3 Small-Cap Laggards That Show Promise
These names have been underperformers in my portfolio, but now are on the march due to positive news.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Markets fell across the board on Tuesday when it appeared the Israel-Iran fighting was escalating, spurring the president to cut his trip to the G-7 summit in Canada a day short. As the major indexes fell, oil shot up by more than 5% on Tuesday. I am still hopeful cooler heads prevail. I am also sure that topic will get plenty of coverage today.
So, instead of focusing on the fighting, I am going to pivot to small caps for this Wednesday column -- and look at the laggards.
One of the few bright spots in my portfolio outside my energy holdings on Tuesday was around Verve Therapeutics VERV. The stock rose just over 80% as the gene editing business was purchased by drug giant Eli Lilly LLY. Even with the buyout premium I still took a slight loss on what was a small position that had been a laggard in my portfolio for quite some time.
This got me to thinking about what other laggards that are in my portfolio that have started to move up recently on positive news. Here's what I found:
Gene editing company Intellia Therapeutics, Inc. NTLA is up some 30% so far in June. This comes after a selloff in late May triggered by a trial event. One of over 350 subjects had an adverse event that required hospitalization but wasn’t fatal. The company still has a potential best of breed late-stage candidate to treat a heart condition known as transthyretin amyloid cardiomyopathy, or ATTR-CM. The disease, which can be deadly, happens when the transthyretin protein builds up in the heart and elsewhere in the body. This ATTR-CM drug could be on the market by 2027 if all goes according to schedule. Most of the company’s market cap is also represented by cash on hand. The Food and Drug Administration put out a statement yesterday that it would be examining new methods of fast-tracking new medicines, which could end up benefiting Intellia as well.
Another name I'm watching is the professional workforce and property management firm called BGSF, Inc BGSF. This name got a nice pop in trading yesterday. The company announced it was selling its professional services division for nearly $100 million, which was higher than its market cap at the time. This will reduce revenues by approximately two thirds but will extinguish all corporate debt, with significant cash remaining once that is done. The move will also simplify the company’s structure and allow management to solely focus on the higher margin property management business.
Finally, we have Blade Air Mobility BLDE that has been moving nicely higher after a rough start for shareholders in the first quarter of this year. The company operates an air-taxi business that transports clients from places like Manhattan to airports like LaGuardia. It also has an organ transport business. Earlier this month, the administration announced an electric "Vertical Takeoff and Landing" integration pilot program, in which Blade will participate. This type of flight has been a core part of the company’s vision for some time and could lower costs substantially for the industry. The company recently announced a JFK-to-Downtown Manhattan route that would be ideal for eVTOLs, Blade also has a good slug of cash on hand and was already moving rapidly to profitability as it was.
At the time of publication, Jensen was long VERV, BLDE, NTLA, BGSF
