What’s Basenese’s $3 “Buy LEO” Pitch About?

Checking in on Micro-Cap Advantage's tease of a "conservative" potential for 3,906% gains

By Travis Johnson, Stock Gumshoe, March 31, 2021

Here’s the lead-in from a new Lou Basenese ad that got a lot of our readers asking questions:

“URGENT BUY ALERT:

“America’s Leading Technology Analyst Says Buy “LEO” Now!

“This tiny company is poised to transform a $2.7 Trillion market with the single flip of a switch.

“Its groundbreaking technology is already being used by thousands of customers across the globe, like global oil giants Halliburton and Petrobras — with many more on the way.

“And because its stock trades on a ‘secret’ stock exchange — for less than $3 per share — it’s gone completely unnoticed by Wall Street.”

Tiny company… $3 share price… hot “story” area (LEO means Low Earth Orbit, which is the orbit used by the new waves of broadband-providing satellites being launched by Starlink and others)… and a “secret” exchange? What more could we ask for?

Well, we could also throw in the “stick it to the cable company” spiel, something that is almost always rolled out whenever we get a pitch about “space-based internet” — people hate their cable and telecom providers, so the dream that somehow space internet will be cheaper and better always gets attention. This is from the order form:

“By this time next year, the ‘Big Three’ cable companies — Comcast, Verizon, and Charter Cable — could be out of business…

“Not only that, but you could be hundreds of thousands of dollars richer. All thanks to the decision you’re about to make today.”

We’ve seen those spiels ever since the first “Halo-Fi” and other satellite broadband pitches started rolling several years ago — and the promise has also been of a mythically cheaper offering (Ray Blanco always used $7 a month in his teases)… though we should note, of course, that so far prices for the initial products, like Starlink, are pretty comparable to cable broadband (about $100 a month, plus you have to shell out $500 or so for the equipment). Perhaps as Starlink and others grow there will be more price competition, but the main advantage is in reaching more people whose only other option is slow DSL or super-expensive satellite internet from Hughes, not competing with cable and fiber connections in well-connected areas. Comcast and Verizon aren’t going away anytime soon.

The ad is for Basenese’s Micro-Cap Advantage ($995/yr, 30-day refund period), and it uses some of the same themes as he did for his pitch of Gilat (GILT), a satellite equipment provider that he teased for his lower-cost Trend Trader newsletter last year (that one has worked out well so far, for what it’s worth). Here’s a little more from the ad:

“This Tiny L.E.O. Company Could Soon Dominate a MASSIVE Market I’m Calling: “Space-Net” ….

“The market I’m referring to is Space-Based Internet.

“In other words, the ability for consumers like you and me to get high-speed Internet access beamed directly to us… from outer space!”

OK, so we know the big-picture spiel — companies like SpaceX and Amazon and Telesat are building massive constellations of low-earth orbit satellites, and those satellites will provide broadband connections for people in remote areas, who have no access to fiber (or even cable) broadband. That will make money for the equipment makers, we’re told, and certainly there’s been a big run on almost anything space-related over the past year… so which little player is Basenese teasing today?

These are our clues:

“… clients like global oil giants Halliburton and Petrobras are paying for its technology already.”

OK, so that indicates it’s probably some kind of communication technology for ultra-remote locations — HAL and PBR have crews working on hugely expensive oil projects that are hundreds of miles from any civilization. What else?

“… named as one of the 50 best-performing companies on the “secret” stock exchange it trades on.

“Profit Magazine dubbed it one of the fastest growing companies.

“On top of that, thanks to a new product it’s poised to launch, this company could soon become the ‘linchpin’ to a massive $2.7 trillion market.”

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We hear that “linchpin” word a lot in these kinds of teasers (the Oxford Club folks used it over and over for Inseego, for example) — it conjures up a huge high-tech global system that can only work through the use of one particularly little widget that our secret company provides… and that’s not true. $2.7 trillion markets are never dependent on a single provider or a single source, so get that out of your head. Even Apple goes far out of its way to make sure that they’re not stuck with single-source providers for chips and parts for the iPhone, and that’s “only” a $200 billion market.

Still this is apparently a tiny company, and you don’t have to be a “linchpin” to have a valuable product or service to sell. What else do we get by way of clues?

“… even if the big telecom giants were to get into the Space-Net market…

“They’d very likely become customers of this tiny L.E.O. company.

“… it produces a key piece of technology that, as far as I know, is unlike anything else on the market today.”

OK, so it makes something… what? Turns out, it’s a special kind of antenna. More from the pitch:

“More specifically, this company produces the antennas that allow you to access Space-Net’s high-speed internet.

“You see, without an antenna that can connect to your computer, there’s no way for Space-Net satellites to beam Internet or phone access to you.

“So, these devices are absolutely critical to Space-Net’s success — as I said earlier, these devices are the “linchpin” to the entire Space-Net industry.

“And this company’s devices in particular, are PERFECT for Space-Net…

“That’s because its antenna system is ultra-portable…

“It can fit in a standard carry-on suitcase….

“And it’s also one of the only devices in existence (that I know of) that has built-in “Auto-Acquisition Controller Technology” — or AACT for short.

“AACT allows one of these ultra-portable antennas to be set up — and to start receiving broadband internet via satellite — with a single press of a button.”

OK… that narrows it down a lot. And he says this product already exists, it’s not some hypothetical project… there are “thousands of them” being used now.

Other clues?

We’re told that it’s “ontario-based” … and he shows a photo of one of the little backpack-carried satellite dishes, as well as an image of larger truck-mounted devices being used to deliver cell signals in Japan after the Fukushima disaster. And there’s apparently something new in the cards as well:

“… this company already produces a portable Space-Net antenna…

“It’s one of the smallest products on the market…

“It can fit in a backpack and be mounted on a home, an office, a public building…. anywhere….

“In order to get high-speed, affordable and reliable Internet access to everyone on earth — no matter where they are — we’ll need a different type of solution…..

“… this tiny company I’ve been telling you about is on the cusp of launching its most groundbreaking antenna yet…

“Essentially, it’s a modular antenna system that’s so small and thin, it could literally be mounted anywhere!

“From a car, to a train, to the top of an airplane.”

And finally, we get the typical wild (but called “conservative”) projection about this tiny company taking “just” 5% of that crazy $2.7 trillion market for global internet access (stop laughing now, we mustn’t be rude):

“But let’s conservatively estimate that it ends up capturing 5% of the revenue flowing into this space…

“And to be even more conservative, let’s say the company focuses strictly on the U.S. market for now…

“Well, the U.S. market is worth $27 billion annually.

“So, if the company captures 5% of it, it would bring in about $1.35 billion in sales per year.

“(NOTE: If this company lands a contract with Musk or Bezos, it’s highly unlikely it would ever manage to stay that small, but caution never hurts when setting a profit target.)

“Next, we’ll multiply those projected an