Tag Archives: ISDR

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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July 2020 Update – $OSS.v $ISDR $PSD.to $ISV.to $STC.v

I was thinking that I would try sending out a quick update on the companies mentioned here recently that I keep tabs on. Maybe I’ll make it a regular thing, maybe not. Many companies will be announcing Q2 2020 numbers next week.

OneSoft Solutions – $OSS.v

Their wholly-owned subsidiary (OneBridge Solutions) was named as a finalist of Application Innovation 2020 Microsoft Partner of the Year. The demonstrates the value of their solution and the intimate relationship of the relationship with Microsoft.

Filed a statement of claim against a breach in a Software License Agreement from 2014. The claim is not material from a financial standpoint, but it shows how important they take their IP.

Issuer Direct – $ISDR

Issuer reported their results last night and they were really good. Shares have jumped over 20% today. Revenue was up over 20%. Profitability was the highest in a long time. They have cash to deploy on multiple capital allocation opportunities. If growth and profitability is maintained, then ISDR is still cheap.

Pulse Seismic – $PSD.to

Very rough quarter, but that was expected. Still generated a little bit of cash. They are in compliance with covenants at this point.

Information Services – $ISV.to

They announced an acquisition of Paragon. This diversifies the business and bolts in well to the existing Services side of the business and is recession resistant. The price isn’t dirt cheap, but does seem reasonable.

Sangoma Technologies – $STC.v

Closed a financing for $81 mil. This was oversubscribed. The price was at $2.30 per share. They now have a bunch of cash and I would expect an acquisition announced soon.

 

The author is long shares of $STC.v, $OSS.v and $ISDR

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Issuer Direct ($ISDR)

I originally met the CEO (Brian Balbirnie) about 5 years ago at a conference. I was impressed with his work ethic and how much focus was on the future of the company. I didn’t hurt that he owned over 20% of the company at the time. I’ve followed the company since then waiting for a decent entry point on the stock. I took an initial position during the covid sell-off.

There is a good overview of the company at CleverInvesting. Check it out here. I swear I have (some) original ideas, but sometimes someone else already has an idea that’s worth investigating.

Why now?

As you can see from the 5 year price chart, ISDR has essentially performed in line with the S&P 500.

The company has built out the Platform and Technology side of the business gradually and now it is the primary driver for earnings in the short and long term.

The services side of the business has seen top line slowly decline, though gross margins have been maintained. I would expect the services side to decline at a pace of 3-5% per year until it eventually troughs out.

Platform and Tech has more than doubled in quarterly revenue in the last 5 years with the combination of organic growth, migration of customers from services to platform and acquisitions.

Opportunity

I believe that along with Covid there are some temporary items that are suppressing earnings or otherwise preventing the shares from re-rating at a higher multiple on a trailing twelve month basis:

  • expanding sales team (gradually)
  • some development expenses used to integrate acquisitions
  • build out of new headquarters in 2018/19
  • lumpiness in services revenue decline masks the growth in the platform business
  • dividend cut a few years ago

Why I am long

  • my understanding is that Accesswire can get about 80% of the reach as the major players at 1/3 the cost
  • the company has a net cash balance of almost 16mil to weather the storm as well as potential acquisitions
  • they have demonstrated that they can run the business well through a lockdown and will likely run a small loss or profit in the near term
  • the company pivoted very quickly to get something quite useful out in time for virtual conferences, i think this speaks to how well they work as a team and adapt on the fly
  • they issued 800k shares at $15.50 and then bought back a little over 200k at $12.25 from a fund that wanted out of the stock – oppo
  • the company announced an increase to the share buyback recently

Risk

There are obviously risks associated with ISDR. I can think of a few that would lead to a gradual decline in share price, but nothing that I think would cause share prices to crash.

  • Covid-19 lockdowns continue or are reinstated
  • Accesswire never gains traction
  • Services decline accelerates
  • Acquisition of a sub-optimal business

Given how aligned the CEO is with the business and share price performance, I think ISDR is worth an initial position.

 

Thanks,

 

Dean

*the author is long ISDR at time of writin.

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