For those who may have missed them

Investment Analysis Clubs Saul’s Investing Discussions
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For those who may have missed them, comments from Mekong and Daniel Sparks just now have been very useful to the discussion.

Mekong pointed out that:

“RDVT’s auditor, since 2017, has been Grant Thornton, one of the most reputable midsize audit/accounting firms on the globe. They aren’t using some rinky dink local audit firm that would bend over backwards and sign off on anything for their business. Grant Thornton has a reputation that outweighs the wants of any small client like Red Violet.”

In other words, the chance of Red Violet being a fraud are very small!!!

He also pointed out that numerous companies are headquarted in Boca Raton, with names you’d recognize including ADT, Office Depot, and Office Max.

TMF Daniel Sparks wrote:

“I also love the fact that there hasn’t been any recent insider selling despite the stock’s huge run-up”.

Hard to see that as a pump and dump.

Daniel seems to have been an investor for some time as he wrote:

“Red Violet has provided a very clear narrative detailing its fast-growing and broad-based customer base, increasing revenue from existing customers, strong sequential growth from new customers, increased adoption from large customers, and the optionality of its business model. Further, management repeatedly lives up to any optimistic commentary it provides. This is a very experienced team with deep industry knowledge – and they keep surprising to the upside for me …. Investors who want everything to sound perfect should go shopping in the $2 billion+ market cap range.”

My heartfelt thanks to both of them.

Saul

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Your welcome, Saul. What a pleasure to read your analysis!

RDVT has been a long-term holding for me for some time. You’ll also find it on my CAPS page. For investors who care to take the time to go back and read the entire first-quarter shareholder letter and the follow-up commentary in the earnings releases and capital raise (highly recommended because it doesn’t take too long to read all of these and there is a lot of great stuff), you’ll see what I mean about management delivering on everything it has said. I’d also encourage investors to go listen to RDVT’s first-ever earnings call from last quarter.

Insider buying has been quite extraordinary: https://www.insider-monitor.com/trading/cik1720116.html

Thanks,

Daniel Sparks

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Thank you Daniel and Saul. I did check Daniel’s CAPS page and looks like Daniel is the Score Leader on RDVT (https://caps.fool.com/Ticker/RDVT.aspx).

I also highly recommend reading the shareholder letter that Saul shared yesterday and the powerpoint that Saul shared today. Lots of useful information.

-Gaurav
Long a tiny starter position

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I’ve did quite a bit of research on red violet over the past two days and I didn’t like the way the company was created but otherwise found nothing to block an investment. I’m not so sure about their supposed moat. Depth of knowledge is very valuable. Creating a new language to solve a problem is not a real moat but C and UNIX are an interesting example. When AT&T decided it needed a new operating system for their digital switchboards, the coders didn’t like any of the existing languages so they wrote “C.” It was called “C” because it was based on an older language called “B.” With “C” they wrote UNIX which is still going strong decades later as are various descendants of “C.” Over the past several years I developed a Covered Call Selector which has been invaluable in my option trading. A great tool can make a big difference but I don’t know how good a moat it makes.

Insider buying has been quite extraordinary:

https://www.insider-monitor.com/trading/cik1720116.html

Insider buying in perspective (summary)


**Insider Name                      Shares  Price   Value ($)   %**
Brauser Michael (10% Owner)      471,060   6.50   3,063,435  73
Schulke Ryan (10% Owner)         115,000   5.00     575,000  18
Benz Peter (Director)             20,928   7.04     147,337   3
Dubner Derek (CEO)                19,000   6.01     114,180   3
Reilly James Patrick (President)   8,500   6.98      59,355   1
Swayman Robert (Director)          4,000   5.87      23,480   1
Maclachlan Daniel (CFO)            2,500   5.00      12,500  <1

Michael Brauser is the former Executive Chairman of red violet and Schulke Ryan is the founder and CEO of Fluent. Brauser stepped down during an SEC civil suit

red violet Executive Chairman Michael Brauser Steps Down from Board; Vice Chairman and CEO Derek Dubner Appointed Interim Chairman
September 10, 2018 06:50 AM Eastern Daylight Time

BOCA RATON, Fla.–(BUSINESS WIRE)–Red Violet, Inc. (NASDAQ: RDVT), a leading information solutions provider, today announced that Executive Chairman Michael Brauser has resigned from the red violet Board of Directors, effective immediately. The red violet Board of Directors has accepted his resignation and appointed Vice Chairman and CEO Derek Dubner interim Chairman, effective immediately.

https://www.businesswire.com/news/home/20180910005260/en/red…

The case is being settled…

SEC: Former Riot Blockchain CEO agrees to settlement in principle for alleged ‘market manipulation’

“The staff has reached agreements in principle to settle this action with Defendants Michael Brauser, John O’Rourke, and John Stetson, and their affiliated entities,” the SEC letter said.

https://www.cnbc.com/2020/01/21/former-riot-blockchain-ceo-t…

Being sued by the government is not proof of wrongdoing. My most profitable post 2000 investment was touted by a broker who had also been sued by the SEC and reached a settlement. Research the principals by all means but base your investment on the business itself.

A micro-cap is easy to manipulate and Brauser has put a lot of his money on the line. If I were to buy this stock I would keep a very close watch on further insider trading.

RDVT has no options!

What’s Required for a Stock to Trade as an Option?

Under CBOE rules, there are four criteria a publicly company must meet before options on its stock can be traded on the options exchange:

1. The underlying equity security must be listed on the NYSE, AMEX or Nasdaq.
2. The closing price must have a minimum per-share price for a majority of trading days during the three prior calendar months.
3. The company must have at least 7,000,000 publicly held shares.
4. The company must have at least 2,000 shareholders.

https://www.investopedia.com/ask/answers/04/072104.asp

This is what’s keeping me out of RDVT

Denny Schlesinger

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Hi Denny,

Thanks for your perspective. However, I will say that when I say that insider buying has been “quite extraordinary,” I mean the net buying. In other words, the fact that there is only buying and no selling despite the huge run-up in the stock price.

But you have some great points. Thank you!

Daniel

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