Sending positive vibes to everyone. Regardless of what happens tmrw, enjoy your Sunday Night!

The following is my investment thesis related to Newton Golf (NWTG). I will lay out my investment in accordance with my investing framework.

According to my framework, I invest in companies that have

1. High returns on invested capital
   1. Measured by return on invested Capital or ROIC
2. With a long runway of growth and abilities to reinvest at similar high rates of return
   1. Benefiting from secular growth drivers
   2. Low market penetration with large and growing total addressable market
3. That have sufficient competitive advantages or ‘moats’ around their lines of business
   1. Network effects
   2. Patents 
   3. Brand value 
   4. Control over distribution
4. Led by honest and shareholder aligned management
   1. Consistency with doing what they say
   2. High insider ownership
   3. Continued insider purchasing
5. With economic futures which are predictable enough to make a reasonably confident prediction about the next 3-5 years.
   1. Where is the market going?
   2. What is their growth strategy?
   3. How will their economics develop
6. Available at an attractive valuation
   1. Generally looking to make investments in companies with a forward PEG ratio of .5 or cheaper 
   2. Projected total return potential of 300% or more over the next 5 years using reasonable projections
      1. Goal is not to be ‘conservative’ but ‘accurate’

Applying Newton Golf to this investment framework

Assessing Newton Golfs ROIC potential

Newton Golf is currently not profitable, therefore estimates regardings its return on invested capital are going to have to be estimated based on company projections and details pulled from their filings and investor presentations.

Sales Potential has been outlined as about 7 million this year, 20 million in the near term future which is their current capacity assuming no additional hiring or adding of shifts, and 50 million in the medium term outlook of 3-5 years.  This 50 million figure represents their total machinery capacity

The company has shown its model for reaching break-even which gives a good representation of its operating expenses.

1. 1.8 million dollars of General and administrative expenses.  This figure, based on commentary, is likely sufficient to support 20 million in sales, and will likely need to increase in order to support 50 million in sales.  Therefore This implies a future G&A as a percentage of sales in the 8-10% Range as a base case.
2. Management outlines an expected Return on advertising spend at about 300% which for the purposes of this forecast will mean that Selling and Marketing spend will stabilize at approximately 25% of revenue.
3. Currently Research and Development spending is projected at 800,000 to support 10 million in sales. This implies an 8% R&D spend as a percentage of revenue.  This is a reasonable target for a company which puts a premium on technological advancement
4. Gross Margins last quarter were 74% and projected as increasing from 80% to 90% as production scales. These projections will assume the midpoint of the guidance and forecast gross margins going forward at 84%
5. Depreciation and Amortization is quite low given a fairly capital light structure I will forecast it as 3% of sales going forward which is inline with its current break even model projection (240k into 10 million.)

Applying these Assumptions we end up with the following Margins

Even in the Bear case, Return on invested capital is high. I assess this as meeting the requirements for step one of my framework.

Assessing Newton Golfs Growth runway, Secular tailwinds and reinvestment opportunities

Growth Runway

Newton Golf is situated in a market of about 17 billion dollars which is projected to growth at about 5% over the next decade to approximately 21 billion dollars.  Specifically Newton Golf at present competes in the Replacement shaft market, and Putter market which have a total addressable size of about 400 million and 3 billion respectively putting newton golf at a .6% and .008% market share respectively.  This indicates that Newton Golf has a long runway for growth ahead of it assuming it is able to continue to capture market share.  The most promising outlook is for its shaft product line, which is growing quickly, unlike its line of putters, which saw a year over year decline from 2023 to 2024.

Secular Trends

Management outlines increased adoption of golf, particularly by women and young adult men. This is in addition to the continued premiumization of the sport, with more and more people seeking out premium high quality products.  This fits into the secular growth driver category of Premiumization of the Developed world which I have placed on my top 5 secular growth drivers list:

1. Artificial intelligence
2. Alternative Asset Management
3. Premiumization of the Developed World (Newton Golf)
4. Health and Entertainment
5. Digitization of the Developing World

Re-Investment Opportunities

Management outlines their desire to break into new markets such as apparel and other sport related technology which indicates medium term growth opportunities. The growth runway as mentioned above indicates that the current high ROIC lines of business have sufficient room to continue to expand.

Summary - I would assess Newton Golf’s Growth and reinvestment opportunities meeting the requirements for my investment framework over the next 3-5 years, it does remain to be seen what kind of ROIC they will get with future product lines and how far they can penetrate into their existing markets. I will be monitoring the growth rate of their replacement shaft business and keeping an eye on the returns of their new product lines to see if the business starts to ‘Di-worse-ify’ 

Assessing the Competitive advantage or Moat around Newton Golf’s Lines of Business

Since Capitalism is a brutal game, and competition is fierce, businesses which have access to high margin, long growth runway businesses need to have some advantage which allows them to prevent other competition from entering the market and driving down prices across the board.  As outlined above, the economics of the replacement shaft line of business are extremely attractive and have strong potential to attract competition.  Generally my order of preference for competitive advantages go in this order:

1. Network effects
2. Brand Value
3. Control over distribution
4. Patents and Intellectual property

Currently, Newton Golf can realistically only be said to have protected intellectual property as a competitive advantage.  Their DOT system is a simple yet revolutionary way to categorize the weight and flex of the shaft, which makes it easier and more consistent for fitting and trial.  They also have distribution partners in Japan and the U.S. yet this is not a distribution they control directly.  Currently, I would assess Newton Golf as meeting my criterion for competitive advantage, it would however be prudent to keep a close eye on the progress of innovation in the sport, virtually all of Newton’s competitive position comes from intellectual property.

Assessing Management Honesty and Shareholder Alignment

Discussions regarding shareholder alignment must include the recent offering and substantial dilution which shareholders experienced.  Adjusted for splits, shares outstanding increased from 60,000 to 4,286,000 which decreased the ownership interest of existing shareholders by 70,000%. Put another way someone previously holding 10% of the shares outstanding (6,000) would now only own .13% of the company.

While this is extreme levels of dilution, it is also worth noting that company insiders owned, and likely continue to own a large portion of the outstanding shares. So while public investors were diluted, insiders likely were as well. It is also worth pointing out that at the time, Newton Golf had trailing 12 month sales of about 2.4 million and expenses of about 5.4 million with only a few quarters of success behind their newly launched replacement shafts.  They also had only 2.3 million dollars left of cash to burn before they ran out.  Anyone underwriting this investment is taking on significant levels of risk, and would understandably want to be compensated for it.  During this time of dilution, insiders continued to buy shares.

Since then, the economics of the business and its financial condition have changed dramatically.  Risks of dilution of the kind seen in Q4 of 2024 are unlikely to repeat, however, management has outlined the possibility of needing access to capital in the future.

Management has acted with good faith and consistency since that time, released documents and news in line with what they projected. Thus, while prudence is required, management has, in my opinion, earned the benefit of the doubt.  They have a chance this year to perform in the context of the recent guidance they have put out and seemed to have signaled confidence with a 1 million buyback authorization and a projected 100% increase in sales.

I would at this time assess Newton Golf as meeting my criterion for management honestly and shareholder alignment sufficiently but not exceptionally.  I will continue to watch closely this year

Assessing the predictability of Newton Golfs Business going forward

Different investors have different requirements when it comes to the predictability of a business. Some are only intending on holding the stock for a few months and are satisfied with swing trading after a 10-20% pop, others like Warren Buffet are loath to invest in anything that they aren’t sure will be able to endure the next 100 years.  For the strategy that the portfolio this framework was built around is designed to follow I require a reasonable confidence in the ability to predict what the business will look like in the next 3-5 years.  Things that can contribute to this include companies that make relatively simple products, are in industries with modest but not excessive levels of innovation and competition, clear guidance from management and the ability to assess the current market size and growth potential.  

At this time I assess Newton Golf as Meeting the standard of predictability

Valuation

Peg Ratio .27 - Based off of a forward earnings per share of $.0326 forward PE of 57 and 5 year earnings growth rate of 210%

5 Year upside 1928% - Based off the analysis of various Bear, Base and Bull case scenarios

Final Scores

After completing the analysis I assign a point value to each category

Acknowledging the limitations of rating systems such as these I would assign an investment quality score to Newton Golf (NWTG) of somewhere between B+ and A- The attractive economics and valuation are partially offset by concerns about management, as well as the predictability of its business going forward.  This year of 2025 will provide an opportunity for the business to develop in those aspects.  I see this investment as attractive now, and anticipate its attractiveness increasing over the next 3-5 years.

Things To watch

1. I’ll be looking to see how management and insiders behave over the next year and would be encouraged by continued insider share purchasing and operating results inline with guidance. If I see these two things they could gain significant points in management quality and shareholder alignment.
2. I’ll be doing more research into the industry and assessing the risks to Newton Golf’s moat, if their technology becomes the standard in the professional scene then its competitive advantage score could increase significantly.
3. Will be closely watching to see how capital is reinvested in the business and what the economics of new product lines are like. Newton has the potential to significantly decrease their ROIC if they diversify into lower quality product lines but also has the ability to build on the success of their shaft technology and leverage the high returns for continued growth

Limitations of this analysis

1. This analysis had virtually no commentary on the industry dynamics, which would be of great value
2. This analysis utilized a significant amount of projection into the future, virtually all of the analysis on future margin and investment return potential was based on estimates derived from information available on their Investor Deck. I would advise anyone to take the projections with a massive grain of salt, they were my best attempt with the given information

Disclaimer

I am not an investment professional and this is not investment advice.  My aim in posting this investment thesis is to hopefully attract constructive criticism and begin a discussion on the stock in question.  I welcome any thoughts and critique of my process overall, and this thesis on Newton Golf Specifically.

Viva Christo Rey.

God Bless you all.

Just become Nasdaq compliant Friday aftermarket:

• Company is not on non compliant list anymore
• https://www.nasdaq.com/market-activity/stocks/non-compliant-company-list?page=17&rows_per_page=20
• Official announcement not yet made. (This is a big catalyst for penny stocks)

Earnings report announced gross profit yearly +%1764 announced Friday aftermarket:

• https://app.quotemedia.com/data/downloadFiling?webmasterId=90423&ref=319066433&type=HTML&symbol=NWTG&cdn=bbdcbd119a2da9c81070c360ded8546b&companyName=Newton+Golf+Company+Inc.&formType=10-K&formDescription=Annual+report+pursuant+to+Section+13+or+15%28d%29&dateFiled=2025-04-04

Next year revenue forecast increased in the earnings report:

• Revenue Guidance: The Company expects full-year 2025 revenue to range between $6.5 million and $7.0 million, representing continued strong growth from 2024.
• https://www.newtongolfir.com/press-release/newton-golf-company-announces-fourth-quarter-and-full-year-2024-financial-results

Masters golf tournament will be played this week:

• Increased tour adoption, with over 30 players putting the Newton Motion Shaft in play on the PGA TOUR Champions during 2024. Newton Golf continues to expand its presence, with growing traction on both the PGA Tour and LPGA Tour.
• If winner plays with Newton Shaft this will be big
• There is an instagram post about "more news later" this is about an advertisement shoot, it can launch this week with masters tournament

Very high cost to borrow:

• %391.18
• https://chartexchange.com/symbol/nasdaq-nwtg/borrow-fee/
• There are some available shares time to time but bulls are buying the dip

Naked shorted for months:

• https://www.nasdaqtrader.com/trader.aspx?id=regshothreshold
• One day naked shorts will cover.
• The stock has been on this list for a very long time, which is unusual for a stock. It may soon leave the list, and this could happen with a rise in its value.

There are many bullish holders:

• Some bulls are holding at least 200k shares (you can find screenshots at reddit if you search NWTG or SPGC)

Dilution ended and this is the dip caused by warrants (A new era just starting):

• As of March 31, 2025, approximately 90% of the Series B warrants had been exercised, extinguishing most of the Series B warrant liability balance of $11,410,000 while increasing stockholders’ equity.

Share amount is 4,287,902

• Share amount given at FAQ section
• https://www.newtongolfir.com/faq

Zacks valued company previously:

• Now there are no warrants B series (a new valuation can be much better)
• They valued company $3 per share when float was 8.915.000 It makes 26.745.000 $
• Valuation / Share Count = 26.745.000 / 4.287.902 = $6,23
• They expect the company to reach cash flow breakeven in 2026.
• They expected revenue expectations of $5.19 million in 2025, however Earning reports expectation is much better with $7 million
• https://finance.yahoo.com/news/spgc-sacks-parente-reports-preliminary-142300559.html
• Full report: https://s27.q4cdn.com/906368049/files/News/2025/Zacks_SCR_Research_01282025_SPGC_Kerr.pdf
• The current EV appears to be irrational and more reflective of the ongoing microcap stock malaise as opposed to company fundamentals.
• This graph will need an update, because current company revenue expectation is much better

Shafts are working comments are bullish:

• There are extraordinary comments for the shafts at Golf Forums
• Technology looks like working for players
• https://newtongolfco.com/collections/newton-motion-shafts

Made in USA products:

• This is another bullish catalyst

Stock is volatile:

• Make your own investment decision
• This is not an investment advice
• Share prices can fall or rise

£ANIC in the UK

$AGNMF in the US

Note: Due to recent market conditions this is now potentially extremely volatile in the short term.

Quick Technical Update

https://imgur.com/a/IviLlWX

As you can see from the picture, currently in a deep dip due to American Tomfoolery that has nothing to do with this UK stock. We are hitting the 100/150 moving averages and have hit oversold on the daily RSI. Selling volume reduced at the end of last week and we could be seeing the end of it.

Nonetheless this is a period of high short term risk, swings of 20%+ are likely and even medium length stops are likely to be triggered.

ANIC is a publicly listed ETF like investment company that holds stock in 25 front running companies in the emerging precision fermentation and cellular agriculture industry that are largely fully funded, have extensive government support and are gearing up for production. One of the only ways to invest in this future tech.

The current market shenanigans have nothing to do with this stock.

The majority of people holding ANIC are in it for the long haul and see the value to come. We are looking at some huge stock triggers to come this year, factories opening, more regulatory approvals and first sales of precision fermentation.

The deeper the dip the stronger the investment case, currently sitting at 35% of NAV, ANIC’s market cap of 52m is covered by only two of its’ holdings and cash in the bank. 

That leaves another £100m of value ignored by the market cap.

TLDR: Fully funded globally diversified etf like future food tech stock is on dip

There will not be a "V Bottom" in this sell off, but some stocks may have seen their lows (or very close to their lows) as the margin calls get satisfied and panic cash raising is not necessary.

$EPM Evolution Petroleum GAPPED DOWN on Friday and now has over a 10% yield. That decline is NOT from anything fundamentally bad with the company. Check the chart--https://stockcharts.com/sc3/ui/?s=EPM EPM is closing on a significant acquisition this month that will boost their oil and natural gas production significantly, further strengthening their dividend coverage.   Closing Friday Price:

$RCAT Red Cat Holdings bounced from its lows of the day in Friday's trading --as the overall market declined another 700 points on the Dow. Positive sign. (CHART: https://stockcharts.com/sc3/ui/?s=RCAT)    Red Cat has been awarded a very large military drone contract with the US Army. No tariff exposure here--because Chinese-sourced drones are banned from the military AND US commercial applications.  Research reports have a $13 Average Target Price. https://www.marketwatch.com/investing/stock/rcat/analystestimates?mod=mw_quote_tab  Closing Friday Price: $6.17

$RIG Transocean, an offshore oil drilling operator, also GAPPED DOWN on Friday. Panic selling? Again, no fundamental company news to slice this stock by 40% over three trading days on huge volume (Over 77 Million shares traded on Friday alone). Research coverage from eight (8) analysts has an average target price over $4.25.  https://www.tipranks.com/stocks/rig/forecast On a technical basis--the RIG chart is in OVERSOLD territory with a Relative Strength Index (RSI) of 26.   Closing Friday Price: $2.17