I Think I Found a 100 Bagger - OTCM Stock Analysis

Small Cap 100 Bagger? OTC Markets (OTCM)
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OTCM Stock Analysis

Industry

OTC Markets operates the largest list of over the counter stocks in the USA. The company makes money in 3 different ways,
- Subscription fees paid by brokers to collect stock quotes and communicate.
- Subscriptions that brokers and other customers pay for market, compliance and company data.
- Subscriptions from the companies to get set up on the OTC market.

Essentially they are a coordinator of 10’s of thousands of company listings. They compete with the Nasdaq and NYSE but in the small cap world and the international listings world.

OTC Markets separates the companies on their list into 3 tiers.

Tier 1 - OTCQX

Tier 2 - OTCQB

Tier 3 - OTC Pink Sheets

Competition
Like I have mentioned earlier, they compete mostly with other exchanges. So that’s the Nasdaq, NYSE and major listing providers around the world.

So cyclical risk and any major rule changes will affect the business. That is what we have to weigh up in this investment case.
But historically, the company has performed exceptionally well and reliably.

Management

The CEO, Cromwell Coulson, holds over 36% of the company. He is a true owner operator with his net wealth tied directly to the performance of the stock price.
He has also been leading the company now for about 25 years. He turned the business into what it is today.

Opinion

So the negatives are.
- Cyclical. Honestly, I don’t think it's a big deal for such a cash flow producing subscription based business. Costs are low, and even in a downturn, it shouldn’t be a big problem. During the GFC the company performed completely fine, a slight dip, but they were never distressed.
- The rules can change. This is definitely my biggest concern. The SEC dictates a lot of what happens in the space and OTC Markets would have to adjust. It is outside of their control which I don’t like.
- No Super investors that I follow have invested. This would give me more confidence. I’m not that smart, so having an experienced, successful investor already invested would make me have a lot more confidence in my analysis.

But there are so many positives,
- Subscription, low capital business. I love recurring revenue businesses.
- Monopoly in the small cap world.
- Market cap is perfect. Lots of room to grow.
- All metrics are improving. Shown solid and reliable growth. Over decades.
- ROIC is very strong.
- The CEO is heavily invested and incentivised.

Don’t forget to subscribe so you don’t miss my future videos. Hit me up in the comments if you have an opinion about OTC Markets as I would love some feedback.

And obviously you will need to investigate a lot further if you want to invest yourself but this hopefully gets you started.

Видео I Think I Found a 100 Bagger - OTCM Stock Analysis канала Andrew Brown