[ed. note: This article was first published on December 3, 2015. The ad has been running again in similar form, and with similar hints about the “secret” company being teased, so we’re republishing this solution to help answer some reader questions. We have not re-analyzed the stock, and the article has not been updated or revised.]
This ad from Louis Basenese for his VentureCap Strategist caught my eye, partly because it’s based on the same general trend as the pitch from Michael Robinson for his “Neural Imprinting” idea (and secret stock) a couple weeks ago. Of course, that one turned out to be a reasonable investment, but not an earth-shaking stock that will explode because of virtual reality in the next few months — the promise is always bigger than the reality.
That same virtual reality pitch, however, comes also from Louis Basenese — and unlike Robinson, he’s not touting a large, profitable and established company (NVIDIA turned out to be the company touted by Robinson, in case you forgot… that article from a couple weeks back is here) — he’s pitching a tiny company with a $47 million market cap that he implies is some sort of a “VC” opportunity.
The ad is long and drifts across a few topics, so I won’t bore you with the whole thing — but he catches your attention with the news that the NFL’s highest-rated quarterback is “all in” on this technology, and that it’s bound to boom in consumer acceptance as the biggest brand in the space (Oculus Rift, owned by Facebook) comes to market with their $400 headset early next year.
But what really catches my eye, of course, is the absurd profit projection that Basenese implies:
“I expect this company’s meteoric rise up the S-curve ‐ toward a billion-dollar valuation ‐ could happen before the end of the year.
“The ‘float’ ‐ the number of shares available for public consumption ‐ is incredibly low, which means your investment won’t suffer from dilution.
“To date, the company has only issued 1/100th the amount of shares that Microsoft has issued.
“You’ll be invested directly alongside storied venture capital firms like Sprott Asset Management and Sonora Investment Capital.
“Although it’s ultimately your decision whether to invest, keep this in mind…
“We’re at the most critical juncture of this company’s development, as it’s about to receive a final funding push.
“So on the merits of the other 35 newly hatched billion-dollar companies I predicted over the last five months ‐ collectively worth over $50 billion ‐ I suggest securing my latest report, ASAP.
“Investment proceeds could runs as high as $342,857 per reader.”
Lots of squishy language in there, of course — “could run” as high as $342,000, “could happen before the end of the year,” but the whole spiel drives you to the conclusion that this stock must be on the verge of some massive breakout, whether it’s a big IPO that soars dramatically higher or just a miraculous 1,000% return for, golly, any reason at all. And he’s got one of those arguments built on almost nothing that indicates these stocks “should” rise within 56 days.
So what’s the stock? Basenese’s basic argument, once you get down to it, is that Virtual Reality needs gesture recognition. That’s already available in lots of forms, of course (VR headsets attach to computers and gaming systems, so Microsoft’s Kinect for the Xbox is a basic gesture recognition technology, and there are others), but it’s far from perfect. So apparently this company has something to do with making it better or “owning” the technology.
Here’s more from the ad:
“The innovation I’m about to brief my partners on is called ‘gesture recognition’ technology, and it’s part of Vega.
“You’ll recall that Vega is an acronym that stands for the ‘Virtual Ecosystem Gaining Adoption.’
“Put simply, the Oculus Rift headset ‐ or any other headset, for that matter ‐ can’t function properly without gesture-recognition technology, which assures its rapid ascent up the S-curve.
“So what’s gesture recognition technology, and why should you care?
“Well, it’s everything!
“It literally unlocks the entire virtual world.
“In the simplest terms possible…
“Gesture recognition is a brand-new computer language technology that interprets human gestures via complex mathematical algorithms, and then feeds the gesture information to the virtual reality headset.
“Although a recognizable gesture can originate from any bodily motion, it’s typically derived from the face or hand.
“If the Oculus Rift headset is the gateway, then gesture-recognition technology is the gatekeeper ‐ one can’t exist without the other.
“‘Gesture recognition is critical to the mass market adoption of Virtual Reality,’ says one top industry insider.”
So how about our specific little company? What can we learn about them? A few clues:
“Virtual reality fortunes won’t be minted on the headsets!
The fortunes will come from Vega. That is, the software and drivers needed to unleash the virtual world! But here’s the best part…
“The company behind the technology is presently valued at only $47 million.”
So what is Lou talking about this time around? Well, we can answer the easy questions first — yes, virtual reality is being used by some NFL teams to help get more practice “reps” without the players being on the field and suffering through that wear and tear… and the quote about being “all in” is from Carson Palmer (who has been the top rated QB from time to time, though he’s currently #3 on the list.
And some people are working on gesture recognition for virtual reality, and consider it a critical part of moving VR to that next stage.
But when it comes to the actual stock, I have to admit that I’m only at about 98% certainly that I know what Basenese is touting: I’m pretty sure this is a pitch for Spectra7 Microsystems (SEV in Toronto, SPVNF OTC in the US).
It is indeed a $47 million company, though that’s in Canadian dollars — about US$31 million. And though they are small and fairly young, they do have “funding events” pretty much every quarter to keep the lights on — issuing equity, getting cash from warrant redemptions, or borrowing a wee bit.
They are a semiconductor firm, so their contribution to VR (they hope) is in making thinner, lighter interconnects and wires that allow for faster data transmission, which in turn, they say, will lead to the possibility of the gesture recognition being built into the headset, not in some separate sensor.
So far their sales are ramping up, though not, as far as I can tell from browsing the financials, to anywhere near the level that they might be profitable in the near future. I have read very little about them and don’t know what their market or competition is, and I’m rushing out the door to a meeting and don’t want to make you wait… so I’ll have to leave you to handle this one on your own — whaddya think? Any interest in little Spectra7? Have a better idea for the stock hinted at by Basenese? Let us know with a comment below.