return is better than what Commonstock says because I sold half my shares for a 50% gain in February 2021 before Fubo plummeted.
Benchmarks
$SPY total return: (4.1%)
$QQQ total return: (6.7%)

$GRWG total return: (81.8%)
Benchmarks
$SPY total return: 2.8%
$QQQ total return: (7.7%)

Good riddance from my portfolio.
Alberto Wallis's avatar
$22.7m follower assets
Upcoming Earnings Calendar (March 21st-25th)
Two heavy-hitters reporting next week: Nike and Adobe. Really interested in seeing what Nike has to say about supply chains after the recent events. Carnival Cruise and Nio should also be interesting. Full list of companies below.

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Mega week for earnings! (Nov 8-12)
Here are featured earnings we are paying attention to @ Fincredible.

The ones I'm paying close attention are:

$PYPL - Want to learn more about their plans for 'super app', integration of BNPL and if any color on rumored $PINS acqn, which is now dead (or never was there). I own some $PYPL

$PLTR - I think I'm the only non-bull on this company. I'm unsure of their technological prowess and confused by their corporate governance. I don't own and have no plans, but just curious.

$COIN - I have no exposure in crypto except via a managed investment on Titan, but I think this is a great way to continue to learn and try and get smarter

$U - I like this company a lot. I'm particularly interested in their non-gaming revenues which I think is a larger TAM. Selfishly, I'm hoping this stock falls after earnings (Sorry for the many who own it) so I can buy on the dip, but not expecting it.

$SOFI $AFRM - I view both of these innovative companies but are overpriced, and don't have as much moat as people give them credit. Yet always interested to hear about them to be proven wrong, and given my investments in $PYPL, banks, and various private fintechs

$EHTH - not Ethereum, but eHealth. Given they fired most of the management team recently, always interested in what the tone/focus of the call is.

BTW as of this week, for S&P 500 companies (plus other popular stocks) you can not only play the calls in real-time at Fincredible, but also read the transcript and monitor specific keywords in real-time. Check it out - https://app.fincredible.ai/latest-earnings

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A potentially undervalued growth stock
$GAN today will hold their first ever investor day event. As part of the pre-released material, management expect revenue for 2023 to be in the range of $225-250 million. For context revenue for 2021 is expected to be ~$130m. This would represent revenue growth of over 80% in just 2 years.

The current market cap is $607 million meaning the 2023 price to sales ratio is 2.55. This looks like an opportunity to me and at the current valuation the upside outweighs the downside.

Further to this, management expects 2026 revenue to exceed $500m.
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