Finding Alpha On X
Users are giving it away, if you know where to look.
Finding Alpha On X
I’ve mentioned before that one of my main sources of alpha, in addition to Portfolio Armor’s Top Names, has been the site formerly known as Twitter, X. Here’s a great example of that.
Seeing The Potential In A Nano Cap Industrial
In a post two months ago, X account @Mike10947310 (let’s refer to him as “Mike” for the rest of this post) wrote about a (then) nano cap industrial called Tecogen (TGEN 0.00%↑). The company’s description didn’t make it seem like a potential rocket stock. Via Seeking Alpha:
Tecogen Inc., together with its subsidiaries, designs, manufactures, markets, and maintains cogeneration products for multi-family residential, commercial, recreational, and industrial use in the United States. It operates in three segments: Products, Services, and Energy Production. The Products segment designs, manufactures, and sells industrial and commercial cogeneration systems to hospitals and nursing homes, schools and universities, health clubs and spas, hotels and motels, office and retail buildings, food and beverage processors, multi-unit residential buildings, laundries, ice rinks, swimming pools, factories, municipal buildings, indoor agriculture, military installations, and indoor growing facilities
That description goes on to mention chillers the company produces:
Its product portfolio includes InVerde e+ and TecoPower cogeneration units for the supply electricity and hot water; Tecochill, an air-conditioning and refrigeration chiller, and hybrid-drive air-cooled and gas engine-driven chiller to produce chilled water and hot water
Sounds pretty boring right? But wait: what generates a lot of heat and is booming now?
Understanding It As A Picks & Shovels Play On AI
Mike noted Tecogen’s partnership with Vertiv Holdings (VRT 0.00%↑), which
designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers
AI of course relies on data centers, which consist of stacks of computer servers that generate heat. In Mike’s X post on May 2nd, he explained the connection:
Prima facie: Previously the numbers they'd talk about regarding DtX (liquid cooling gas-powered chiller) sales would be one or two units. One medium data center might use 10 or 20 chillers. Revenues double + multiple expands. Keeping in mind that they still would handle servicing which historically is 1/2 of revenues.
Dominoes: And then, of course, more customers come. Because the tech is "validated", and $VRT is incentivized to market it even more, and their company has broken in. And the DtX is totally modular. They can just bank them to serve larger data centers. And the customers understand how insane power demand is going to be. So the potential and PMF [Product-Market Fit] is really obvious.
It’s Looking More Obvious Now
What Mike saw in his post in May, the market has started to see too.
Shares of TGEN have climbed 241% since.
I shared Mike’s idea with Portfolio Armor Substack subscribers as a bonus trade on May 6th.
If you want to see Mike’s next idea, you can follow him on X here. You can follow my whole X list here, and if you want to see a trade on a stock that is both a Portfolio Armor Top Name and a favorite from our Market Watchers X list, Wednesday’s talking cars trade fits both bills.
