Update on Weebit Nano and 4 stocks to watch: Investor Webinar 1 March 2023

In this Investor Webinar:

– An update on the performance of our stock picking service Concierge. Spoiler alert…it’s shooting the light out!

– 4 stocks to watch.

– An update on Weebit Nano (ASX:WBT)!

 

See full transcription below.

Disclosure: Pitt Street Research / Stocks Down Under directors own WBT shares.

 

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Transcription

 

Mark: Good morning. It’s the 1st of March. It’s autumn or fall again, Stuart. Time flies when you’re having fun.

Stuart: Right.

Mark: Yeah. So, it’s time for our weekly webinar. Last week, I wasn’t around, so we skipped that one. And next week, Stuart will be away, so we’ll skip that one. But this week, we’ve got a lot of news for you, including stocks to watch. So, Stuart will talk about some of the stocks that we are keeping a close eye on. We’ll do an update on Weebit Nano, one of the stocks that we love so much, as most of our regular viewers will know.

And before we jump into all of that, I just wanted to give everyone a bit of an update on how our concierge stocks are performing. So, we’ll just do a quick performance update. So, for people that don’t know, Concierge is our stock picking service. We will give you buy and sell alerts through SMS and email. We’ll tell you when to buy, up to what level, what our target price is, and also we put in a stop loss. And I’m happy to say that the performance has been really good.

So if you look at the performance of the current trades, the trades that we have open at the moment, they’ve done 78% since inception. So we put these stocks on at different times, obviously, but we started out in May. So that’s 78% that we’re really happy with, because remember, this is still a bear market technically. And then the performance of the stocks including the ones that we closed, and some of these hit their stop losses, right? And some we closed when we hit our performance target. So the average for those is 37.5%. And the key thing to keep in mind here is that the ASX 200 has only done about 2% in the same timeframe. So, it’s a massive outperformance even if you include the stocks. You can see them on the left chart, the ones in red that we closed out on because our stop loss got hit, but all the others are doing really well. And then on the right, and I broke up the performance into two charts because on the right you’ll see one stock that isn’t included on the left, which is the one that’s been delivering a massive performance for us. It would put the ratios or the scale outta whack a little bit, so I put it in two charts. But on the right, you can see that one has done really well for us, more than 230%. So, really pleased with that. But in general, we think we’re doing really well with the stocks that we’ve invested in, the ones that we took our profits on. And again, even including the ones that we had a slight loss in, we’re still doing really well with 37.5%. So, in a nutshell, we’re very pleased with Concierge.

If you wanna sign up for free trial, you can do that for three months. You sort of test us out. What we do, because our philosophy is we’re really transparent, unlike some peers in this industry, we’re really transparent in what we do. What you get is a subscription service. You can sign up for a year or you can pay in one go or you can pay in bi-monthly installments, whatever you want, whatever you prefer. But you can try us out for three months for free. And again, the transparency is, I think, really what most of our subscribers value the most. So go to stocksdownunder.com, click the yellow button, and just sign up. That’s what I wanted to start off with, Stuart.

Stuart: So, basically, Mark, the way we’ve developed our services, I think we can show that we can make investors some serious money, generally over a 6 to 12-month time horizon. I like to say we know what stocks are valuable six months ahead. So it’s a matter for the market that they come around to our point of view, which will do over that roughly six-month time period.

Mark: Yeah. I think that’s a good way to word it. And again, we are not big risk-takers, right? So a lot of these stocks you’ll find are solid companies, most of them. We’re early stage, a lot less early stage right now, but they’ve sort of grown into our thesis. But yeah, we try to stay away from risky stocks. Target performance is 20% to 40%, and I think we’re smack in the middle with 37.5%. We’re right in the middle of that target range too, actually at the top end of that range. Stuart, you prepared a presentation on stocks to watch, stocks that we like at the moment but we’re not yet ready to buy, so I guess a good summary of that.

Stuart: Right. So here are four stocks that you should take a close look at now, don’t buy the stock right now. Just let me repeat that. Do not buy these stocks right now, beginning with the one I’m about to talk about. These are the ones we’re doing our homework on but are starting to look very interesting.
I’ll start with Freelancer, the first of those, ASX: FLN. What is Freelancer? It runs the world’s number one online services marketplace. So if you’re a freelancer in Jakarta, for example, and you wanna reach out to a global audience for your product, Freelancer is the way to do it. Mark, we’ve used Freelancer in the past to source talent for our firm.

Mark: Yeah. Correct. Next is Upwork. Upwork is more global I’d say. Freelancer is good for more local, I guess.

Stuart: Right. Market cap, roughly around $100 million. And the company’s grown to the point where it’s doing between $50 million and $60 million in revenue a year. But the period after COVID has not been kind to this company. Basically, COVID prompted a lot of people to start working from home in freelancing. As those people have gone back to regular jobs, Freelancer’s revenue hasn’t suffered too badly, but it did have a down year in 2022 and it’s loss-making.

Now, that doesn’t bother me because there’s $23 million cash as at December 2022. So this company’s got a pretty robust balance sheet that can cope with any amount of restructuring. But they implemented some pretty serious cost reductions in the second half of the year just ended. And that should put them back into profitability.

I’ve noticed Matt Barrie, who’s the CEO of this company, buying stock whenever he can, as most recently another block of trade that showed up on my screens this morning. That’s telling me that the guy who knows the company best of all is pretty optimistic about his future. So, put Freelancer on your radar screen. There’s a pretty elaborate description of the company in the result that just came out. Its time could be coming around as 2023 progresses.

And let’s talk about Coda Minerals. I sat down last week with Chris Stevens, who’s the CEO of this company to talk about its prospects. It’s amazing. Copper-cobalt deposit in South Australia called Elizabeth Creek. They started with about 250,000 tons of contained copper when Coda Minerals was spun out of an old play called Gindalbie. They’ve since quadrupled the size of that resource, and there’s more where that came from.

The company faced some challenges in terms of figuring out how to mine, and then process the old body that they had. They think they’ve cracked those puzzles now. And we’ll know a whole lot more about what that is worth when the scoping study comes out next month. Now, I’m pretty excited about the scoping study. And if it doesn’t show that Elizabeth Creek is worth orders of magnitude more than $31 million, I will be very surprised. So, for full details there, go to stocksdownunder.com and tune into the interview that I did with Chris Stevens.

Now, I better make full disclosure here, Mark, one of the reasons I like Chris Stevens is, like me, he loves jazz music, and he can actually play. He’s a bassist in a band that’s popular on the Perth jazz scene. So, if he can get his rhythm right on Coda Minerals as he does with his regular musical gigs, the shareholders will be in very good shape.

Mark: All right. Well, whenever he is in Sydney, we should get together, because as you know, I’m a drummer, so we could jam a little bit. Sounds good.

Stuart: Now, Beach Energy, that’s a company that we’ve previously talked about. The stock has not been kind to this one since the middle of last year. They peaked at about a buck-eighty, it’s now about 40 cents below that at $1.40. I’m saying investors should look carefully at this one because its time could come around again. Let me explain my thesis. Basically, it took me by surprise, and I suspect I wasn’t the only one, at how oil and gas markets responded to the shock of the war in Europe started. Suddenly, it appeared there would’ve been major shortages of energy everywhere. Well, the industry stepped up to the plate, and the price of most commodities in the hydrocarbon space has been trending back since May of last year. It doesn’t mean natural gas isn’t important, and particularly, liquified natural gas, to help countries achieve energy independence from the usual pipeline infrastructure. And Beach is part of that thing. The stock had originally been depressed by some issues on the Western flank of the Cooper Basin. They had misread the reserves there. That dropped the stock down to about a buck a share. They then went and fixed those assets.

Now, what I like at the moment is you’ve got a growth profile on production. Thylacine in the Otway Basin in South Australia produces its first gas in the next few months. The big Waitsia gas field in the Perth Basin of Western Australia, that starts shipping gas north to the LMG terminals by the end of this year. And then by about the middle of 2024, you get another field in the Otway called Enterprise. So three big fields about to start delivering. And like any good oil and gas company, they’re doing some more exploration work, in this case, in the Perth Basin, which is yielded Waitsia in West [inaudible 00:09:14.254] as the latest couple of monsters, as well as some smaller companies.

So there’s a lot of reasons to like this company. The trend is not your friend, but watch when it gets back towards a dollar, that’s when the insiders were buying post the Western Flank issues before. And that price seriously undervalues the assets that are in hand. The man you can see on the left of the screen there is Morné Engelbrecht. He’s the new CEO that stepped up in the wake of the Western Flank issues. A steady pair of hands to make sure that the shareholders can be rewarded for the investments they’ve made in some pretty serious new discoveries.

Finally, Immuron, another interview that we’ve got on stocksdownunder.com. This is with Steve Littlemore, who’s the new CEO of that company. It’s one of the best companies I’ve seen in a long while in terms of value in the life sciences sector. 2022 wasn’t very friendly to be in life science stocks, and this one is worst than most. In fact, you can virtually buy the company for free. Market cap is $17 million, and there’s more than $17 million cash on the balance sheet at the moment. So, this stock almost pays for itself at the current share price.

What are they famous for? Travelan. It’s a product for the treatment of traveler’s diarrhea. You’re flying to Bali, you wanna make sure you don’t spoil your holiday through traveler’s diarrhea. Travelan can do it. It’s a mixture of antibodies to various bad stuff sourced from bovine colostrum. It’s a platform that they’ve had many years to develop.
Under Steve’s leadership, they’re now doing serious clinical work to take this up the value curve into a more serious prescription product. And what interests me is the U.S. military interest. They want to keep their fighting men free of problems like traveler’s diarrhea when they go into combat zones that are endemic for that sort of thing. So they’re actually funding a lot of the clinical work that Immuron is doing.

So, a lot of reasons to like this company. We’ve got a real business with a small amount of revenue and some growth prospects from some of this new clinical work. So, check out the full story with the interview that I did with Steve Littlemore, again, at stocksdownunder.com. That’s four interesting stories that we’re looking at.

Mark: Yeah, you’ve been a busy bee there Stu, when it comes to interviews in the last two weeks or so. So, yeah, check out Stocks Down Under, under Video, you’ll find a whole bunch of interviews, including those companies.

Stuart: And I promise the viewers, you will not be bored.

Mark: Yeah, there’s something for everyone. There’s miners, there’s life sciences, there’s technology. One interview we actually did yesterday, we hoped to publish that today or tomorrow, was with Weebit Nano, with Coby Hanoch the CEO. And we thought we’d give our viewers an update on what’s happening at that company. Because as shareholders will know, share has performed tremendously for us in recent months. So yeah, we’ll just give you a bit of an update.

So, last week, latest news in company’s half-yearly results was… And this was sort of tucked away somewhere halfway into the report. But basically, the company confirmed that it’s working with the GlobalFoundries on a 22-nanometer fully depleted silicon insulator. And this is a big deal, right? GlobalFoundries is one of the top five foundries in the world. Weebit is working with them. And in that interview that I did with Coby, we talked a little bit about this as well, so make sure you stay tuned to the Stocks Down Under website where we’ll publish that interview as soon as we can. So that was big news. The other thing is…

Stuart: You still say that GlobalFoundries, this is the equivalent of going to the party and going home with Sophia Loren, right? We’re talking with not just any partner, but a seriously valuable partner.

Mark: Yeah, for some people, that will be Sophia Loren, for others, it would be Britney Spears, you know, if you’re slumming it, or…

Stuart: Take your pick, an attractive actress who’s actually pleasant to be with but…

Mark: Or actor, you know, depending on your preference. The Brad Pitt, I don’t know, whatever it is, it’s a big prize. But there’s a few more like that even bigger than GlobalFoundries. And basically, Weebit is talking to all of them. If you will look at the top 10, and we did this in one of our previous webinars, if you look at the top 10 foundries globally, take out the Chinese ones, basically, I think they’re talking to everyone in there. So that’s really big.

What was really interesting, and I have it on the next slide, we’ll look at that as well, but Weebit was included in the MSCI Australia Index basically yesterday, end of February. And I think the implications of that are really big because if you look at what happened… And just for people that don’t know, MSCI is basically the benchmark for a lot of investors, right? You’ve got MSCI Global or World, you’ve got North America, you’ve got Europe, you’ve got Australia. So if you’re a big fund and you want to follow that benchmark, basically what you do is you buy all the stocks in that particular index. So in this case, MSCI Australia now includes Weebit Nano. And that means as an offshore fund, if you wanna buy MSCI Australia, you have to buy Weebit Nano as well. So it’s really good for the share price as we’ve seen.

Now, what happened yesterday, and I thought… I normally don’t do this, but I sort of dove into what the trading was like at the end of the day. In the chart there, you can see in the picture there, you can see at 3:59, which is the latest regular trade of the day, the shares traded at $7.28. And then in the auction, so at the close, the match, if you will, at 4:10, the last trade was at $7.64. Now, I don’t think I’ve ever come across a difference of 5% before, so this is very uncommon, and I think it shows…

Stuart: And we assure viewers that trade was not put on by Mark Kennis at 3:59 p.m.

Mark: No. The difference is really big, right? And if you look at the number of shares traded, eight million yesterday, that’s a big number as well. And so basically what it says is, and most likely this is installs having to get in on this stock if they’re following MSCI Australia. And hopefully, maybe we’ll see some more insights come in in the next little while.

So yeah, in that chart, you can see the big volume spike yesterday. But before that even, you know, from say October when we’re still trading at $2, we’ve gone up to $7.64, so it’s a massive move. And of course, full disclosure, both Stuart and I own shares in Weebit Nano. We couldn’t be happier with this result, obviously, and we’re in it for the long haul.

So, I spoke to Coby yesterday, we did that interview. He’s in the United States now talking to foundries, IDMs, potential customers, prospects, whatever you wanna call it. On Thursday, he’s doing an investor roadshow in the U.S. So in the U.S., there are certain areas like San Francisco, Los Angeles, Boston, New York, where they’re very specialized semiconductor investors. So, Coby will have a very, very good audience for the story that he’s got to tell.

In terms of milestones, in their presentation on Monday, the roadshow presentation, you can see the updated milestones. But for us, the big one would be another contract signing by the middle of this year. So we’ll see if that happens. But so far, Weebit Nano has really lived up to all those milestones.

And if you want to learn more about Weebit Nano from a research perspective, we’ve followed this company since 2017, go to our parent company’s website, pittstreetresearcher.com, go to Weebit Nano, and you’ll find all of our research and interviews there. And stay tuned to the Stocks Down Under website because today or tomorrow we’ll publish that interview we did with Coby yesterday.

Stuart: Right. Well, well done, Mark, on continuing to make the investors aware of this magnificent opportunity.

Mark: All right, good stuff. So, like we said, we won’t be here next week. I think we’ll be here the week after. Stuart, you’ll be in New Zealand speaking at a biotech conference.

Stuart: Yes. So, I’m going to Singapore to potentially talk to listed companies up there, spend a bit of family time in Jakarta, and then I’m going to Auckland in two weeks’ time. So, we’ll figure out a way to bring you our Stocks Down Under webinar from Jakarta while we’re there, for example, as a special guest star as it were.

Mark: All right. And the Bioshares Conference? Is that BioShares by the way, Stuart?

Stuart: I’m one of the speakers at the New Zealand Bio-Tech Association’s meeting in Wellington. In fact, I’m the MC of the dinner on the middle of the night. We’re gonna have an awards ceremony for some of the legends of the New Zealand biotech industry. Gives me a chance to meet some of the emerging companies that are coming outta that country.

Mark: All right. I didn’t know you were into hip-hop, MC Stuart, that’s a new one. All right, thanks everyone for watching, and we’ll see you either next week or the week after.

Stuart: All right. See you soon.