Tag Archives: CSW

June 2021 Update – $CSW/A.to, $OSS.v, $PSD.to, $IDG.to, $STC.v, $MCB.to, $MTLO.v, $SVT, $FXC.to, $URB/A.to

Happy Canada Day to my fella Canadians and Happy Independence Day to my friends south of the border.

TIKR

I use TIKR to quickly look through ideas and check comparable companies. Would recommend. Referral code below.

https://app.tikr.com/register?ref=smob7c

Thoughts on Market Activity

Really nothing new to report here. There is a still a debate on whether or not the spike is transitory or not. I don’t know. That’s it. Most commodities have rolled over to some degree, except oil and nat gas which have been strong. It will be interesting to see how long or to what degree we reopen if there is still 25-30% of adults with vaccine hesitancy.

Looking at my portfolio at the moment… I am looking to reduce the amount of companies I hold. I have too many small positions that are somewhat distracting given how much they will move the needle.

What I’m Reading

Deep Work by Cal Newport

I really enjoyed this book and have been trying a few suggestions from the book. I have been scheduling my day in 30 min blocks that consist of either shallow and deep work. I have also removed much of my presence from social media. At least, I don’t check my Twitter timeline, but I will continue to utilize and check my DMs. I’ll give it a try for a month or so and see how it goes.

I also like to read books on parenting and relationships. Message me if you’re interested.

Posts this month

Developments on Companies Mentioned

  • Corby Spirit and Wine Limited – $CSW/A.to & $CSW/B.to
    • Lawsuit filed against them
      • Lawsuit filed on black discoloration near the warehouse
      • They stopped managing the warehouse june 30, 2020
  • OneSoft Solutions – $OSS.v
    • New teaming agreement
      • First from Worley via Advisian
      • First in Australia
      • Began trials in March 2020
      • I found this interesting from the PR
        • Hossein Khalilpasha, Advisian Principal Integrity Engineer and Asset Integrity Lead stated, “The case studies we performed demonstrated that our analysis of clients’ data using CIM with machine learning is not only more accurate, much faster and less costly for clients, but also provides state-of-the-art 3D visualization of pipeline data that empowers engineers to surface and contextualize pipeline conditions and threats that legacy integrity management systems and processes used today do not rival.”
  • Pulse Seismic – $PSD.to
    • Burgundy has been selling shares
      • Sold 360k shares
      • Still own 5.2 mil shares or 9.7%
  • Indigo Books & Music – $IDG.to
    • Reported annual results
      • Really hard to judge the business given the lockdowns in place throughout the year
    • CEO bought about 440k worth of stock at these prices
    • Though the business has proved resilient, the business does not attract me at these prices and I will not be updating it moving forward.
  • Sangoma Technologies Corp – $STC.v
    • CEO made a couple of small purchases during the sell off
  • McCoy Global – $MCB.to
    • Announced the formation of a special committee after AGM
      • I view this as positive
      • I think if they shopped this investor deck around outside O&G and an existing business they would have gotten a substantially higher valuation
  • Martello Technologies Group Inc – $MTLO.v
    • Reported fiscal Q4 2021
      • Market didn’t like it
      • Hit by fx
      • Rev up yoy with GSX acquisition
      • Adj ebitda worse yoy
      • Sounds like they have lots of promise in the future
      • Still monitoring
  • Servotronics – $SVT
    • Lawsuit filed against the CEO and the Ontario Knife Company
      • CEO has been placed on administrative leave
      • Gotta love microcaps
  • FAX Capital – $FXC.to
    • Announced the renewal of NCIB
      • Up to 1.5 mil shares or 10%
      • Daily limit of 14,758 shares
    • Investment in BioSyent
      • They own just over 2mil shares or 16.69% of the common
  • Urbana Corp – $URB/A.to

Hope everyone is having a wonderful summer and gets vaccinated.

Dean

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May 2021 Update – $CSW/A.to, $OSS.v, $REPH, $ISDR, $PSD.to, ISV.to, $STC.v, $VLN.to, $VMD.to, $SYZ.to, $MCB.to, $FRD, $FRII.to, $MTLO.v, $DWSN, $FXC.to, $PZA.to, $MCR.to

TIKR

I use TIKR to quickly look through ideas and check comparable companies. Would recommend. Referral code below.

https://app.tikr.com/register?ref=smob7c

Thoughts on Market Activity

Another busy month.

This month continued the debate on whether or not the current inflation readings are transitory or more permanent. I’m not smart enough to know. Most seem to be over the worry about covid in the first world.

Personally, my portfolio took it on the chin this month. Bigger holdings in $STC.v and $VMD.to are the main culprits. I continue to believe in both businesses over the long term so I continue to hold. I’m still finding some interesting ideas, but they are more cyclical or neglected with lots of uncertainty.

Posts this month

Developments on Companies Mentioned

  • Corby Spirit and Wine Limited – $CSW/A.to & $CSW/B.to
    • Reported fiscal Q3 2021
      • In line with expectations
        • Lots of lockdowns so in person dining is hit
        • But people still drinking
        • At about 4.8% yield
          • They’ve have issued special dividends before, as things recover and cash builds on the balance sheet, they may do it again as they now have almost $3 per share in cash
  • OneSoft Solutions – $OSS.v
    • Reported Q1
      • A little below my expectations
      • Last year had a large amount of data uploaded which led to a very tough comp
      • Still holding
  • Recro Pharma – $REPH
    • Reported Q1 2021
      • Results were better than expected
      • They provided full year guidance and the market reacted well
      • the business seems to have bottomed and having the visibility for full year results is a positive
  • AWM announced an initial position
    • 4.8 mil shares
    • I’m assuming they picked some up during the recent issuance
    • Can’t find a ton of info on the fund, but this does not look like a top 10 holding for them based on the last round of 13F’s
  • Issuer Direct – $ISDR
    • Reported Q1
      • Rev up 32%
      • Profitability up yoy and flatish from Q4
      • Outlook was positive
  • Pulse Seismic – $PSD.to
    • Announced a data license agreement for 17mil
      • Immediate rev of 7.3mil
      • Remaining 9.7mil by April 15, 2022
      • YTD rev (17.2) is way ahead of full year 2020 rev
  • Information Services Corp – $ISV.to
    • Reported Q1
      • Better than expected
      • The real estate market in Sask was stronger than I expected
      • It will be interesting to see what the rest of the year looks like given that the seasonality weak quarters were strong and there may be some demand pulled forward in parts of the business but also other parts (Paragon for example) are being held back due to stimulus
  • Sangoma Technologies Corp – $STC.v
    • Reported fiscal Q3 2021
      • Weaker than expected due to stronger CAD
      • Star2Star integration going fine
      • Not much detail on uplisting at this point
  • Velan – $VLN.to
    • Released fiscal Q4 2021
      • Way weaker than I expected and shares tumbled on the day
        • Production issues in north America from selling the plant earlier than expected in 2020
        • Delays due to covid and supply chain interruptions
      • Backlog is up so it’s nice to see demand for their products
    • Still holding, going to regroup on this one
  • Viemed – $VMD.to
    • Reported Q1
      • A little weaker than I was expecting
      • Guidance was pretty good
      • I really like the adjacent initiatives they have to drive customer value
  • Sylogist – $SYZ.to
    • Reported Q1 2021
      • Was weaker than expected
      • Seems like a mix of currency headwinds and covid lockdowns
      • I still follow and am curious if they can find some more acquisition candidates
  • McCoy Global – $MCB.to
    • Reported Q1 2021
      • Was weak as expected
      • Continue to develop their product suite to support a fully automated TRS (Tubular Running Services) for end of 2022
  • Friedman Industries – $FRD
    • Ault Global Holdings announced a 416,000 share position or 6%
      • They have gone activist on company’s in the past and this will be interesting to watch
    • Provided Q4 guidance and new faciility
      • Expect earnings in Q4 to be 9.5-10.5 mil and EPS $1.37-1.52
        • The most profitable in history
      • Steel prices have been moving if you haven’t noticed
      • New facility
        • 21 mil cost
        • Estimated 3 million ton capacity
      • New equipment in Decatur
        • Started in May 2021
      • Shares have performed really well – wish I have bought some
  • Freshii – $FRII.to
    • Reported Q1 2021
      • Weak as expected
      • They seem to be gaining some traction with the app and some omnichannel opportunity
      • Q2 will likely be weak as lockdowns in Canada persist, although likely not as weak as Q2 2020
      • Canada is doing well with administering vaccine and many provinces are talking about reopen, FRII now has to demonstrate how they can succeed in a more normal environment
  • Martello Technologies Group Inc – $MTLO.v
    • Launched cloud-based mulit0tenant Microsoft 365 monitoring platform
      • Sounds like this will be meaningful to revenue in 2022
  • Dawson Geophysical – $DWSN
    • Reported Q1 2021
      • Weak as expected though better sequentially
      • Maybe see a bounce in activity if oil remains at these levels
    • I’ve stopped following the company closely as the shares are continuing to trade above NCAV
    • I’m going to stop providing updates from this point on as this is really just a NCAV play
  • FAX Capital – $FXC.to
    • Announced Q1
      • Book value up 6% sequentially and 24% yoy
    • Held AGM virtually – some interesting points
      • Approved the amended voluntary measures by-law
        • This gives them a little more flexibility on positions allowing for up to 2 holdings to a max of 25% of assets (each)
      • They are happy with the pace of cash deployment
      • They have monetized two investments which had led to cash on the balance sheet being higher than expected
      • I don’t think I understood the potential they see in Carson Dunlop
        • They gave some additional color on the call which was appreciated
  • Pizza Pizza Royalty Corp – $PZA.to
    • Reported Q1 2021
      • As expected results were quite a bit weaker than last year as there was little to no covid impact in Q1 2020
        • Most of their markets had delivery and pick-up only for the quarter
      • Noted they are looking to grow the restaurant base by 5%
      • The tone on the call was more positive than typical
      • As Canada continues with it’s vaccine program we should see reopen happen slowly
  • Macro Enterprises – $MCR.v
    • Announced Q1 2021 and AGM
      • Confirmed min 250 rev for 2021

Dean

*Long $OSS.v, $ISDR, $PSD.to, $STC.v, $VLN.to, $VMD.to, $MCB.to, $FRII.to, $FXC.to, $MCR.to at time of writing

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Corby Spirit and Wine Update – $CSW/A.to & $CSW/B.to

It’s almost been a year since I kicked off dedicating more time to blogging since the covid lockdowns. I have toyed with the idea of having a dividend paying portfolio cover more and more of my living expenses. To be honest, I’m still on the fence. I have debating creating a 10-12 stock dividend portfolio for tracking purposes. Anyways, here’s a quick update on Corby.

Since posting about Corby in May 2020, shares have underperformed the TSX and several dividend focused ETFs. Also, everyone was getting rich off bitcoin except you and me. The performance below doesn’t include dividends.

As expected, Corby has weathered Covid well. Surprise surprise but people kept drinking throughout the (various degrees of) lockdowns. Revenue has been maintained and profitability hasn’t been impacted.

I went over the business in more detail in the previous post so I won’t repeat myself here. Basically, I view the business as very stable and long term demand for their products to grow with GDP. The CEO has been in place for a year and has done well (in my opinion) navigating the pandemic.

Dividends

I’m going to spend some additional time looking at their dividend payouts and policy.

The dividend policy is to pay out 90% of earnings in the previous fiscal year. They have also paid some special dividends out over the years.

In the last 5 and 10 years they have paid out 30 mil and 112 mil ($1.06 and $4.07 per share) in special dividends.


Here is a quick look at the historical payout ratio of Corby. FCF is likely overstated as they have been lowering their capital expenditures since covid to preserve capital.

With a little more visibility on the (eventual) reopen in Canada, I would expect the dividend to increase and potentially pay out a smaller special dividend.

Valuation

A quick look at absolute valuation is below. Forward numbers are my estimate for fiscal 2021 which is over in a few months.

Relative to where Corby has traded, it’s a slight discount to mean for P/S and EV/EBITDA.

Risks

  • valuation is not cheap
  • there could be an issue with one of the brand’s they market
  • people could drink less in the future compared to today (perhaps increase their consumption of cannibis)
  • the B shares are non-voting

Conclusion

Not ridiculously cheap and not expensive. Perhaps dividend paying stocks will have a tougher time if/when interest rates move up. Corby is not a debt heavy company that has a large portion of operating earnings going towards servicing debt.

Anyone own or have an opinion on CSW?

Thanks,

Dean

*the author does not have a position in $CSW/A.to or $CSW/B.to

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