Tag Archives: DWSN

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

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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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April 2021 Update – $OSS.v, $REPH, $ISDR, $PSD.to, $ISV.to, $FTG.to, $XTC.to, $RELL, $MTLO.v, $DWSN, $SVT, $URB/A.to

TIKR

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Thoughts on Market Activity

This month seen a bounce in the markets to some degree. Hearing more and more mention of inflation on conference calls from companies and some larger companies have implemented cost increases due to rising input costs. I am not a macro guy but thinking about how a business will perform with higher input costs feels more prudent than ever. There seems to be a big disconnect on what I hear on Twitter vs. how the indexes are performing. I do consistently hear “it’s a tough market for microcaps” and “these aren’t getting the attention they deserve”. It seems to be a story of what worked in 2020 isn’t working in 2021. Is it a temporary phenomenon or something longer lasting I’m not sure.

On a personal note, my portfolio has been treading water for a few months. Keeping up with the Russel YTD will have to be good enough. I have been deploying into more and more smaller bets as some companies have reached large portions of the portfolio and not sure if the valuations warrant very large positions. This will make it harder to substantially outperform by a wide margin but could lead to less volatility. Also, I’m expecting that the churn in positions will lead me to underperform in the short term.

Posts this month

Developments on Companies Mentioned

  • OneSoft Solutions – $OSS.v
    • Announced another client
      • Nice to see some continued traction
  • Recro Pharma – $REPH
  • Issuer Direct – $ISDR
    • Announced a 1% pledge
      • I like the concept and how ISDR is an entity that gives back to the community
  • Pulse Seismic – $PSD.to
    • Reported Q1 2021 and held AGM
      • 3.8 mil in sales in April
      • They have now booked 77% of the entire year of 2020 rev (although depressed) in the first 4 months
      • I have tried hard to purchase additional shares, but the share price has run away from me
  • Information Services Corp – $ISV.to
    • Filed a shelf prospectus to raise up to 200mil over the next 25 months
      • Interesting development and something to monitor
  • Firan Technology – $FTG.to
    • Reported fiscal Q1 2021
      • Results were impacted by covid from a demand and operational standpoint
      • Trading quite cheap based on trailing numbers with some uncertainty with commercial aerospace returning
  • Exco Technologies – $XTC.to
    • Reported fiscal Q2
      • Results were above my expectations and outlook given was strong
  • Richardson Electronics – $RELL
    • Reported Fiscal Q3
      • Things are looking positive
      • Trading at about NCAV
  • Martello Technologies Group Inc – $MTLO.v
  • Dawson Geophysical – $DWSN
    • Adopted a shareholder rights plan
      • Expires in 2022
      • Not a fan
  • Servotronics – $SVT
    • Released 10-K
      • Not a ton of details that we don’t already know
      • Revs down 10% in 2020
        • ATG down 16% as they are tied to commercial aviation
      • CPG up 34% as they shipped more units
    • Still interesting to follow
  • Urbana Corp – $URB/A.to
    • NAV is slowly creeping up

The author is long $OSS.v, $ISDR, $PSD.to, $URB/A.to

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March 2021 Update – $OSS.v, $REPH, $ISDR, $PSD.to, $ISV.to, $STC.v, $FTG.to, $VMD.to, $SYZ.to, $MTLO.v, $DWSN, $SVT, $FXC.to, $PZA.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

Podcast

I was a guest on In The Market Trenches podcast this past month. Have a look/listen.

YouTube

Podcast

Thoughts on Market Activity

Once a month I write in my investment journal to attempt to capture my current thoughts on the public markets. It’s not a forecast and I am not a macro guy. It is a quick snapshot of what is happening in real time and how I’m processing it.

This month I made note of how the broader market seems to continue to rotate out of “what worked in 2020”/SaaS/lockdown names and into “recovery” companies. The S&P ended up 7.4% YTD, while the TSX ended up 6.7%. The Russel 2000 has now outperformed the Nasdaq comp over the ttm. The disordered pace of covid vaccine distribution seems to be creating lots of noise. As well, there are many that are very concerned about variants and their implications on the healthcare system. It is interesting to experience in real time. This goes without even mentioning NFT, crypto, EVs, etc. Such things I have no business commenting on.

I continue to find some interesting opportunities in more cyclical companies, although these usually amount to more and smaller positions. As always looking for businesses with long term potential, with incentivized management and a reasonable valuation is the main goal and will constitute the largest amount of my energy. Of course, building positions in such businesses takes continuous effort on the bid as they tend to be illiquid.

Building wealth in the most reasonable way for me is not always the optimal way in the short term.

Posts this month

Quick Notes on Companies Recently Mentioned

  • OneSoft Solutions ($OSS.v)
    • Announced an acquisition of IP
      • Not a ton of details
      • They are usually very thorough on MD&A’s so likely to get more color then
    • Posted Q4 2020 results
      • In line with my expectations
      • MD&A is a must read to understand the value proposition
  • Recro Pharma ($REPH)
    • As mentioned before, I have sold but continue to monitor
  • Issuer Direct ($ISDR)
    • Released Q4 2020
      • Results were good
      • Continue to hold my position
  • Pulse Seismic ($PSD.to)
    • Reported auditor change
      • Non event as it was board approved
    • Lots of volume on March 12
  • Information Services Corp ($ISV.to)
    • Released Q4
      • Business is holding up well
      • Margins have ticked up a bit
      • With the Paragon acquisition they are getting more revenue from services
      • Some delays due to covid, but it didn’t sound like anything major
      • Interesting company
  • Sangoma Technologies Corp ($STC.v)
    • Officially closed the acquisition of Star2Star
  • Firan Technology ($FTG.to)
    • Polar Asset Management sales
      • 528k shares sold from Jan 8 to Feb 12
      • About 50% of the trading volume
      • They now own about 9% of the outstanding shares
  • Viemed ($VMD.to)
    • Reported Q4
      • Still executing well
      • The covid related one time revenue will run off
      • Call indicated that they can return to historical growth rates once we are fully reopen
  • Sylogist ($SYZ.to)
    • Received conditional approval to list on TSX from TSXV
    • Acquisition of MAS (Municipal Accounting Systems) and new credit line
      • 37.8 mil in cash
      • 7.4 mil rev
      • 4.3 mil ebitda
      • Will be immediately accretive
    • Held a call after the acquisition
      • Will list on TSX shortly
      • Integration of MAS 90-120 days
      • Key employees staying on post integration
      • Investing in sales and marketing to expand MAS geographically
    • Announced they will list on TSX
  • Martello Technologies Group Inc ($MTLO.v)
    • They announced a private placement concurrent with the bought deal
      • This was closed and mgmt. participated for about 1 mil
    • I have sold my shares at a small loss and will move on
      • I will continue to monitor for a few quarters
    • Announced strategic sales win
      • It sounds quite positive
  • Dawson Geophysical ($DWSN)
    • Reported Q4
      • As expected rev way down
      • Potential to recover further with O&G activity
  • Servotronics ($SVT)
    • Filed a notification of inability to timely file their 10-K (deadline was March 31)
      • Micorcaps are fun
  • FAX Capital ($FXC.to)
    • Announced a placement with QUIS
      • 16 mil shares at $1.25 for 20mil total
      • 1 year lock up
      • Able to nominate a board member
      • They should still have lots of cash left over after this
    • Closed Carson Dunlop acquisition and placement with QUIS
      • Also appointed a president (graham Badun) of a new platform company
      • Was president of Alarm Force
    • Q4 results posted
      • No surprises
      • Estimating they have about 45% cash in book value after the acquisition of PEO
  • Pizza Pizza Royalty Corp ($PZA.to)
    • Reported Q4 2020 – Not much to report
      • Ontario and Alberta have been under fairly strict lockdowns during the back half of the quarter
      • Non traditional is hurting
      • Payout ratio was 84%
      • They feel they can grow store count by 5% in 2021

The author is long $OSS.v, $ISDR, $PSD.to, $STC.v, $VMD.to, $FXC.to at time of writing.

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