Alta Fox Capital, a long/short hedge fund based in Fort Worth, Texas, recently published its Q2 investor letter. The fund discussed its investment theory on 3Pea International Inc (OTCMKTS: TPNL) in the letter. Henderson, Nevada-based 3Pea International is a prepaid debit card payment solutions provider as well as an integrated payment processor. The company provides prepaid card programs and processing services to corporate, consumer and government applications through its PaySign brand.
Let’s take a look at Alta Fox Capital’s thoughts about 3Pea.
3Pea International (“TPNL”) is a high-quality payment provider to the domestic plasma industry with excellent returns on capital, a long growth runway with high incremental margins, an attractive duopoly industry structure, and multiple near-term catalysts.
Insiders own ~50% of the company, including the founder/CEO, Marc Newcomer, who owns ~21% of the company and has not sold a single share despite a 10x+ increase in share price since 2016.
Moreover, Dan Henry, a widely respected pioneer in the payments space, agreed in May of this year to join the company as Chairman of the Board. I believe TPNL’s existing plasma payments business is conservatively worth over $5.00/share (~100% upside).
Moreover, the company has three other initiatives that I believe have a reasonable chance of pushing air value above $10 over the next 3 years (~300% upside).
For the first quarter ended March 31, 3Pea International Inc (OTCMKTS: TPNL) reported a 46% increase in revenues to $4.6 million. Net income for the quarter was $412,548, or $.01 per share, versus net income of $369,394, or $.01 per share, in the same quarter last year.
Revenues for the six months ended June 30 were $10.14 million, an increase of 53% compared to the same period in the prior year. Net income for the six months ended June 30 was $1.14 million, or $0.02 per share, a 52% increase compared to net income of $753,837, or $0.02 per share, for the same period last year.