Category Archives: Company Updates

Velan ($ – Quick Update

I have a couple of posts in the hopper for some companies that have not been mentioned here before. I am, however, struggling to articulate my thoughts in a succint manner for them. Rather than let the site go stale, I’ll provide a quick update on an existing holding, Velan Inc ($

Velan was most recently mentioned here in August of 2020. Shares were trading around $5.50. Since then the shares have moved to the $7.50 range or a gain of 30% (give or take) compared to 45% for the Russel 2000, 22% for the Nasdaq, 11% for the TSX, and 36% for the TSX Venture (wait what the Venture goes up?).

Updates since August 2020

  • Released their Q2 fiscal 2021 (ending Aug)
    • as expected this was a rough quarter due to impact of covid
    • though revenue was weak, order booking were decent especially given the environment
  • Announced board changes
    • appointed an independent chair of the board
    • chair of the audit committee is also independent
  • Continued execution of V20 plan
    • they sold a plant in Montreal as part of the V20 plan
      • no easy feat in a pandemic
    • reorganized operations to be more nimble and serve the customer better
    • lower margin, more commoditized valves were moved to India were costs are cheaper
  • CFO resigned
    • did not seem to be a material event
  • Released Q3 2021 (ending Nov)
    • rough top line compared to last year
    • costs being managed well
    • bookings strong and backlog is highest since 2012
      • the nice thing is that this is fairly broad based demand
    • I was on the call and was the only person to ask questions, a good indicator that Velan is not being followed closely

What needs to happen to make money

Valuation has moved up from 0.65x NCAV to nearly 0.80x NCAV. So I think it’s safe to say that expectations are quite low. In order for the gap to NCAV to continue to close, I think the follow must happen:

  • bookings need to stay strong
  • they can’t continue to post losses after covid lockdowns go away and wage subsidies stop
  • at the very least the gross margin needs to be stable
  • board changes need to be permanent

Closing Thoughts

Velan has been executing on what they can control. The V20 plan and board changes speak to what the future of this business could be in a few years.

The company is somewhat derisked with the build in backlog and continued execution of the V20 plan. Although the shares moved up, I still think Velan presents a decent risk/reward. I purchased some additional shares recently.

A dividend, buyback or strong results in H2 calendar 2021 could move this from trading based of assets to being valued on earnings.

Anyone else looking at Velan or other NCAV companies?



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November 2020 Update – $CSW/ & $CSW/, $OSS.v, $REPH, $, $ $, $STC.v, $, $, $, $FRD, $, $MTLO.v

Very busy month. 3 new company’s profiled ($MTLO.v, $DWSN, $SVT) and lots of updates.

Let’s get to it.

  • Corby Spirit and Wine Limited (tse: $CSW/ & $CSW/
    • Reported their fiscal Q1 2021
      • Strong q
        • Rev up 12%
        • Opex down 14%
        • Net earnings up 68%
    • Dividend upped to 0.22/share
      • Yielding almost 6%
    • They have made notes that they don’t expect this to continue for the full year
      • Some pull forward for holiday season but higher than prior consumption may continue due to reinstated lockdowns
  • OneSoft Solutions ($OSS.v)
    • JV to expand presence in Middle East – find it here
    • Released Q3
      • In line with expectations
      • Rev up sequentially and slightly up yoy
      • Best MD&A in the Canadian small cap space
        • New pay as you go sales model being trialed
        • A few customers in the trial phase – likely to be announced in 2021
      • Admitted that doubling of 2019 rev won’t happen this year
  • Recro Pharma ($REPH)
    • reported results – mixed bag
      • rev up from Q2 but still down yoy
    • positive
      • seeing some wins in business development
      • some renegotiated of debt to push out current payments and increased flexibility
    • negative
      • still no new CEO
      • still high cost debt
  • Pulse Seismic ($
    • reported Q3 and was a tough q
    • sales down to 1.8mil
      • still generate 860k for shareholders which shows how little their operating costs are
      • interesting that they had very little traditional data sale revenue and had a transactional sale
    • trading at about 50mil MC and a little more than 14x annualized FCF at the most depressed biz environment in the company’s history
    • You can see how low the active rig count is in Alberta relative to the prior 10 years
  • Information Services Corp ($
    • Reported a pretty decent quarter
    • There was some catch up from previous quarter as the economy in Sask reopened
    • Trading around 12x EV/EBIT and a little over 4% yield
    • It will be interesting to see if they do another acquisition in a couple of quarters and/or increase the dividend
  • Indigo Books & Music ($
    • Reported fiscal Q2 2021
    • Results were better than I was expecting
    • No questions on the call from analysts – I continue to think I’m the only one watching this one
    • Also announced an addition to the board that seems like a good fit
    • The holiday quarter is the most important quarter for IDG, it will be interesting to watch as Canada managed the 2nd wave of Covid
  • Sangoma Technologies Corp ($STC.v)
    • reported fiscal Q1 in line with expectations
      • they really are navigating the current environment very well
    • still looking to deploy cash from recent financing – I’m expecting something soon
  • Viemed ($
    • Reported Q3
      • Revenue was up 22% yoy
      • Still seeing impact from covid getting into hospitals and preventing new customer wins
        • Thinking there would have been even more growth if this wasn’t the case
      • Ancillary sales at 18% and growing fast
        • I liked how they focus not on incremental gross margin as the ancillary side of the business grows, but incremental gross profit in dollars
      • Some temporary PPE and equipment sales due to the pandemic
        • Still see this as a testament to mgmt. being nimble and adapting
        • Really seeing some gross margin compression
      • Prepared remarks had dialogue about a potential acquisition
        • Will be interesting to see if they find a potential company to acquire
        • They have 32mil in cash at this point
      • I continue to hold
  • Sylogist ($
    • new CEO announced
    • seems well credentialed to execute their M&A strategy
  • McCoy Global ($
    • New credit facility that gives them some additional flexibility and lower borrowing costs
    • Released Q3 results
      • Rev way down
      • Adj ebitda positive
    • Backlog stable at 10.6 mil
    • Continue to wait while things turn around – NCAV is stable to support margin of safety
  • Friedman Industries ($FRD)
    • Reported their fiscal Q2 2021
    • Smaller loss sequentially with some better expectations for Q3
    • Capital expenditure project costs are coming in higher than anticipated but I do appreciate them investing in the business
  • Freshii ($
    • Reported Q3 results
    • Non event as they are just above EBITDA breakeven
    • Closed a few more restaurants
    • Good news is that cash balance (and my margin of safety) is being maintained
  • Martello Technologies Group Inc ($MTLO.v)
    • Released fiscal Q2 2021
      • Numbers were below what the market was expecting and MRR was lower than I thought it would be
      • I believe there was higher expectation for organic revenue growth
      • Will keep monitoring the position
    • Announced a partnership with Rapid Circle (a Microsoft Gold Partner)
      • Further validates their value to customers in my opinion

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October 2020 Update – $OSS.v, $ISDR, $, $STC.v, $, $, $

Here is a quick update for the month of October 2020 for some names mentioned on the blog.

  • OneSoft Solutions ($OSS.v)
    • Announced first new customer win in 18 months
    • Pretty big deal given the long wait
    • Still looking for more customer wins in order to move the share price
  • Issuer Direct ($ISDR)
    • Reported Q3 and was really well yoy
    • Share price has doubled since I purchased and is no longer cheap on trailing numbers
    • I still see potential in the business
  • Pulse Seismic ($
    • EdgePoint picked up 3.1 mil shares during a private transaction. They increased their ownership to 24.60%, up from 18%.
    • This is not anywhere near their top 10 in position size, so somewhat of a non-event.
  • Sangoma Technologies Corp ($STC.v)
    • Reported fiscal Q4
      • Good quarter and encouraging outlook
      • Beat previous guidance and issued new 2021 guidance
        • EV/REV
        • EV/EBITDA
  • Firan Technology ($
    • Reported numbers and held a conference call
      • Numbers were better than I would have guessed
        • Managing the covid precautions well
      • Have 3.1 mil in PPP
      • Backlog of 47M of which 26M due in fiscal Q4
        • Likely won’t deliver all though
    • Polar Asset Management picked up some more shares
      • They now own 13% of the outstanding
      • Non-event to me as this isn’t a top 10 holding for them.
  • Pivot Technology Solutions ($
    • Shareholders officially approved the arrangement for $2.60
  • Velan ($
    • Reported numbers and held a conference call
      • Quarter was a little weaker than I anticipated
      • Some additional costs with forex swings, land clean up with sale of plant, continued restructuring,
      • Took over 4 mil in wage subsidy which would have made things worse
    • Good news
      • V20 plan progressing well and seeing some benefit to the business ahead of schedule
      • Backlog is up as book to bill was over 1.2
      • Gross margins are steady
      • Most important to long term – the company now has it’s first independent chairman who has lots of industry experience. This is the Velan family moving to independent leadership. I’m a big fan.

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