How One Investor Found a Home Run Stock, Part III

Below is Littlefish's addendum to his recollection of how he found Mexco Energy (MXC):

LOL, the fun part was after doing some DD on it after that time period. I do recall early on I felt pretty good about the initial wave of DD and started whooping it up in the study room when I knew I ahd something good (kinda felt like AYSI but I wasn't real confident on the Tarrant Cty wells yet).

My wife wondered what was up when I had all the commotion going on. It was weird though, I felt rather sure it was an easy 50% gainer and told my wife so. I also told her it would take some patience or a little luck to get a lot.

So I waited for I think several weeks on the bid and attacking the ask whenever more than a few shares came up available. I built a moderate position but never got the big fat chunk I wanted cuz it never sold down and the volume was mostly anemic.

There were I think 3 times though where the MMs or someone traded thousands of shares BETWEEN the bid and ask (maybe $4.2-$4.35) and I was away from the computer each time AND was on the friggin' bid EACH TIME as I recall (the trades happened over maybe 3-5 minutes' time each and seemed to happen around 8-10:30 AM Pacific on difft days with the trades mostly 1 penny above the bid and one penny under the ask so kinda weird).

After it happened the first time, I made sure the next day I sat vigilantly in front of the screen during that time.

But it was a waste of time after a couple days and had other stuff to do so sure enough a few days later it happened that 2nd time. When I went in and saw the volume I felt like swearing LOL. I was pissed that someone was getting a few thou shares in a few minutes when I was getting that many over maybe a week or so on a light week. So I would up the bid and sit all day getting maybe 200-500 shares. Sometimes.

Whenever I'd see a retail investor put in an order at the ask, say maybe 500 or 1,200 shares I grabbed fast. When my position was OK, I got my daughter in on the act chanting "Let's Go Mexco" when it went up. Man, we were dancing around a lot for a little while there LOL. She's 5 years old.

After getting my position about half full I mentioned it on I-Hub. Then waited thinking some people would start getting in. But no one did. I even posted on the VMC board 'hey guys I see 1,000 shares (or whatever it was) that have been sitting on the ask for the last hour or so (I htink it was around $4.5 or so), anyone want them?' or that was the gist of my post. No one grabbed them for awhile. So then I ate them up myself before the day ended.

Then after awhile with time it rather suddenly broke out to the upside so I sold a little. Then it pulled back a bit os I grabbed them back cuz I still ahd less than the position I wanted.
Then somewhere in there a PR announced the flow rates on the other 2 wells and I went ape sh#% when KiK posted the PR. I immediately started buying again and even drove it up a little.

Then eventually the whole market fell in love with micro energy plays and the thing took off way above anything I (or probably anyone) thought it would do. It was fun but way excesive

Anyhow, I got work to do now.

Oh ya, It;'s

'A NEW HIGH FOR AYSI!" in the house now:) Although haven't been able to pull that one out as much as the Mexco slogan...

How One Investor Found a Home Run Stock, Part II

Littlefish's explanation of how he found out about Mexco Energy (Amex: MXC) continues below:

I've been writing this piece meal over the last 2 1/2 hrs of work as time permits so it may be disjointe das hell so sorry for that.
but anyhow, I then saw MXC had been in a heavy downturn for awhile (2-3 years) and had recently purchased their largest nat gas production interest. Volume was anemic and the sellers had been washed strongly out (kinda like GV now but GV needs to get clsoer to a turnaround in---dare I say it--- the Fla condo market).

Yet the stock hadn't responded so then I looked over reserves and production and saw that both those had also started increasing. Then I went digging around trying to find out about their drillings and what areas they were working on, where their acreage was, etc. A couple drillings were taking awhile so I called the CFO and asked for clarification as to what kinds of things might be delaying those coming online. I also wanted to find out what I could about the new purchases since they were a bit of mystery. I came to find out the CFO didn't know specifics either on the wells so I tired to find out on my own. I got production for one of the supposed 3 wells. But it had been in production for over a year and ahd a fairly steep decline curve (so I wouldn't be too excited owning MXC after another Q report or two since the other wells may decline too but also found otu it is a pool of wells and not the original 3 wells announced last I heard- they never did clarify that).

I had no idea about the other 2 wells and their potential until a PR came out about the flow rates in a PR. When that hit I bought even more (some of which I had recently sold because it had popped)...

OK enough LOL. I'm boring everyone in AYSI land.

But in retrospect it was nice to see that last Q rpeort to verify my thinking that they could probably set alltime records for earnings and revs (they did for both). What surprised me was the lack of interest in the company all along until suddenyl it went crazy.

Then specualtion took over, record earnings, the microcap energy sector went ape crazy, low float, it got added to the Russell, etc... And I only own 200 shares now LOL. It was a bigger chunk of my port than AYSI for a little while there.

It was total luck to get that return in that timeframe obviously. But seeing earnings confirm my thinking makes me feel better regardless of share price.
Plus the CEO is a bit of tightwad IMO and owns over 50% of the company (ahem, not that any other CEO out there would be that way- although for the record AYSI's website kicks azz compared to what used to be MXC's so MXC won the worst website award from me so I gave MXC a slightly higher point value score on web ugliness in my evaluation- although MXC redid their website recently so now it is all pretty and bling).

MXC and AYSI are the only 2 companies I've ever owned/controlled where my position was 1% of the company or more. But they are also the only 2 companies I can think of that have fiscally tight leaders that own over 50% of the company and bright prospects in their biz segments and are microcaps with near (or at) zero dilution.

That's my elongated, disjointed, semi-accurate recount (I think) of what I think is the general idea of how I went about refinding MXC.

Littlefish added an addendum to this which I'll post in Part III.

How One Investor Found a Home Run Stock, Part I

On the Alloy Steel International (AYSI.OB) message board on the Investors Hub website, a poster who goes by the nome de Internet "Littlefish" mentioned offhand his successful investment in another company, Mexco Energy (MXC). In May, Mexco Energy shot up from under $5 per share to about $50 per share, before settling back to today's closing price of $29.82. I'm always curious about how investors came up with their successful ideas, so I asked Littlefish how he came to invest in Mexco Energy before its big move. What follows is his response, verbatim and unedited. It's a little rambling, as Littlefish himself self-deprecatingly acknowledges, and has some of the deliberate and accidental misspellings common to these sorts of message board posts, but I found it an interesting read. Hopefully, you will too. Since it's long, I'll post it in three parts.

LOL, sorry Dave. There's nothing at all tircky with MXC. I had an accnt that I manage where there were a few shares of MXC left in it from a long time ago (I think they were bought after Katrina). I had learned and followed the company back then so knew the background story.

I don't exactly remember how I went back to looking at it cuz the amount of shares was insiginificant (wait, I think I recall Bobwins sent me a list of nat gas producers and the name caught my eye and had me dig it back up) but remember spending a weekend with headphones on and no distraction from family.
I eventually was looking for a nat gas producer (thanx to BW for the list that clicked me back onto it) but think I started off by looking into untapped fert angles. I remember looking into a perlite producer since perlite is a bulk agent in home and garden fertilizer (LOL I went out in the garage and thought 'gee, I'll look at the ingredients in the fert mix to see what else beside nitrogen, potassium, and phosphorous are in there' and perlite is a big ingredient). Then I looked for perlite miners (go to the source) and found they're mostly in Greece and not really tradeable as pure plays. there would ahve been a good one somewhere in SW USA liek Arizona or New mexico but they went BK a couple years earlier.
Then I thought heck I'll look for eprlite expanders that make the perlite from the mined product and found a small Canadian company (forget the symbol- I think Gilead might know.. Wait, found it it is PCI.V).

Anyhow (now you know why I didn't touch this MXC question LOL, takes me awhile to ramble and remember and I'm working), when I saw PCI.V I looked into them and saw their expenses were going up because they used lots of nat gas to 'pop' or expand the perlite. So then I thought 'hey these guys are in like Saskatchewan and the big fert companeis are in Saskatchewan and making urea etc... takes lots of nat gas! I need to find a nat gas pipeline company in this area or even better a driller'. Then I think BW let me know there were NO nat gas producers in that area LOL. So it was back to scratching the head but contacting BW helped eventually get me to MXC.

I thought about the Pres candidates and what they all had in common (when it was down to 3). They all had some kind of plan for carbon emissions restrictions tighter than currently enacted. So I started dwelling on nat gas with fert producers consuming more, election probably spurring more nat gas usage than coal or oil if possible, etc. There were other things that turned me toward nat gas.

So I messaged BW (Bobwins) asking for a list or something of nat gas producers and that was when I saw MXC on the list and slapped my forehaed in a "DUH" moment (kinda like today when Gilead pointed out CXPO's ability to just sell the nat gas instead of having to cover hedged positions).

Click here to read Part II.