Dawson Geophysical – $DWSN

Here is a another quick write-up on a net-net I stumbled on after looking at the Grahamiam Value site.


  • Market cap 41mil
  • EV -3mil
  • 23.4mil shares outstanding

Chart via TIKR

Dawson Geophysical Company provides onshore seismic data acquisition services in the United States and Canada. The company acquires and processes 2-D, 3-D, and multi-component seismic data for its clients, including oil and gas companies, and independent oil and gas operators, as well as providers of multi-client data libraries. Its seismic crews supply seismic data primarily to companies engaged in the exploration and development of oil and natural gas on land and in land-to-water transition areas. The company also serves the potash mining industry. Dawson Geophysical Company was founded in 1952 and is headquartered in Midland, Texas.

They combined with TGC Industries in early 2015, so keep this in mind when looking back before 2015.

I mentioned a similar company ($PSD.to) earlier. Although Pulse will own the data and charge customers a fee to use the data for a specific timeframe and they have change in control measures in place in the event that the data changes owners.

Obviously the business has been hit hard this year. The company just reported the lowest quarterly revenue in over 10 years. They reported a fairly large operating loss of about 8mil and and EBITDA loss of 4mil. They have been able to remove some costs from the business to weather the storm. Although there is a balance between removed costs and keeping the right amount of staff to be ready for a return in activity. Either way, I don’t envy their position.

Income Statement

Given the gyrations in the business I think it’s best to look at the financials on a TTM basis.

We will likely see top line go below the previous slowdown in 2014 and 2017 as the pandemic drags on for a few more quarters (at least).

Margin of Safety

Looking at how the balance sheet, you can see that despite the business volatility the NCAV of the business has not changed much.

The drop in tangible book value has declined as the fixed assets have been declining as the depreciation is greater than the capital expenditures. There is still a further 40mil of PPE on the balance sheet as an additional margin of safety.


  • Management doesn’t own much of the common stock
  • Very cyclical and likely delayed rebound in their business
  • Many governments are pushing more and more electric vehicles that could have a material impact on demand for them


This is a company that does quarterly conference calls and they have been quite conservative and reasonable with investor expectations.

I also like that Gate City Capital owns over 10% of the business. They have proven to be smart capital allocators.

As with most net-nets, this is effectively a marshmellow test for adults. The business (and share price) likely recovers, but who knows when.

Anyone else look at DWSN?



*the author does not own DWSN at time of writing, but that may change at any time.

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Martello Technologies Group – $MTLO.v

I’ve been writing lots about more traditional and statistical investment opportunities. I think it’s important to be flexible to some degree with your portfolio. I will never be the investor who buys a business at 20x revenue, but I’m not against buying one that has not earned a profit, is growing fast, and isn’t cheap or traditional.

Martello is an interesting example. I recently picked up some shares. It’s still a small position at this point, but that can change.

Background (pasted from TIKR.com)

Martello Technologies Group Inc. develops and sells products and solutions that optimize the performance of real-time applications on cloud and enterprise networks. The company operates through three segments: Performance Analytics, Network Performance Management, and IT Visualization. Its products include unified communications (UC) performance management software, IT systems visualization software, and software-defined wide area network (SD-WAN) technologies. The company also offers Martello iQ, a service monitoring and analytics platform; ATLAS, a SD-WAN solution with security, optimization, virtual private network, and failover components; and Martello Vantage suite of products to prevent, detect, troubleshoot, and address UC performance problems, such as delay, jitter, packet loss, and poor voice quality. In addition, it offers subscription and perpetual software licensing, maintenance and support, and training and professional services, as well as hardware products, cloud connectors, and virtual LBX devices. The company serves education, hospitality, healthcare, and professional service industries, as well as enterprise networks, remote works, and service providers. It operates in Canada, the United States, Europe, Asia, the Latin America, Australia, and internationally. Martello Technologies Group Inc. is headquartered in Ottawa, Canada.

We’ve all experienced some disruptions with some virtual meetings regardless of the platform used. Digital Experience Monitoring helps businesses take a proactive approach to cloud based collaboration and productivity.

Their website has some useful information on the topic.

The company has integrated with Mitel very well and should see revenue increase if there is an increase in Mitel’s business. Mitel has sales over 1 billion and over 4,000 employees.


As you can see they just hit EBITDA break even last quarter if you adjust for some one-time expenses.


The C-suite seems fairly stacked for a company of this size.

The CEO has been on BNN a few times and always seems quite measured. He also did a TEDx Talk that I think is worth a listen. He has a background in the military and experience in Cyber Security.

The CFO recently won an award and well qualified given all the capital allocation decisions in front of the company at this growth stage.

The remainder of the team has deep experience in product development, talent acquisition, marketing, among other things.

Management owns about 3% of the company. I wish it was a little more.


Similar to the executive team, the board has characteristics of a much larger company.

Sir Terry Matthews is on the board as co-chair. He cofounded Mitel and is obviously well connected. He owns about 15% of the common shares.

The other co-chair is Bruce Linton of Canopy Growth Group. Canadian retail investors will be familiar with him.

The co-founder of Martello (Niall Gallagher) is also on the board as well.

The board owns about 20% of the outstanding shares with 15% coming from Matthews. The board does not give me the impression that they are simply rent seeking buddies of the executive team, which is really nice to see.

The audit and compensation committee are comprised of independent directors.

Execution to date

The company has been focused on building recurring revenue through organic growth and through acquisitions.

Of course, the acquisitions have come with increased recurring revenue and it’s likely too early to judge if the prices paid were too high or at a fair price.


  • capital raise could happen to accelerate M&A activity
  • poor outcome from a deal
  • low insider ownership
  • share count is over 200mil, I usually prefer businesses with less outstanding shares
  • retail shareholder base can lead to volatile gyrations in the share price
  • increase in expenses as the economy reopens could be quicker than revenue growth


Some milestones I can identify that would bring me more confidence in their execution and encourage me to add to my position:

  • several quarters of positive EBITDA
  • full integration of GSX (acquired in early 2020)
  • insider buying
  • another acquisition
  • getting MRR (monthly recurring revenue) growing organically

The shirt….

In July of 2019, Bruce Linton appeared on BNN to discuss being terminated as co-CEO of Canopy Growth. He was wearing a Martello Technologies and the shares took off from 0.20 to over 0.70. Now I don’t know what his intentions were by wearing the shirt, and I’m not going to speculate. The CEO appeared shortly after to discuss the business. I think John Proctor did a good job explaining the business and managing expectations.

I think this goes to show how primitive the venture market is. Linton was in the filings for Martello for about a year. If you type $MTLO into the search bar in Twitter you get some interesting comments around this time. Hopefully, the shareholder base is a little more focused on the business not the share price now, but who knows.


I think MTLO is a decent bet at today’s price. There seems to be some stability in the investor base after the run-up (and subsequent run-down) in 2019. The business seems to be building a base of recurring revenue while having a service that should be in demand for the foreseeable future. Monitoring the business performance is critical at this stage in their life and risk management via position sizing is my strategy.

Anyone else own MTLO?



*The author is long MTLO at time of writing. Thanks Chip and Liam for sharing notes.


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October 2020 Update – $OSS.v, $ISDR, $PSD.to, $STC.v, $FTG.to, $PTG.to, $VLN.to

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 ($PSD.to)
    • EdgePoint picked up 3.1 mil shares during a private transaction. They increased their ownership to 24.60%, up from 18%.
    • This is not anywhere near their top 10 in position size, so somewhat of a non-event.
  • Sangoma Technologies Corp ($STC.v)
    • Reported fiscal Q4
      • Good quarter and encouraging outlook
      • Beat previous guidance and issued new 2021 guidance
        • EV/REV
        • EV/EBITDA
  • Firan Technology ($FTG.to)
    • Reported numbers and held a conference call
      • Numbers were better than I would have guessed
        • Managing the covid precautions well
      • Have 3.1 mil in PPP
      • Backlog of 47M of which 26M due in fiscal Q4
        • Likely won’t deliver all though
    • Polar Asset Management picked up some more shares
      • They now own 13% of the outstanding
      • Non-event to me as this isn’t a top 10 holding for them.
  • Pivot Technology Solutions ($PTG.to)
    • Shareholders officially approved the arrangement for $2.60
  • Velan ($VLN.to)
    • 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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