$SPIR was just added to the Russell 3000. You can see the press release here. This should cause some forced buying, as it will need to get added to funds tracking the index.

I'll make a prediction that $SPIR will be back above $12 within the next month.

In March it was announced that Spire Global did a direct offering at $14.00 per share. Meaning, there was an institution willing to buy 2,142,858 shares of Class A common stock at 47% higher than the share price is now ($9.59 as of 5/29/24).

The direct offering had an option to acquire up to an additional 2,142,858 shares at a price of $14.50 per share until 100 days from the date of the closing of the offering (which would be July 3rd).

I don't know if the institution will exercise that option, but if they do, it will improve $SPIR's balance sheet by $31 million, which will likely be used to pay down debt, reducing their debt payment, and getting them closer to profitability (which is a huge inflection point for them).

My guess is the Russell inclusion, and the fact that there are institutions out there willing to pay $14 per share, will pull the stock up above $12 a share in the coming month.

The longer the timeline, the more confident I am, but Commonstock only allows predictions to be 1 month at the longest, so we'll go with that.

Latch shares got delisted from Nasdaq yesterday. The company now only trades over-the-counter.

Latch sells bluetooth door locks to building management and individual residences.

In 2021 $LTCH had a net loss of $166 million, mostly because it spent too much on Sales & Marketing and G&A.

In 2022 $LTCH had two restructuring events.

Losses continued to mount as the company delayed not only its Q2’22 filing but also its Q3’22 and full-year 2022 filings.

They also fired their CEO and CFO. Yikes.

In April, Paul Cerro @paulcerro outlined the value of $LTCH in both of the following scenarios:

Option 1: If the company shuts down and they sell everything down to the nuts and bolts for what they can reasonably get for it: $1.10 per share. Which is a 37% premium to where shares just closed today. For more details on how Paul got to this number, read his piece here:

Option 2: Strategic buyout. The value to another company that wants to expand into the smart home ecosystem, and instead of starting from scratch, they can just buy Latch to get a head start. Paul believes they would pay $1.49 per share for Latch. 86% more than where shares closed today.

After Latch was delisted yesterday, shares fell as much as -25% today before finishing the day up +14%. The market doesn't seem to know what to do with it.

One unknown is how bad their cash burn is. The estimates Paul did back in April don't take into account how quickly they are burning through the liquid assets they do have.

yay!

There's also the fact we haven’t seen a filing in almost a year and have zero clue on what’s actually under the hood.

Latch ran all the way up to $2.23 in anticipation that they would file necessary documents and be able to stay listed on the Nasdaq. They didn't, and so now we are plunged back into the waters of uncertainty.

Yay!

Spire Global had a record second quarter, with their strongest revenue and lowest operating loss since becoming public.

During the quarter, Spire Global announced a number of awards including:

$SPIR expects to execute a reverse stock split within the next 30 days, which is designed to regain compliance with the NYSE listing requirements.

AppFolio is known for seeing 'big waves' early. They saw the shift to the cloud, the the coming dominance of mobile, and once again, they're early to AI.

AppFolio makes property management software, and for each of the above trends, they've had the engineers and product expertise to create property management products that made their clients lives easier.

They saw AI coming, and they invested big.

Back in January 2019, AppFolio acquired Dynasty Marketplace, an advanced artificial intelligence technology provider for the real estate market.

They bought Dynasty for $60 Million.

This was a lot. And its still a lot.

The acquisition was to help further develop and strengthen AppFolio’s AI products and services targeted at the real estate vertical market.

Now, we finally have an idea of what that investment went towards.

AppFolio released "Realm" a suite of AI-powered tools for property managers.

With AppFolio Realm, property managers can do:

Check out the video on the Realm announcement page:

Do you think these features are worth the $60 million?

Since early 2021 we've had a group of people on Commonstock watching InMode, a company that makes non-Invasive aesthetic procedure devices.

I thought it would be fun to do a roundup of different thoughts and wins the Commonstock community has had about $INMD over the last couple of years:

"I think society will demand aesthetic treatments at a much higher rate moving forward. I consider this a huge thematic trend." — Pat Connolly, 2/2/21

"Overall institutional ownership is 60.42% of shares outstanding as of Q2 2021." — Hedge Vision, 9/27/23

"To understand InMode's distribution and product, check out their Instagram page. Inmode's customer isn't the end user, it's the medical office. Once an office buys a device, they jump onto social media to educate consumers on their new service. This is a really powerful cycle that drives both patient interest in the treatments and medical office's desire to invest in an InMode device." — Pat Connolly, 1/10/22

"InMode has 46% profit margin. 5-year sales growth is over 25%. Return on Equity over 25%."

— Josh Kohn-Lindquist, 5/1/2022

"Quality companies don't trade for cheap. Here are some names in my portfolio that say otherwise: $INMD 37.88% ROIC. PE 15." — The Thinking Investor, 8/1/23

"InMode management brings up their goal of 83-85% gross margins on nearly every single conference call. They will not budge on these margins, and even though they've had supply chain issues, their latest quarter still was >83% GM. Throughout the time they have gone public, they have kept this number in their guidance range." — The Thinking Investor, 8/8/22

"Incredible margins for a company with TTM rev up 41%, profitable, and FCF/S of 45% TTM. Buying back shares as well." — Steve Matt, 9/28/22

Steve also bought the stock at that time. He's still holding, and is up 56% on his position:

"How is $INMD different from other medical devices companies? 1) Direct sales model 2) Emphasis on research and development 3) Emphasis on minimally invasive treatments."

— Michael Scofield, 5/14/23

"InMode trades at 13x FCF, despite growing sales by 51% annually over the last five years and 31% YoY in its previous quarter. $INMD offers non and minimally invasive procedures that are an alternative to many older plastic surgery techniques." — Josh Kohn-Lindquist, 7/12/23

"InMode's balance sheet is truly incredible, with strong returns on their invested capital and assets, attractive gross margins, and impressive growth in their income, EBITDA, and revenues. They also have reasonable valuations on earnings and FCF ratios, though their P/E ratio to growth figures looks highly unattractive, with a PEG ratio of 194. My main concern for the stock is that plastic surgery is hardly what you would call ‘necessary spend.’ In periods of macro-economic difficulty, InMode may struggle. There was some evidence of this in 2022, when revenue growth fell of a cliff to 27% from 74%. However, this is still a decent growth figure and may suggest that the high-income nature of the patients interested in plastic surgery provides some buffer on the downside." — Jared Leary - Hourglass, 8/4/23

@hedgevision @pat_connolly @joryko @thethinkinginvestor @hourglassnetwork @interrobangbros @micscof1eld

On July 6th Derek Spartz (@derekilab) wrote that Vital Farms wasn't getting any respect. His thesis was simple:

Today is August 3rd and Vital Farms reported:

Today, $VITL is up +29%

I bought on July 7th, the day after Derek wrote his Commonstock memo. Since Derek's thesis was around earnings, I'll be exiting my position today.

Thanks for the great call Derek!

AEye provides lidar systems for vehicle autonomy, advanced driver-assistance systems, and robotic vision applications.

On May 22nd, Jared Watson @wjared posted on Commonstock about how $LIDR was trading at less than half net assets, had extended its runway to the end of 2024, and has a floor based on the value of its LiDAR IP that he believed was above the current stock price.

Jared initiated a position at $0.19. (I also bought that same day at $0.19)

​

Here's the memo

Then, on Friday, $LIDR shot up +30%.

Estate, I sold.

Bad move.

$LIDR is up another +29% today 😄

@wjared Jared, however, was brilliant, and is still holding on.

Check out his memo on AEye, it's worth a read.

Fairfax is a holding company which, through its subsidiaries, sells property and casualty insurance and manages the investment of the insurance premiums.

Fairfax’s goal is 15% growth in book value per share over the long term.

Fairfax differentiates itself through disciplined underwriting and investing its assets on a value oriented total return basis, believing that this approach will provide above-average returns over the long term.

✅ Higher interest rates benefit Fairfax

✅ Fairfax still trades below book value, despite strong recent performance and attractive growth prospects

The two engines that power Fairfax:

In the past, Fairfax's insurance business would actually lose money; but the money that was collected in insurance premiums would be invested, and those investments made more than the insurance losses.

Prem Watsa is the founder / CEO, and he was able to compound Fairfax's book value per share at 24.7% for the first 25 years of the company's existence.

However, low interest rates in the 2010s hurt the investing side of the business because they have a large bond portfolio as well as defensive equity hedges and even made a good amount of bearish macro bets that didn't pan out.

Ultra-low interest rates were bad for Fairfax's bond returns for a decade. Showing a lot of restraint, Fairfax never bought long duration bonds (which is what got Silicon Valley Bank in trouble as $SVB searched for yield). Now Fairfax has bonds maturing soon and can reinvest in much higher-yielding instruments.

Fairfax's fixed-income portfolio will likely produce over $1.5 billion in interest and dividend income this year, up from $530 million in 2021.

On the insurance side, Andy Barnard was put in charge in 2010, and was able to refocus the insurance operations on underwriting profitability. They began acquiring high-quality insurance businesses as well. Fairfax's insurance operations have been profitable in all but two years since 2010, and those were in 2011 and 2017, due to catastrophes). Gross premiums written increased more than 5x.

I just bought $FRFHF at $777. Both it's insurance operations and investing operations are doing well at the same time, which the market isn't used to. I think there's a good chance that Fairfax's multiple rerates to around 1.25x book value, which would place Fairfax's intrinsic value at $1,005.

Spire Global announced today that they were awarded a $16M contract for the EURIALO project to develop the preliminary design and demonstrator for a global space-based independent aircraft surveillance system.

The project intends to design and demonstrate the viability of a novel system that uses a satellite constellation to track aircraft by determining their exact position based on different times of arrivals of radio frequency (RF) signals.

Today, surveillance systems often rely on self-reported positions of aircraft, which are derived from GNSS satellites. The need for an additional complementary space solution will provide a fully reliable and resilient surveillance solution.

Following the initial design and demonstrator phases, there is a potential opportunity to be selected to build out the full constellation, which would foresee a large number of satellites.

On Tuesday Spire Global announced that RDC Aviation selected Spire to supply flight data which aggregates millions of satellite and terrestrial ADS-B positions. With Spire's global constellation, they are in a unique position to supply data from remote regions of the Earth, like over oceans and the poles.

This deal moves up the value chain with the addition of terrestrial data to our satellite data and becomes what Spire refers to as “smart data” (clean data -> smart data -> predictive analytics -> solutions). As the aviation industry is recovering post COVID, $SPIR is seeing growing interest in their aviation offerings.

According to RDC, “Having been aware of Spire’s data and capabilities for some time, we knew there was the potential to enhance our applications, core data and back-office processes. However, once we started working with the team at Spire, we quickly discovered a number of unique and exciting customer-facing use-cases that will allow us to provide powerful insights for our airport and airline clients.”

On Wednesday, Spire had two replenishment satellites deployed. Given the technology improvement curve of 10X every 5 years, this is kind of like jumping from an iPhone 8 to an iPhone 14 with our two new birds. Here’s a link to the launch and deployment. Spire Global's satellites are deployed around the 1:11:00 mark.

Just this morning I Amazon announced plan to build a $120 million facility in Florida to prepare Kuiper internet satellites. This is a good example of the continuing investment in the space ecosystem. Earlier this year, McKinsey pegged the space market at ~$477 billion currently with the potential to grow to $1 trillion by 2030.

As a quick reminder, internet satellites are what we refer to as “talking” satellites and don’t compete with Spire’s “listening” satellites due to the differences in technology and use cases.

My $SPIR position was down about -5% today, but it's up nicely since I bought it at the beginning of July.