Vegan diamonds? Anyone?
If reading does not vibe with you, here is a video describing this business! :-)
Disclaimer: The information provided on this stock-related blog is for general informational purposes only and should not be considered as financial advice. The content presented here does not constitute a recommendation to buy or sell any securities or make any investment decisions. The author of this blog is not a licensed financial advisor or broker, and the blog should not be construed as professional advice. Readers are encouraged to conduct their own research and consult with a qualified financial professional before making any investment decisions. The author and the blog are not responsible for any actions taken based on the information provided. Investing in stocks involves risks, and there is no guarantee of returns. The past performance of stocks or investment strategies mentioned in the blog is not indicative of future results. The author may hold positions in some of the stocks mentioned. Readers should use their discretion and judgment when interpreting and utilizing the information provided on this blog.
- TICKER: NASDAQ:CTHR
- Company Description:
Charles & Colvard (hence forth referred as C&C) is a company that specializes in the manufacturing and distribution of moissanite gemstones. Moissanite is a unique gemstone that closely resembles diamonds, known for its exceptional fire, brilliance, and durability. It is a lab-created gemstone that offers an ethical and sustainable alternative to traditional diamonds.
The company was founded in 1995 and has since become a leading provider of moissanite gemstones worldwide. They have invested significant resources in R&D to perfect the art of creating high-quality moissanite gemstones. Through advanced technology and a meticulous manufacturing process, C&C produces gemstones beating traditional diamonds with exceptional Clarity, Color, and Cut and also is low Cost (remember the 4C’s that were popularized by De Beers, the Diamond monopoly).
- Market Opportunity
The brilliance and beauty of moissanite have made it a popular choice among the younger demographics for engagement rings, jewelry, and other accessories as these look better than regular diamonds for a fraction of the price. C&C offers a wide range of moissanite products, including loose gemstones, engagement rings, earrings, pendants, among others. Their products are designed to cater to different styles and preferences, providing customers with a luxurious and affordable alternative to diamonds. (Check out https://www.charlesandcolvard.com/ or http://moissanite.com/)
In addition to their product offerings, C&C is committed to ethical and sustainable practices. Moissanite gemstones are lab-created, reducing the environmental impact associated with traditional diamond mining. Additionally, the company ensures that their manufacturing processes adhere to strict ethical standards, ensuring fair labor practices and responsible sourcing of materials. This particularly appeals younger millennials and Gen Z generations who are about to enter the market to shop for a ring in this downturn(?)
Overall, C&C is recognized for its expertise in creating and distributing moissanite gemstones that offer exceptional beauty, quality, and sustainability. They have established themselves as a trusted brand in the jewelry industry, providing customers with an ethical and brilliant alternative to traditional diamonds.
- Share Structure
a) Institutions: ~24%
A number of institutional investors and hedge funds have recently modified their holdings of the company. State Street Corp lifted its stake in shares of Charles & Colvard, Ltd. by 14.8% in the first quarter. State Street Corp now owns 93,048 shares of the company’s stock worth $146,000 after buying an additional 12,003 shares during the last quarter. Meros Investment Management LP lifted its stake in shares of Charles & Colvard, Ltd. by 14.9% in the first quarter. Meros Investment Management LP now owns 632,614 shares of the company’s stock worth $993,000 after buying an additional 82,148 shares during the last quarter. Punch & Associates Investment Management Inc. lifted its stake in shares of Charles & Colvard, Ltd. by 10.3% in the first quarter. Punch & Associates Investment Management Inc. now owns 2,077,051 shares of the company’s stock worth $1,932,000 after buying an additional 194,505 shares during the last quarter. Finally, George Kaiser Family Foundation acquired a new stake in shares of Charles & Colvard, Ltd. in the first quarter worth $443,000. 24.34% of the stock is currently owned by institutional investors and hedge funds.
b) Insiders: ~22%
c) One (27 year-old(!) individual investor owns about 5%, more about him in a bit!)
- Competition
Jewelry competition is high eg. BlueNile (popular online), Tiffany’s (popular for their blue box), De Beers (OG Blood diamonds), and all other gemstones (sapphire, pearl, tanzanite) compete for the wallet.
- Management
Industry veteran CEO
Don O’Connell is the President & CEO of C&C. He previously held the positions of COO and SVP, Supply Chain at the company. With over 25 years of experience in the jewelry industry, Don has successfully managed various areas including distribution, operations, global supply chain, gemstone procurement, jewelry production, merchandising, product development, and customer experience. Before joining C&C, he served as Executive Vice President Operations & Global Jewelry Business Solutions at OFT Investment & Management Group. He also worked with the Richline Group, LLC (part of Berkshire Hathaway!) as Vice President, Operations & Procurement, and held leadership positions at Aurafin and OCON Enterprise.
- Financials
Pros: EV < MC; Current Price < Book; History of disciplined capital allocation
Cons: -ve EPS; Online/Digital investments are yet to show ROI as the most recent quarter posted negative earnings
- Financing Risk
N/A — Healthy balance sheet, debt can be serviced by cash
- Catalysts
Gen Z and younger millennials being thrifty amidst a looming recession(?) and environmentally conscious amidst a climate crisis.
- Who did you talk to at the company, and what did you learn?
A 27-year old (Charlie/ Carlos Valades Mar) recently bought a 5% stake and filed a 13-K. This individual wrote an open letter to the management with his suggestions on making specific improvements to the online marketing. This particular individual has a strong social media following on TikTok, Youtube and twitter so definitely knows a thing or two about generating and online brand. With them owning 20% of the company, I see a ray of hope on their current weakness.
- Current Valuation
At the time of this writing the company is valued at $28.39M USD
- Future Expectations (e.g. new contracts, future revenue, earnings, etc.)
I shy away from fortune telling but the Price by Book is 0.58 and I see no reason why the company will not be traded at the same if we make a conservative assumption that Intrinsic value = book value. I encourage you to do your own due diligence.
More from bubbykin here. You may also like some of these popular posts related to investing:
Investing in high growth economies
Retail investors pre-purchase checklist
