2 Micro-Cap OTC Companies Thriving During COVID-19

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

The coronavirus outbreak has hit smaller companies particularly hard in 2020. Despite the U.S. government’s CARES Act and Federal Reserve’s efforts to stabilize the economy and markets, many industries will be forever impacted by the “Great Lockdown.” 

Restaurants, brick-and-mortar retailers, gyms, and other industries that rely on in-person interactions will most likely continue to suffer for the foreseeable future, as consumer habits and preferences adjust with the current climate.

While the pandemic has been a major setback for some industries, others are witnessing surging demand and interest. Two such companies experiencing strong fundamentals are Sortis Holdings, Inc. SOHI, and Nightfood, Inc. NGTF.

Sortis Holdings, Inc.

Sortis is an alternative investment firm with operations primarily based out of the Pacific Northwestern United States. The company primarily focuses on real estate investment opportunities, both as a lender and direct investor. Currently, Sortis has four active proprietary investment funds: Sortis Income Fund, Sortis Rescue Fund, Sortis Growth Fund, and the Sortis Opportunity Zone Fund.

The company’s flagship fund, the Sortis Income Fund (SIF), recently released second-quarter 2020 performance results, which showed the fund produced a net annualized return of 10.2%. The SIF is an unleveraged mortgage fund, which focuses on short-term notes that are collateralized by real estate.

“Not only are we seeing strong performance in our current loan portfolio given our average 65% loan-to-value 1st position on real estate collateral, but we are seeing tremendous demand for real estate financing at very attractive terms for our investors,” notes Jef Baker, SIF managing director. 

Outside of the income fund, the Sortis Growth Fund (SGF) also recently made headlines after placing its first investment into an innovative RV startup, Happier Camper. During a time when coronavirus is driving a rebirth for the camping and RV industry, the Happier Camper investment could not have come at a better time for Sortis. 

A recent survey conducted by the RV Industry Association showed a massive hike in demand for RV traveling, as air travel continues to be a riskier option during the pandemic. The RV Industry Association estimates that around 46 million Americans will take an RV trip within the next year. This shows that Sortis and Happier Camper could be strong beneficiaries of the industry re-awakening. 

"Happier Camper is a perfect first investment for our fund," said Butch Bannon, Fund Manager, and Principal. "The demand for their products is incredible and we are excited with the leadership's vision and plans for the future. We view our investment as the next phase of our relationship as we've been working together on e-Commerce strategy for some time now."

The SGF is designed to accelerate “emerging consumer brands in the next phase of growth by providing an infusion of capital and a digital strategy to generate demand and revenue,” according to Sortis. The fund’s unique venture-hybrid approach showcases the unique qualities & capabilities of Sortis Holdings that continue to push the company into the foreground of its industry.

The Sortis Rescue Fund, the company’s latest investment fund, has already made two high-profile investments so far in 2020: Rudy’s Barbershop and Sustainable Restaurant Group. In May, the Rescue Fund helped save Seattle’s iconic Rudy’s Barbershop from bankruptcy and provided the opportunity for the original founders to regain control of Rudy’s. 

Most recently, the Sortis Rescue Fund announced the acquisition of Sustainable Restaurant Group (SRG), the owner of Bamboo Sushi, the world’s first certified sustainable sushi restaurant. SGR received strategic backing from the Bain Capital Double Impact and Kitchen Fund, which initially placed an investment into the restaurant group in 2018. Bamboo Sushi has locations in Portland, Seattle, Bay Area, and Denver. 

Nightfood, Inc.

Nightfood focuses on the research, development, distribution, and sale of various food products geared towards healthy evening snacking. The company’s flagship product is its Nightfood Ice Cream product line, which has been recognized as the “official ice cream of the American Pregnancy Association,” according to the company. 

The company’s ice cream line was also named the “2019 Product of the Year” in a Kantar survey spanning over 40,000 consumers. Nightfood ice cream also won the “Best New Ice Cream” award in the 2019 World Dairy Innovation Awards.

The evening snack market is estimated to be worth $50 billion, as an estimated 80% of Americans engage in regular snacking during the evenings. Unfortunately, the vast majority of evening snacks are unhealthy and not ideal for consumption right before going to sleep. 

Nightfood products are designed to be a healthier evening snacking alternative. The company accomplishes this by utilizing a more “sleep-friendly” approach to its snack development: less sugar, fat, and calories, more protein, fiber, minerals, digestive enzymes, amino acids. And no artificial sweeteners.

Demand has been strong for the company, as expanded distribution and even an appearance on The Rachael Ray Show back in February, continues to drive awareness amongst consumers. Just in the past month, Nightfood has announced expanded distribution into Texas’ five largest cities and entering into Pacific Northwest and New York Metro markets.

Most recently, Nightfood announced a partnership with MyRegistery.com, the world’s largest universal gifting platform. This partnership will now allow expecting mothers to add Nightfood ice cream products to their baby registries. 

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The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.