One of my favourite lines from the VG Capital report:
TLO was put up for sale during the bankruptcy process which sparked an all-out bidding war between several very large competitors, including LexisNexis and TransUnion (TRU). After 20 straight hours of bidding, TRU won the auction with a bid of $154m (LexisNexis was about to up their bid to $180m but got timed out by the attorney overseeing the process).
I’m positive that is all completely verifiable.
I agree about having concerns with RDVT. Yes, the numbers on RDVT look impressive right now. But the question is, how long is this sustainable? It really depends on how much you trust management, right? There was a stock once discussed on here called Parateum (TEUM). It was a microcap with great numbers too and went on a phenomenal run, until it didn’t. There was a short attack on the stock and it’s now a penny stock which will either be delisted from the Nasdaq or they will have to do a reverse stock split. This reminds me of HMNY which bought MoviePass and also had great numbers and a phenomenal run, until it burst. The CEOs of TEUM and HMNY promoted themselves heavily and the way they did, some of which you can watch on YouTube, now seems like a red flag to me. And by the way, they’ve since deleted some of those videos; I wonder why?
HMNY did several reverse splits, which wiped out every single investor, and HMNY is now in bankruptcy, in case anyone doesn’t know the story. The CEO of HMNY is a serial entrepreneur who bounces between business and business, all of which have failed. He tries to hide from his past, which is getting hard to do with the internet. Serial entrepreneurs are the opposite of what most of the CEOs here, on this forum, represent. A successful serial entrepreneur is a rare exception (Ray Kroc seems to have been one, who successfully capitalized on an opportunity.) I see some of these red flag qualities in common with the CEO of RDVT. He’s got a history with various companies and has been CEO of a company that changed its name and stock ticker. That’s very different than the typical founder-led CEO discussed in this thread. Look at Phunware (PHUN) and Riot Blockchain (RIOT) for other microcaps that had explosive numbers, big runs and a collapse. Those were about blockchain, and the CEO of RDVT has dabbled in blockchain too (see DRGN, Dragonchain); is this a red flag?
I actually had my eye on RDVT, but the CEO has a checkered history. You can watch him on YouTube promoting a different company, and he reminds me of these other microcap CEOs that failed. I’d be very worried that Muddy Waters Research (Carson Block) or Citron Research (Andrew Left) will catch sight of RDVT and attack the stock. RDVT has had an absolutely phenomenal run, from $6 to $26 in about a year! Cramer would call this frothy and would be a seller here, not a buyer (say what you want about him, we’re all human, but he knew the entire market was frothy a few weeks ago, and he’s been proven right). With a stock this high, short sellers will come out like vultures if they see any sign of weakness in RDVT. That’s basically what happened to all the microcaps I’m mentioning. Incidentally, HMNY and RIOT had Florida connections, which is being pointed out as a red flag for RDVT, also located in that area.
Saul, you’ve taught us all so much. You warned us about shady Chinese companies. I feel we must at least try to offer our two cents back, in return. I understand you probably have a smaller number of positions than you feel comfortable with and want to diversify a bit? Why not look back at SQ or SHOP or PAYC or SMAR or EVBG or GH? How about ROKU or TEAM or FIVN or RNG? There are so many solid companies, many of these just had great reports, some even with accelerating numbers. There’s stocks like LVGO, HCAT and AVLR which Bert has written about. MDB is performing like it’s still got a long-term trajectory, even if it’s not the explosive numbers (accelerating numbers can’t last forever, but reliable numbers can continue; isn’t this what Tinker calls CAP? Competitive Advantage Period really seems like a valuable yet elusive metric). Heck, you can’t go wrong with MSFT or ADBE or MA or FB either. I would sleep better in any one of those for a little diversity, rather than a risky microcap (or investment in a different country with external concerns and an economy we may not know much about). But if you did want a little international exposure, there’s STNE, MELI and SE, all which have been discussed here.
As of 2018, the National Assoc of Realtors said there are 1.3 million Realtors in the US. If every one of them paid the $20/month to check out potential homebuyers, that is a total annual revenue of $312 million. Figure some smaller offices will cheat and one or two will buy subscriptions and check for the others. Drop the TAM in US real estate companies to $200 million. Nice big bump from today for Forewarn.
I was able to find some material on IDI on Glassdoor, but don’t have Glassdoor membership. “Great product, terrible company” is the 2017 review. 2019 reviews were more complimentary.
A 2017 article on a private detective site showed about 10% of 400 surveyed use IDI. Bloomberg has a 2016 story, but again, no membership.
At work. Will look more later.
Don’t shoot the messenger! The work that was done in the first place to alert us of this Company was as usual impressive but I seem to recall clearly that Saul said this company COULD be a scam and to tread carefully.
I did and made today just over 8% and for that Saul I am very grateful. Less of a trader over the years but with what’s been going on recently I will take it and run for the time being. I mean 8% in a day… yes please! Oh do we all have short memories!
Again, thx Saul
Hi Saul,
I have to say when I red your end of portfolio review I had a sneaking suspicion that your unnamed starter position was in RDVT. Glad to hear you also find merits in the business model and the company itself. Looking forward to seeing RDVT discussed more on this board!
Tommy
Why would anyone invest in this company making a measly $5-7 million per quarter with all the shenanigans accompanying it???
Practically everyone is doing 40-60% annual returns in your portfolios with companies doing $100-200 million per quarter.
Why does anyone need this element of risk and unknown when your results without it are so stellar?
My skepticism meter went up when I saw the company headquartered in Boca Raton, FLA.
I said it was a tiny company and that it could turn out to be a scam. On the other hand I’m willing to risk 1.5% on it not being one. We’ll see.
Saul
And who’s the name with the second most shares of the stock?
David Dubner. Just looked him up, he’s a real beauty. Attached is a class action suit against another company he and his colleague, none other then Michael Brauser had that went bankrupt in Boca Raton.
These guys are con artists and getting away with it time and time again. Helps to live in Florida where the state or the feds can’t go after your property.
http://securities.stanford.edu/filings-documents/1056/II00_0…
TMB
TMB,
These guys are con artists and getting away with it time and time again. Helps to live in Florida where the state or the feds can’t go after your property.
Is that why so many scam/shell companies are in Florida? Why Boca Raton precisely? Just where they gather to scam?
I looked at Pareteum, it too is based in Boca Raton FL. That one had a pretty convincing analysis that revealed it as a scam. Pareteum said they signed a big deal with some African telephone company. A Google Maps revealed the address for the telephone company was just some empty 1 room shack.
I said it was a tiny company and that it could turn out to be a scam. On the other hand I’m willing to risk 1.5% on it not being one. We’ll see.
Thats why I always try to exit positions, prior to the SEC entering. Seriously though, I put 2%. Why not, if it works, it will be bags.
Just wanted to address a few of the concerns brought up so far.
One big concerns seems to be the business location: Boca Raton, FL:
It should be noted that there are several logical reasons why RDVT would chose FL as their HQ.
First, Hank Asher (you’ll know the name if you have looked into RDVT), grew up in South Florida. Asher founded Seisant and TLO in Florida (both of which were acquired).
For good measure, current CEO fo RDVT, Derek Dubner, earned his JD from Florida State University. Also, the current CFO of RDVT, Dan MacLachlan earned his degree from Florida Gulf Coast University. These guys worked with Asher for years up until his death.
It makes sense that these guys are all from FL and would chose to HQ there
Second major concern seems to be Michael Brauser:
I won’t spend anytime attempting to defend the character of Mr. Brauser, as I don’t know him at all personally.
Also, I think that if you have concerns about Brauser who owns about 10% of RDVT, then you should necessarily have concerns about billionaire Phillip Frost, who owns about 21% of RDVT, and was named as an accomplice to Brauser.
Could they be puppeteering this company and waiting for just the right moment to pull the rug out? Sure, but I doubt it. Risking getting your hand caught in the cookie jar twice would be very foolish, especially when they’re already on the SEC’s radar. Also the businesses that Brauser/Frost were accused of pumping and dumping were biotech companies/blockchain, not companies with proven merits (remember this management team has exited 2 businesses with this exact same model). Beyond that, Barry Honig, who was named as the ring leader in the pump and dump schemes with Brauser and Frost, has no affiliation with RDVT. Brauser has also stepped down from the board at RDVT, but still works with the company in a consultative role.
Do your own due diligence.
So just get out before the SEC comes knocking. Very interesting investment strategy. No “socially responsible” criteria there.
All I can say is, in light of this new information, I will not be buying, not that I was going to before. I hadn’t clarified this wasn’t just a company similar to all those “check the background on ANYONE” sites with s bunch of buzzwords and slick talk to make it sound like they were solving world problems with big data. Pulling from credit bureau and state/local arrest records is not solving “big data” problems.
Seriously it’s hard enough as it is trying to avoid the next NTNX as it is let alone knowingly holding a ticking time bomb.
I will also add that one of the enticing things about PRTM was its downright cheap stock price, a similar trait many other sketchy companies always shared.
So as long as these concerns linger, I would not expect RDVT to trade at high price multiple valuations.
Doesn’t take more than 6 seconds to understand that Duma and TMB’s posts make complete sense. Even if, by some chance (and chance it is) this company is solid, why take that sort of risk given the opportunities out there?
Each to their own. In my mind, if you have to go here to improve your portfolio we are either at the top and nothing seems real great to invest in any more, or your portfolio just really is not very good to begin with.
A lot of money can be made in a stock like this as long as your not the last fool caught in it before the crash. Companies like this, I can think of maybe 1 or 2 that ended up being legitimate, and maybe one that was legitimate and successful in the end. In the interim you cold look like a genius and ride the frenzy into it.
Hey, if you get rich on it, let us know in a few years.
Tinker
From 12x’s description, you can manage to recreate the product yourself through use of Alteryx. OMG! They are going to disrupt Alteryx!!!
And if you believed that…god help you all.
Yes, Alteryx can exactly recreate this product with a citizen data scientist and a week or two of time. Don’t even need a real data scientist to pull that off. Seriously.
So be it, each to their own. I don’t know Saul’s involvement in this, I just heard he added. I trust Saul, so maybe there is something more to it. I just don’t see the need to invest any more time into it givens what 12x has also added, plus experience combined with intelligence. If you think you can play the momentum (which this board is not, but why not) people have gotten rich by not being the last person out.
For whatever it is worth.
Tinker
TommyTripod writes…
Also the businesses that Brauser/Frost were accused of pumping and dumping were biotech companies/blockchain, not companies with proven merits (remember this management team has exited 2 businesses with this exact same model). Beyond that, Barry Honig, who was named as the ring leader in the pump and dump schemes with Brauser and Frost, has no affiliation with RDVT. Brauser has also stepped down from the board at RDVT, but still works with the company in a consultative role.<\i>
This is not reassuring. Brauser is a dealbreaker. I’m w TMB - this stinks to high heaven. Like attracts like. No way I’d trust a word this crew says.
Pardon html typo - bottom part of post above is mine.
An investigative journalist, Teri Buhl who has written for Barron’s is extremely critical of Brauser and recently Tweeted that he is brazen enough to pump-n-dump while under investigation. From an article she wrote…
http://www.teribuhl.com/2020/01/16/more-charges-coming-for-b…
But a glimpse of who the SEC is focusing on can be seen in a recent subpoena sent to Brauser’s son Ben Brauser. The SEC list 33 companies, which includes Red Violet ($RDVT) and Fluent ($FLNT), that it wants private documented information on. Red Violet and Flint have both seen extreme swings in their stock price in the last year. Ben Brauser filed a motion in South Florid Federal Court to squash the subpoena in November. This was the first time the investing public learned Ben was also working as a securities lawyer for his dad Michael since 2010. Ben, who invested in some of the stocks at the heart of the SEC case, is now trying to say he doesn’t have to turn over everything the SEC is demanding, which includes trading records and emails to stock promoters because he conveniently has attorney client privilege. The lead SEC attorney on the case, Nancy Brown, has fought back and filed a five page letter to the judge arguing why Ben Brauser shouldn’t have attorney client privilege and could have aided his father in his scheme.
Tinker,
From 12x’s description, you can manage to recreate the product yourself through use of Alteryx. OMG! They are going to disrupt Alteryx!!!
Funny, I had the same thought, which is why I said moat here may not be sustainable…
I had 1% in RDVT after tommy discussed it on the board a few weeks ago. After today’s bump and discussion of uncertainty I was able to sell with a 10% gain. Took those funds and moved them to DDOG.
Still keeping them on the watch list for the short term. Quarterly earnings coming this week on Thursday. If it gets under $24 in the next two days, I may look at adding a new position in it at 5%, taking the funds from my cash reserves and hope the earnings report brings another 10% gain.
Just saw that the one year forecast is $36.80 and five year $94.66 so I see the growth potential that caught Saul’s attention for a 1% position of his portfolio as it sits at $26.00 after hours.