116 - Learning from mistakes you narrowly avoid $MCLDF

Mental Models discussed in this podcast: Confirmation Bias Skin in the Game Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode116 mCloud Technologies - $MCLDF SaaS company Trading at just 1x expected revenue Energy efficiency (Oil and Gas Plant efficiency) Green Energy (Wind Turbines, HVAC efficiency) Uses AI Problems: Cash flow negative (Presumably in the name of growth) Regular ongoing stock issuance and dilution Both shares and warrants "An assumption that this is the last time." Very promotional management (with skin-in-the-game?!?) "Uplisting to the NASDAQ" talk A lot of examples of SaaS names going from 1-2x revenue while on the Canadian TSX market to 10x+ revenue on the NASDAQ in the US Still hasn't occurred many years later Mergers and acquisitions using stock (Not cash, because they don't have any) Growth targets include non-organic growth (REALLY BAD) Dilution is required, but it makes it impossible to model per share returns Exit: Liquidity event needed for the payoff (Either sell to another company or an uplisting) Lessons Learned: Don't buy promotional companies Don't buy companies that dilute Don't buy companies that can't self-fund growth Insider ownership does not equal skin-in-the-game Be wary of 'uplisting' as a catalyst Summary: Investors need to constantly be wary of confirmation bias and stay alert for possible red flags. mCloud Technologies stock $MCLDF taught me this lesson. Don't buy promotional companies that dilute shareholders and can't self-fund growth.