Dave Gentry, president and CEO of RedChip Companies, Inc., talks with the Opportunist’s Managing Editor Leslie Stone about his small-cap research and investor relations firm, his weekly TV show and his views on the economy.
Dave Gentry prides himself on discovering companies before they show up on the Wall Street radar screen. Through his Orlando, Fla.-based RedChip Companies, Gentry, a leading authority on small-cap stocks, provides financial public relations and consulting services with a focus on market research and investor relations. “Our goal is to be the go-to investor relations firm for smaller cap companies,” he says. “That’s what we work for every day—to be the best in the business of what we do.”
For its efforts Gentry’s firm earned the distinction of being named an Inc. 5000 company in 2011 and Inc. magazine ranked it one of America’s fastest-growing private companies.
Gentry’s latest project is hosting “The RedChip Money Report,” a weekly TV show that he launched last fall. Sporting his trademark red bowtie, he delivers upbeat yet insightful commentary on small-cap investing and market trends, interviews Wall Street analysts and executives of public companies and reviews financial books. After just three months in production, Fox Business approved the show to air nationally on its network at 2:30p.m. EST each Saturday. The show also airs weekly on My Family TV, TUFF TV and some test markets for Fox Sports South, WGN and the Madison Square Garden Network. “The show is filling a very important niche for smaller companies that need exposure to investors on a national level,” Gentry adds. “With this TV show we can reach tens of thousands of investors in one day. It would take a traditional IR firm years to reach investors.”
Opportunist: Was it your lifelong dream to host a TV show?
Dave Gentry: No. I never really thought about it until five years ago when I had the vision to create a show. We built our own production studio here in our headquarters, and my vision finally came to fruition about six months ago. So I think it’s significant that Fox Business approved us to air nationally on their network.
It has been a very positive experience for our clients and our team, and it is generating significant retail and institutional exposure to our client companies. Each week the show generates 60 to 100 new microcap investor leads—mostly retail and individual accredited investors. This certainly makes us unique in the industry. We have worked hard to build a comprehensive platform that generates significant interest for microcap companies, and our platform is clearly the most comprehensive and robust anywhere in the world for small-cap companies.
Opportunist: Can you share some of the show’s success stories?
Dave Gentry: The interesting thing about microcaps is you’re exposed to new technologies, groundbreaking products and services and innovative entrepreneurs. Recently we had Brad Pyatt, CEO of MusclePharm Corp. (Nasdaq: MSLP), on the show. In the last four years, MusclePharm has become an almost $100 million revenue company. The company’s stock went up almost 100 percent in the first 45 days we represented it. Galectin Therapeutics (NasdaqCM: GALT) is a biotech company whose stock has gone up over 100 percent since I recommended it about three months ago. It’s nice to give these companies exposure on national TV that they would otherwise not receive. This value proposition makes a lot of sense for small public companies.
Opportunist: Have you ever experienced any production mishaps?
Dave Gentry: Well, I once shot a show with my bowtie crooked and had to shoot it over because it looked so ridiculous. [Laughs] We have a lot of fun shooting the show.
Opportunist: Please tell us about some of the other services that RedChip Companies offers.
Dave Gentry: We have both our research component and our telemarketing component, and we also do road shows for institutional and retail investors, social media and blogging services, TV, direct-mail marketing and conferences. Each year we do four virtual conferences and two physical conferences. We also have a growing public consulting division—our most profitable division—that helps private companies go public on a consulting basis. We also publish a weekly newsletter and research reports, or profiles, on our client companies. In the next 90 days we will be launching an independent retail product that we are currently revising.
Opportunist: We understand you recently opened an office in Seoul.
Dave Gentry: Yes, we are doing business in Seoul because we feel you have to go where you have relationships and we have relationships in Seoul. South Korea is an American ally, of course, and we have a free trade agreement with them. It’s the most wired country in the world, and its banking system is transparent. South Korea is a democracy and it understands the rules of capitalism, unlike China.
Opportunist: What qualities do you look for in the companies you represent?
Dave Gentry: We are sector agnostic but many of our client companies are in high tech, consumer goods, oil and gas, mining and industrials. We only represent companies that have a strong, focused and disciplined management team and a product or service in which there is a market opportunity. Ideally, the CEOs will have a history of inspiring morale upon their workforce. We like to see a sense of humility and a lack of hubris, as well as a capacity to work well with others. We avoid situations where the CEO is looking for a quick exit. We want to work with those who are trying to build long-term value. As Jim Collins said in his book Good to Great, we are looking for companies that want to build clocks—not just tell time.
About 50 percent of our clients are Nasdaq or NYSE companies and the others are OTC Bulletin Board companies. We are not an investment bank, but we know all the investment banks and institutions in our space. During the last 12 years we have made introductions that resulted in hundreds of millions of dollars being raised.
Opportunist: What obstacles, if any, have you faced in working with publicly traded companies?
Dave Gentry: Let’s put it this way, I have learned from my mistakes over the years—and I have made a lot of mistakes in this business in representing companies that I should not have. I have been representing some of the smartest people in the microcap space—people with MBAs from Wharton—but there are so many unknown factors that one cannot control in trying to build a company. There are certain obvious issues that cause us to take a step back, so before we choose to represent a company we carefully review its filings. We have found that one of the chief problems with microcap companies is the upper management, so we look closely at the management team and directors.
Opportunist: What types of investments do you personally participate in?
Dave Gentry: I invest in a combination of blue chips and small caps.
Opportunist: Who influenced your career?
Dave Gentry: I started out as an English and social science teacher, so I read widely—especially history and biographies. I study a lot of successful men and women. I have learned and grown by reading about people who have failed and those who have been successful, from Army generals to entrepreneurs to people in my own field. Alexander the Great, and Napoleon Hill and his works have inspired me. I’ve never been a stockbroker, fund manager or trader. My first job in this business was microcaps, so that is the world I was born into. There are many successful people in the microcap space who have accomplished far more than I have, and I continue to learn from them today.
Opportunist: Who is the most impressive person you have met?
Dave Gentry: I previously worked with David Horowitz and Peter Collier, founders of the Center for the Study of Popular culture. Those guys are innovative writers and thinkers. When I ran for Congress, I met Newt Gingrich. I also have the opportunity to work with Barry Honig, whom I consider the top microcap player today. Learning from him and working with him has been incredible.
Opportunist: Looking back on your career, which of your achievements makes you the most proud?
Dave Gentry: Starting a company in May of 2001 with a couple hundred dollars in the bank while working part time in the evenings at DialAmerica Marketing. In terms of accomplishments, though, I have a lot more to accomplish. After I lost my bid for a seat in the U.S. House of Representatives, I kind of devolved into three years of what I’d call a lifestyle that did not reflect my true values and Judeo-Christian foundation. Through discipline and hard work, I was able to recover from that three-year hiatus into hell. In 2005, I bought RedChip from [Spokane, Wash.-based] ICM Asset Management and integrated it into the existing IR firm that I founded in 2001. I am proud that we became an Inc. 5000 company. We have a great team with lots of good people. Our success is not based on just my accomplishments—it’s based on the team’s accomplishments.
Opportunist: Describe your typical day.
Dave Gentry: I am on the phone all day—talking with my clients, brokers, hedge funds, and institutions—and I stay busy running the business and making sure our systems are working well. I also do training, and a lot of travel.
Opportunist: If you weren’t in the IR business what would you be doing?
Dave Gentry: I would either be in politics or writing full time. In 1996, when I became the Republican Party’s nominee for the United States House of Representatives in the Fifth District of Florida, I saw an opportunity to fight for conservative principles. In college I led the movement against political correctness when I co-founded the First Amendment Coalition to defend free-speech rights on college campuses. We lost that war—in fact, things are probably worse today—but we had a great national movement that brought a lot of attention to the issue and mobilized thousands of students to stand up to those who were attempting to impose their leftist ideology. It grew into a national organization with chapters in over 50 universities.
Opportunist: Is there a book in your future?
Dave Gentry: Yes. I am working on one book about microcap superstars and another book about my life in microcaps. I have previously published newspaper articles and a couple of magazine articles, and I wrote a chapter in a book on political practice.
Opportunist: Do you believe the U.S. economy is poised for continued growth?
Dave Gentry: Well, it certainly appears that the economic outlook in this country is much brighter than it was two years ago. The innovative spirit of American entrepreneurs is alive and well and contributing to the growth of the economy. Manufacturing has picked up. The automotive industry is recovering. High tech is doing well. However, I think inflation is going to be a major issue in the next three to five years. The deficit is still a very serious issue, and the inability of Congress and President Obama to put a budget together that will keep this country from becoming a European style socialist state is disturbing.
Opportunist: What’s next for RedChip?
Dave Gentry: My goal and vision has always been to be the dominant microcap research and investor relations firm in the world, so I could see RedChip potentially merging with a bigger company and going public. I also anticipate that within the next two to three years we will have 100 to 150 new clients each year.
Leslie Stone is an award-winning writer/editor with more than two decades of experience covering business, finance and lifestyle issues for newspapers, magazines and online publications. Originally from Virginia, she currently resides in the Orlando area. Follow her on twitter at @les7989.
RedChip Companies - http://www.redchip.com/
RedChip Money Report on Fox Business - http://youtu.be/PNM6_h1TTR4