Is Nocopi Technologies (NNUP) A Smart Long-Term Buy?

This post was originally published on this site

SRK Capital, an investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A net return of 10.9% was recorded by the fund for the Q4 of 2020, below its S&P 500 TR benchmark that delivered a 12.15% return, and its Russell 2000 index that gained 31.40%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

SRK Capital, in their Q4 2020 Investor Letter, said that Nocopi Technologies, Inc. (NYSE: NNUP) is facing a temporary issue that will soon be resolved. Nocopi Technologies, Inc. develop and distributes document security products and related services. It currently has a $12.3 million market cap. For the past 3 months, NNUP delivered a decent 20.13% return and settled at $0.1832 per share at the closing of February 19th.

Here is what SRK Capital has to say about Nocopi Technologies, Inc. in their Q4 2020 investor letter:

“Nocopi reported an 18% increase in revenues year over year for Q3. The quarter was impacted by an increase in the cost of goods, which I believe to be a temporary issue. Since last year, the company has doubled the amount of cash on its balance sheet and it now sits at more than 10% of its market cap. Nocopi’s only use of cash is for inventory purposes; by this time next year the cash balance could make up more than 20% of the company’s market cap at today’s share price, trading less than 10x earnings, and growing double digits with operating margins greater than 28% and expanding. They have several options with what they can do with their cash: 1.) Do nothing and let the cash continue to accumulate on the balance sheet; this is most likely the least efficient use. 2.) Initiate a special dividend to shareholders (potentially considered a return of capital). 3.) Repurchase shares at opportune times to reduce the share count and benefit all existing shareholders that continue to own their shares. My recommendation would be for the board of directors to seriously consider committing to share buybacks. To potentially increase liquidity and visibility of the company’s stock for effectuating share buybacks I suggest the company up-lists to the OTCQB market.”

NNUP delivered a massive 161.71% return in the past 12 months. However, our calculations show that Nocopi Technologies, Inc. (NYSE: NNUP) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:

Disclosure: None. This article is originally published at Insider Monkey.