Jan 2021 Update - $OSS.v, $ISV.to, $STC.v, $VLN.to, $VMD.to, $SYZ.to, $MCB.to, $FRII.to, $RELL, $MTLO.v, $DWSN
Trying something new this month to catalogue some recent market activity and my thoughts around it.
Thoughts on Market Activity
I’m sure you’ve heard of activity around wallstreetbets reddit board and the short squeeze on some heavily shorted names (Gamestop being the most well known). Sorry to disappoint, but I won’t be participating in the short or long side of that corner of the market. It’s too risky for me. It is absolutely fascinating to witness in real time. I have been overly curious to understand what the thought process is for the individuals on each side. I will admit I have probably spent too much time listening to finance and non-finance people explain why they feel the way they do about it. Anyone interested in hearing some anecdotal data I’ve collected can send me an email or DM on Twitter.
I am not a macro guy. I can say that I have been finding interesting ideas lately, but I have not stumbled across businesses that I feel warrant a very large position in the portfolio. I am sitting on a higher than normal amount of cash, but that can change in a few weeks.
Posts this month
Relevant News from Companies Profiled Recently
OneSoft Solutions ($OSS.v)
Another customer signs on to integrate CIM into their pipeline operations
4th customer in 3 months
This is a big positive and shares are up a bit for the month (about 15%)
Information Services Corp ($ISV.to)
They announced that they ratified a collective agreement with their in-scope unionized employees
They did this virtually which is good to hear
Provides 6 years of stability with the members with modest wage increases
Sangoma Technologies Corp ($STC.v)
Update on cyberattack
Had no material impact on sales or additional risks to the business
Huge acquisition announced
The had a call on Jan 29th to discuss
More details to come in the next few weeks
On the surface the acquisition seems like it is a good fit for the business and will further increase their value to customers, but the valuation is not cheap
This is common for Sangoma; all previous acquisitions looked a little off at first glance, but ended up being very well executed
I’ll likely to a more in depth post to help myself digest the news
As of this morning the shares are halted
Velan ($VLN.to)
CFO resigned to join a private owned company
Doesn’t seem a material event on the surface as he is staying to help transition the role
Would like to see a new CFO within a reasonable amount of time
Reported fiscal Q3 2021
The quarte was better than expected though covid is still having an impact on the business
They were able to execute the V20 plan remotely
They have the highest backlog in 8 years
Sale of the montreal plant resulted in a gain on the balance sheet
To me this gives additional margin of safety as looking at this as net-net gives no value to PPE which obviously has some value
I honestly think that this is one of those weird names that could earn more ebitda in a few years than the market cap in 2020
But that needs to be monitored
The bulletin boards are dead from this
Viemed ($VMD.to)
Released details of a recent Non-invasive vent study
Study was led by their CMO
Data was between 2012 and 2018
Seems like a good validation of NI vents and a helpful data point to bring to the table
Sylogist ($SYZ.to)
CI purchased shares
Bought 1.032 shares since Nov 10, 2020
About 40% of trading volume
These likely happened at the start of December as there was a spike in volume
New CTIO announced
Pedigree seems well
225 options at $11.78
5 year term that vest in equal tranches on 1st, 2nd, 3rd anniversary of $15, $17 and $19
McCoy Global ($MCB.to)
New board member announced (Cory Janssen)
Was co-founder of Investopedia
He’s quite connected as McCoy commercializes some of their digital products
Freshii ($FRII.to)
Alternative Monthly Report stating that Silver Ring Value Partners Fund LP
During the month ended December 31, 2020, Silver Ring acquired 195,500 Common Shares through open market purchases on the facilities of the Exchange, resulting in Silver Ring holding an aggregate of 2,806,233 Common Shares as at December 31, 2020, representing approximately 10.65% of the issued and outstanding Common Shares.1 Prior to December 1, 2020, Silver Ring owned, or exercised control or direction over, 2,618,733 Common Shares, representing approximately 9.95% of the issued and outstanding Common Shares.
Seems like a decent value shop
Nice to have a capital allocator own a large amount of the shares outstanding
Bobby Kraft interviewed him about a year ago https://www.youtube.com/watch?v=q2qwDLM4iqo&feature=emb_logo
Update on Special Meeting Circular announced
Reason for the special meeting is to reduce the stated value of the A shares so they can institute a NCIB
This is a step in the right direction
Richardson Electronics ($RELL)
Reported fiscal Q2
Results were better than expected and guidance was strong
Looks like wafer side of their business is rebounding and the current cycle could match or eclipse previous cycle
The CT tubes are seeing an increase in demand versus what was previously communicated, particularly seeing strength in Europe
looks like they could get the healthcare part of the business to break even closer than anticipated
shares spiked 20% on the news
Martello Technologies Group Inc ($MTLO.v)
Provided an update on operations
GSX (which was acquired in May 2020) is now fully integrated
Gizmo coupled with solutions MTLO already provides is set to take their DEM strategy to another level
Sales from all GSX and Savision were about 58% of rev in Q2 fiscal 21
Reiterated that legacy products have been declining and will mask core business growth
They noted that expenses related to managing the legacy part of the business are minimal
Dawson Geophysical – ($DWSN)
Wilks Family disclosed a passive stake of 2.28mil shares or 9.7% of the outstanding shares