Singular Research Director’s Letter : March 2017

A Theme Based Market Advance

As the market attempts to gauge the winners and losers based on policy changes from the new US administration, there have been pockets of euphoric market moves, primarily in larger cap names. The aggressive agenda of the new administration leads to good headline material, but the slow grind-it-out process of enacting new legislation may cause some of the recent gains to be suspect in the months ahead. The US equity market is generally positive on the pro-business stance in Washington, however, some of the main themes may play out with fits and starts. That being said, there will be investment opportunities in many companies that may benefit from higher infrastructure spending, lower taxes, lower regulations, a changing healthcare landscape, and higher military spending. Some of these headline themes may take more time to develop. Overall, we remain bullish on the prospects for the small cap arena.

For the top performing companies in February on the Singular Research coverage list, a common theme is current and anticipated strong revenue growth. Salem Broadcasting (SALM) was the strongest performer in February. The company operates radio, print and internet properties targeting a conservative-minded audience, and the stock has been on a steady rise after early November lows. Kulicke & Soffa designs and semiconductor, LED, and electronic assembly equipment. Much stronger than expected equipment sales drove the better than expected quarter. Gray Television Networks (GTN) owns television stations and digital assets in many US markets. GTN has been reporting strong revenue growth and the stock has been on a rebound since the November lows. Iridex (IRIX) manufactures laser-based medical equipment and supplies for the ophthalmology market. New products are driving revenues. Stealthgass (GASS) provides seaborne transportation for LPG. GASS has responded from its lows and the company reported an uptick in contract rates for its vessels. There are very few industry builds coming online in the next two years which will likely lead to higher dayrates.

The worst performing group of the Singular coverage list during February have several hidden gems that we anticipate will perform well in the next year. The worst performing stock of the coverage list, Aceto (ACET), has been correcting for a few months, but our analyst perceives strong EPS growth in the next 18 months.  VASCO Data Security (VDSI) is transitioning to be a software company, and outperformed recently reduced expectations. . CTRP.com (CTRP) was down as a short. The stock has moved up to the top of the trading range, and we expect weak performance (positive as a short). NV 5 Global (NVEE) provides technical engineering and consulting for infrastructure and construction markets. The stock has been digesting recent strong gains and our analyst expects a very strong 2017. ClearOne (CLRO) provides audio/video conferencing tools for Fortune 500 companies. The company has developed new products that are expected to drive growth in 2017.

We initiated coverage on two new companies in February. General Finance (GFN) with a BUY rating. GFN is a specialty rental services company with portable storage, modular space and liquid containment solutions. The Asian fleet, primarily in Australia, has a very high utilization rate while the utilization rate in the US fleet has declined due to the slump in the oil & gas industry. Our analyst expects improvements in the US from general economic growth and any uptick in oil & gas will drive EPS growth. We initiated coverage on New York Times (NYT) with a SELL rating. NYT publishes the New York Times and has had challenges in the digital market where others dominate. Ad spending with newspapers continues to decline, and NYT is saddled with high unfunded pension costs.

We continue to work on new ideas and plan to launch coverage in the coming weeks on one or several new names. At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We thank our clients for your support of independent equity research.

Singular Research Director’s Letter : February 2017

A New Year Brings Consolidation

The post-election rally took a breather in January, and in the process the large cap stocks outperformed. Does this foretell what we can expect for the year? Will the January effect work again in 2017? We anticipate an up year for the equity markets in 2017, but we expect the nature of it will likely favor small cap names which is different from what occurred in January. After a strong Q4 performance it is normal for small cap names to trail during consolidation phases. We anticipate any fiscal stimulus from lower taxes or infrastructure building will support domestic companies which typically means small caps.

For the companies on the Singular Research coverage list, most of the top performing group in January have strong fundamental outlooks. NV 5 Global (NVEE) was the strongest performer in January after digesting earlier gains in December. NVEE provides technical engineering and consulting for infrastructure and construction markets. Our analyst expect a very strong 2017. Seabridge Gold (SA) released two very favorable reports critical to mineral development. Both the Preliminary Feasibility Study and a Preliminary Economics Assessment demonstrated improved project economics on its mining assets.  Supreme Industries (STS) manufactures specialty commercial vehicles has been performing well after the October low. Our analyst indicates the company is well positioned to outpace its industry. Stealthgass (GASS) provides seaborne transportation for LPG. GASS has responded from its lows and the company reported an uptick in contract rates for its vessels. There are very few industry builds coming online in the next two years which will likely lead to higher dayrates. Nova Measuring Instruments (NVMI) develops and markets process control metrology equipment used in the manufacture of high end integrated circuits. The company expects the strong demand from foundries to continue.

The worst performing group of the Singular coverage list during January have several hidden gems that we anticipate will perform well in the next year. The worst performing stock of the coverage list, Amyris (AMRS) was a new initiation for Singular in September, and the stock performed exceptionally well in September – October. The company has several products in the pipeline with favorable long-term implications and our analyst remains very bullish on AMRS. Century Casinos (CNTY) has been performing well in the last few months and our analyst forecasts strong EPS growth in 2017. Aceto (ACET) has been correcting for a few months, but our analyst perceives strong EPS growth in the next 18 months. Trecora Resources (TREC) performed poorly driven by weakness in the mining operations. Our analyst perceives strong operating fundamentals in the petroleum business. CTRP.com (CTRP) was down as a short. The stock has been in a trading range in the past year, and we expect the breakout out of this range to be to the downside.

We are currently working on several new ideas and plan to launch coverage in the coming weeks on one or several new names. At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We thank our clients for your support of independent equity research.

Singular Research Director’s Letter : January 2017

Post-Election Equity Market Euphoria Continues

The two month equity market rally began to take a breather when the Fed raised interest rates in December. We anticipate several more tightening moves by the Fed in 2017, driven by an uptick in the pace of economic growth. In closing out 2016, manufacturing activity and construction spending metrics have shown surprising strength – we view this as further confirmation the US economy does not need any more monetary stimulus to be self-sustaining. Expectations of a more favorable business environment from the incoming administration are adding support to the recent rally, in our opinion. We anticipate business investment and infrastructure spending to increase in 2017. The combination of these events points to continued bullishness in the US equity markets over the intermediate term. Small and micro cap indexes have begun to outperform the broader equity market in the past few months after a few years of underperformance. We expect this trend to continue through 2017. Our proprietary market overview aggregate, the MMI, has moved into neutral territory after the recent equity market run.

For the companies on the Singular Research coverage list, most of the top performing group in December reported a Q3 that was above expectations, and some of the names responded strongly after a few months of rather weak performance. Harvard Bioscience (HBIO) was the strongest performer in December after a weak November. HBIO develops and markets scientific equipment and consumables that are used in medical research, with strong brand name recognition in the industry. Emergent BioSolutions (EBS) reported much better than expected revenues and earnings, and the stock has rebounded in December after a weak November. Century Casinos (CNTY) has been performing well in the last few months after languishing for several months, and our analyst forecasts strong EPS growth in 2017. A-Mark Precious Metals (AMRK) is rebounding after lackluster performance for a few months, and the company is positioned to benefit from a healthier environment for small to mid-sized companies in 2017. Acme United (ACU) reported a very strong Q3.

The worst performing group of the Singular coverage list during December have several hidden gems that we anticipate will perform well in the next year. The worst performing stock of the coverage list, AMRS, was a new initiation for Singular in September, and the stock performed exceptionally well in October. The company has several products in the pipeline with favorable long-term implications and our analyst remains very bullish on AMRS. SA released two very favorable reports critical to mineral development. Both the Preliminary Feasibility Study and a Preliminary Economics Assessment demonstrated improved project economics on its mining assets. IRIX had a weaker than expected Q3 as the company invests in its production capacity and marketing which our analysts expects will drive margin expansion in 2017. NVEE corrected after a strong November and our analyst expects strong revenue and earnings growth in 2017. LAKE beat our analyst’s expectations in Q3, and is anticipated to have strong earnings growth driven by double digit revenue growth and margin expansion in 2017.

We initiated coverage of two companies in December, Black Hills Corp (BKH) and Daktronics (DAKT). BKH is an electric and natural gas utility company covering several states including Colorado, Wyoming, Nebraska, Iowa and Arkansas, among others. The company is a low cost producer and is developing renewable energy sites. DAKT is the leading supplier of large electronic scoreboards with commercial and live event markets driving over 60% of revenues. Margins are expanding as revenues grow in the upper single digit range.

At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We are working on several new names that we anticipate coverage will be launched in the coming weeks. We thank our clients for your support of independent equity research. And we wish you and your families the best for 2017.

Singular Research Director’s Letter : December 2016

December 2016 Post-Election Euphoria

 

Following a weak October, the US equity markets roared back to life after the US presidential elections. What had previously been viewed as uncertainties from a potential Trump administration during the campaign season turned into a vote of confidence for an administration that is more business friendly. It’s not hard for equity investors to favor lower corporate and capital gain taxes along with a simpler personal income tax code. But are more favorable tax rates enough for a bull rally to continue? We believe there is more to the recent equity rally. Campaign rhetoric about the current state of the economy from the president-elect was not accurate, in our opinion. The US continues to lead the world in this economic expansion – employment metrics, retail sales, and the ISM data all describe the healthiest economy since the Great Recession. Adding fiscal stimulus in the next few years from infrastructure spending and military budgets will juice up this expansion. Oh, and that potential for higher interest rates – it’s still here. We expect the first of several tightening moves by the Fed in the next year to occur quite soon. That may stall the rally, but only temporarily. Small and micro cap stocks are rebounding with a vengeance after underperforming the broader indexes for a few years. Our takeaway is the US economy and US equity markets can weather Fed tightening during 2017, particularly when it occurs when confidence is high for lower tax rates and increasing fiscal stimulus.

For the companies on the Singular Research coverage list, most of the top performing group in November reported a Q3 that was above expectations, and some of the names responded strongly after a few months of rather weak performance. State National Companies (SNC) reported a very impressive Q3, with strong revenues and good expense controls. The company is valued at a significant discount to the industry, despite its unique and favorable business lines. NV5 Global (NVEE) rebounded strongly after a few weak months. Our analyst forecasts strong revenue and earnings growth in 2017. Encore Wire (WIRE) also rebounded strongly after a few weak months and a better than expected Q3. Trecora Resources (TREC) had a weaker than expected quarter but it was mainly driven by the mining investments, and the petrochemicals business rebounded from Q2 weakness. Kulicke & Soffa (KLIC) performed well after another positive earnings surprise.

The worst performing group of the Singular coverage list during November have several hidden gems that we anticipate will perform well in the next year. The worst performing stock of the coverage list, AMRS, was a new initiation for Singular in September, and the stock performed exceptionally well in October. The company has several products in the pipeline with favorable long-term implications and our analyst remains very bullish on AMRS. SA released two very favorable reports critical to mineral development. Both the Preliminary Feasibility Study and a Preliminary Economics Assessment demonstrated improved project economics on its mining assets. HBIO was a new initiation in November, and the company has met earnings expectations. CTRP was down as a short. The stock has been weak and the market rebound caused the stock to stall in its decline. EBS reported much better than expected revenues and earnings, and the stock has rebounded after month end.

We initiated coverage of Harvard Bioscience (HBIO) in November. HBIO develops and markets scientific equipment and consumables that are used in medical research. The company’s products have strong brand name recognition in the industry, and the company is well positioned to benefit from planned increases in NIH spending. New products and recent acquisitions are expected to support revenue growth while improvements in operational efficiencies, including implementation of an ERP system, are anticipated to support margins.

At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We are working on several new names that we anticipate coverage will be launched very soon. We thank our clients for your support of independent equity research. And we wish you and your families the best during this Holiday Season.

Sincerely,
Singular Research

Singular Research Director’s Letter: November 2016

The Presidential Election Will End, But Will Washington Change?

The US equity markets were weak in October even as economic metrics convey a US economy that continues to grow slowly and it may be picking up some momentum. Listening to some of the presidential election rhetoric may cause one to believe the US economy is headed for a decline, but the economic metrics just do not support such commentary. Concerns over the impact of rising interest rates appear to be driving the recent equity market weakness – we fully expect the Fed to notch up interest rates by year end. The US economy can bear this, but equity markets may become choppier in the short-term. Both presidential candidates have mentioned the importance of infrastructure oriented spending. Such a fiscal stimulus is welcome, in our opinion, since it has been relatively absent since the stimulus spending that was needed in the wake of The Great Recession. We believe economic growth would receive a boost for a few years with such a move, which would also justify further interest rate increases. In the long term, greater economic growth and higher interest rates puts the Fed in a better position by revitalizing its monetary levers. But will congress approve of infrastructure spending? Can the two-party rhetoric and positioning get much worse? We certainly hope that regardless of the outcome of the elections, Washington DC can go through a phase of reconciliation and move towards more compromise as opposed to inflexible positioning. A non-functioning congress does not support US economic growth.

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For the companies on the Singular Research coverage list, several in the top performing group were either new initiations, or had strong quarterly reports. Amyris (AMRS) has been the strongest performer since our initiation in September. Our analyst is expecting very strong revenue growth from the new products including cosmetic ingredients and performance polymers for tires. The AMRS product pipeline is developed through partnerships with future customers. Newtek Business Services (NEWT) has seen improving results and made an acquisition recently that our analyst expects will support dividend growth. Ctrp.com (CTRP) was up as a short. China’s slowing growth and reports on excesses in real estate and monetary policy are weighing on the lofty valuation. Acme United (ACU) had a strong earnings beat in Q3:16 driven by strong margins. Stamps.com (STMP) reported a strong revenue and earnings beat in Q2.

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The worst performing group of the Singular coverage list during October includes a few companies that have lowered guidance. The worst performing stock of the coverage list, STS, reported a very strong Q3, above our analyst’s expectations, but guidance was weaker than anticipated. VDSI lowered guidance due to higher deferred revenue from European banks. EBS has been volatile as the stock is carving out a bottom, and appears very oversold. GTN reported earnings below our analyst expectation in Q2 but exhibited good cost controls, and is a likely benefactor of increased advertising revenues in Q3. HAYN has been experiencing pricing pressures.

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At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We recently launched coverage on several companies in the past few months, while dropping coverage on others. We thank our clients for your support of independent equity research.

Singular Research Director’s Letter: October 2016

What Does the Equity Market Tell us About the Presidential Election?

 

The equity markets took a swoon in early September, with a quick recovery right after the first presidential debate. Does this tell us something about how the equity market is voting? In a most unusual presidential election season that focuses on blaming the opponent for being “un-presidential,” one may easily make varying interpretations on how the equity market is voting. One thing is for certain, equity markets do not like uncertainty. What we perceive as certain is the steady pace of slow economic growth. The flow of econometric data describe an economy that appears to be picking up steam at times only to portray slow steady growth in the following months. Labor stats were very strong in June and July only to demonstrate slower growth in August and September. The forward-looking ISM Manufacturing Indexes took a surprisingly sharp decline in July, only to recover above expectations in August (latest available). The ISM Non-Manufacturing Index, representing a larger component of US GDP, was well above expectations in September after a weaker August. A mixed bag of econometric data is what describes our slow growth economy. We expect this to continue with a propensity to push the economic growth rate higher in the coming quarters. For this reason we still anticipate the Fed will raise interest rates by the end of the year.

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For the companies on the Singular Research coverage list, several in the top performing group were either new initiations, or rebounding from being oversold. Amyris (AMRS) was the strongest performer in September and was a new initiation.  Our analyst is expecting very strong revenue growth from the new products including cosmetic ingredients and performance polymers for tires. The AMRS product pipeline is developed through partnerships with future customers. EBS rebounded from a tough Q2 that had several cross currents. Supreme Industries (STS) is a new initiation that is undergoing strong revenue growth and expanding margins in serving the truck manufacturing market. Century Casinos (CNTY) had a tough Q2 but is executing on its growth strategy. INTL FCStone (INTL) reported strong operating profit which drove the large earnings beat in Q2.

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The worst performing group of the Singular coverage list during September has several that missed Q2 estimates but also have good performance potential in the coming quarters. The worst performing stock of the coverage list, IGXT, was a very strong performer in August, and has several new products that will likely come to market in the next 24 months. GTN reported earnings below our analyst expectation in Q2 but exhibited good cost controls, and is a likely benefactor of increased advertising revenues in Q3. MGIC reported Q2 that was below analyst’s expectations. GDDY missed EPS expectations, and as a short this can typically drive outperformance. Wall Street analysts are supporting the company driven by the potential for investment banking business, in our opinion. Our analyst anticipates significant dilution in the coming year as the majority holders, which have several inherent conflicts of interests with common shareholders, sell stock while the valuation is at lofty levels that the fundamentals do not support. SALM beat earnings expectations but slow revenue growth in Broadcast during the election year was disappointing.

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At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We recently launched coverage on three new names in September, while dropping coverage on others. We thank our clients for your support of independent equity research.

The 11th Annual Singular Research Conference, the Best of the Uncovered’s, was held in Los Angeles in late September. Our focus on quality companies with attention on 1-on-1 meetings for corporate management and institutional investors was demonstrated. Our conferences are not for the masses, our focus is on serving our institutional clients, and feedback from the conference is very positive. If you missed the conference or missed meeting one of the presenting companies, please contact your Singular Research representative for information. Many of the presentations were recorded.

Singular Research Director’s Letter: August 2016

Strong Q2 Earnings Rejuvenates Equity Markets

After focusing on the potential negative impact of Brexit in June, the equity markets focus shifted to the Q2 earnings season and political conventions. Low expectations on Q2 earnings set the equity markets up for a positive outcome with the predominance of earnings beats. And Q3 is now looking to be the first quarter for aggregate annual earnings growth in over a year. The earnings view into 2017 is also rosy, buoyed by an improved outlook for energy and a peak in currency headwinds. Future concerns may arise over Fed tightening, but we anticipate this will occur after the US election. The political convention season, which is usually filled with patriotic optimism, albeit political, has taken on a different tone with such unique and different presidential candidates. But the equity markets are voting that both candidates are either an improvement or will not derail the current expansion.

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For the companies on the Singular Research coverage list, Emergent BioSolutions (EBS) and Haynes International (HAYN) were the strongest performers in July. Both companies rebounded from deeply oversold territory, and our analysts maintain Buy ratings on these two stocks. ACU had a strong Q2 report with revenues and earnings above expectations. ACET has been beating estimates for several quarters and is finally being rewarded with higher valuations. LAKE has had very strong fundamental performance in its turnaround, and the company announced a stock re-purchase recently.

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Most of the stocks in the worst performing group of the Singular coverage list during July had good fundamental performance and are creating good buying opportunities in our opinion. The two worst performing stocks, STMP and GTN, both reported Q2 after the end of July, and both had strong fundamental reports and their stock prices have responded. SA was weak on an equity raise, but we still view the company as the most attractive acquisition or partner candidate in the gold mining industry. ANIK reported an exceptionally strong Q2, but the stock had also performed well prior to the earnings release. CTRP was down as a Short recommendation, and we still view the company as over-loved by Wall Street analysts that display no discernment that the company’s valuation is several years ahead of itself, and is susceptible in any market weakness.

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At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We are tracking several names that we anticipate to launch coverage. We thank our clients for your support of independent equity research.

We remind our readers that the 11th Annual Singular Research Conference, the Best of the Uncovered’s, is in September. We anticipate a number of interesting and relatively unknown companies to present. Please plan to attend this insight-packed one-day event in Los Angeles. There is more information on the Singular Research website, or contact your Singular Research representative for details. We look forward to seeing you in Los Angeles on September 22, 2016.

Sincerely,
Singular Research

Singular Research Director’s Letter: July 2016

Brexit Vote Drives Volatility

The changing perception over the Brexit vote drove volatility in the small cap indexes: the Russel 2000   initially increased 3% in the first week of June, then declined 8% and finally rebounded 6% from the monthly lows. Without clear trends, equity markets have been victim to changing perceptions. We anticipate more volatility in the coming months due to extrapolative interpretations of the Brexit vote, and uncertainty over the US presidential election. And volatility can create opportunities, which we perceive in EBS and GASS now. The bar for earnings overall is low for the upcoming earnings reporting season. Low fuel prices and the expanding labor force will continue to support US growth and we do anticipate further Fed tightening this year.

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For the companies on the Singular Research coverage list, Harte-Hanks (HHS) was the strongest performer in June. The company rebounded from oversold conditions after a weaker than expected first quarter. Our analyst has lowered expectations but still highlights strong appreciation potential in the next year. SA has benefited from the increased interest in gold, and the company has been increasing its known gold reserves after drilling programs during the past year. ANIK is a market leader in visco-supplementation for osteoarthritis patients. Our analyst expects Monovisc will continue to take market share, and new products in the coming years will support additional growth. HAYN is rebounding from deep oversold conditions in May. CTRP is overly-loved by Wall Street, even as the company continues to avoid directly answering most analyst’s questions on the quarterly conference calls. The company has a ridiculously high valuation, has lowered expectations, and has huge integration issues with recent acquisitions.

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Most of the stocks in the worst performing group of the Singular coverage list during June are creating good buying opportunities. Some have had weak quarterly reports but others have not and represent significant opportunities. EBS has good fundamental performance but a recent Biothrax order was less than some had expected. Our analyst believes the stock price reaction is overdone.  GASS is another company that is oversold. The company is a leader in the LNG delivery market in Asia. We have dropped coverage of REED. GTN had strong revenue growth in Q1 and is positioned to benefit from the increasing advertising this year due to the Olympics and the presidential election. CPS reported a strong Q1 above expectations but the stock declined after the Brexit vote.

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At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We are tracking several names that we anticipate to launch coverage. We thank our clients for your support of independent equity research.

 

Singular Research Director’s Letter: June 2016

Small Caps Improve But Still Receive Little Respect

Small cap indexes continue to underperform on both a YTD and LTM basis. Concerns over rising interest rates suddenly abated for the short term after weaker than expected GDP and labor reports. The consumer sectors continue to be the drivers for economic growth. We anticipate the concerns of higher interest rates to return soon. The equity market now faces election year uncertainty and the summer doldrums.

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The performance of recent initiations YTD are up an average of 10.8%, significantly above the small cap and broader market indexes. This points to the benefit of tracking changes to the Singular Research coverage list.

For the companies on the Singular Research coverage list, IRIDEX Corp. (IRIX) was the strongest performer in May. The company develops and markets laser-based medical equipment primarily in the ophthalmic space. A new proprietary product and recurring sales of disposable components drove the strong operating results. Management increased its guidance. GASS owns ocean vessels that ship LPG and the industry is emerging out of a cyclical trough. KLIC, EBS and CPS all had strong quarterly reports that included better than expected revenues and/or earnings. The earnings estimate for KLIC was increased significantly.

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The worst performing group of companies from the Singular list during May all reported weak quarters. HHS has reduced its dividend, but our analyst expects the turnaround to be completed this year. REED had a decent quarter, but earnings were below expectations. REED is expanding its distribution, which we expect will lead to better performance in the coming quarters. HAYN is streamlining its distribution business. AMRK had a healthy increase in volumes which attests to the company’s strong market position, but precious metal pricing was weak. SALM was a strong performer in recent months, and is well positioned to benefit from the increased media expenditures that result from the election year.

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At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We are tracking several names that we anticipate to launch coverage. Singular Research sponsored its first conference in San Francisco on June 9 and many interesting companies presented. We thank our clients for your support of independent equity research.

Singular Research Director’s Letter: May 2016

Small Caps Improve But Still Receive Little Respect

Small cap indexes outpaced the broader market in April but still trail on a YTD basis. There has been a stealth bear market within the small cap arena with the average performance of all stocks with a market cap of under $1 billion in the US down 32.3% in the LTM period. This clearly defines a bear market, yet the Russell 2000 is only down 5.6% in the same time period.

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China weakness still spooks the equity market, but domestically, US employment and housing are the economic driving factors.  Concerns remain over when the next Fed interest rate hike will occur.

For the companies on the Singular Research coverage list, Salem Communications (SALM) was the strongest performer. The company operates radio, print and internet media properties that address conservative markets. The presidential election year tends to increase ad sales, the company has committed to reducing leverage, and the stock was far oversold in early 2016. Both SA and TREC have rebounded from early 2016 lows that brought many stocks in the industrial sector well below fair valuation. TREC had a strong contribution from its mine ownership, and SA announced higher reserves after additional drilling. VDSI margins improved in Q1, and IRIX increased its guidance.

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In our worst performing list for April, three companies had weaker than expected Q1 reports, while two are fundamentally strong and the price weakness creates immediate opportunities. Topping our worst performers were LAKE and HHS, both of which had company specific negative news. LAKE is impacted by weakness in energy, and HHS decided to discontinue its dividend in its restructuring process, which is anticipated to be complete in 2016. AVID also missed our estimate. STMP is well positioned, and we believe the stock weakness offers a great buying opportunity.  FLXS is beating our expectations.

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At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We are tracking several names that we anticipate to launch coverage. Singular Research is sponsoring its first conference in San Francisco on June 9 with many interesting companies presenting. We invite those interested in under-covered small cap companies to attend. We thank our clients for your support of independent equity research.