Small Cap Picks

I believe that the overall economy is healthy, and that the business cycle is generally on the upswing. I travel for work and pleasure and see that the airline industry is doing quite well, see my pick of AAL which is up 35% YTD (just over a month). I also know that when I was a consultant I did not think twice about paying for onboard WiFi, as it was just another, relatively inexpensive, business expense. I think that combined with the families I see traveling (buy TV keep the kids entertained) position in-flight entertainment in a good spot. To that point I have made an entry stake into Global Eagle Entertainment (ENT)

Global Eagle Entertainment Inc. (ENT), formerly Global Eagle Acquisition Corp., is the full service platform offering both content and connectivity for the worldwide airline industry. Through its combined content, distribution and technology platforms, the Company provides airlines and the millions of travelers they serve with the offering of in-flight video content, e-commerce and information services. Through its Row 44 subsidiary, the Company utilizes Ku-band satellite technology to provide airline passengers with Internet access, live television, shopping and travel-related information.

My timing may not have been ideal, as the market tanked the following day, putting the stock down about 4% from my purchase price. I believe this is a mid-term to long-term play, I will be keeping an eye on the stock but not looking at it day-to-day, as I do believe this one may take some time.

In a completely different direction, I have opened a small stake in Synta Pharmaceuticals (SNTA). Synta is a small cap ($362M) biopharmaceutical company working in the area of cancer and inflammatory diseases. Their main drug in the pipeline, if approved, is expected to hit annual peak sales of $425 million to $600 million. Interestingly the consensus target price for the stock is a huge $15.85 a share, SNTA is currently about $5.

I'm not much for "swinging for the fences" or "home run" stocks, but this is exactly that. If the stock is able to make consensus price it would be a nice 300% return for current investors. The risk for this possible payout is quite large, if they do not get approval for their drug it could spell the end for them. In my minimal experience with these types of companies, there is a very short lead time from success of failure for the investor to make a move either in or out. A stop-loss or trailing stop-loss may be advisable.