Tag Archives: VMD

Jan 2021 Update – $OSS.v, $ISV.to, $STC.v, $VLN.to, $VMD.to, $SYZ.to, $MCB.to, $FRII.to, $RELL, $MTLO.v, $DWSN

Trying something new this month to catalogue some recent market activity and my thoughts around it.

Thoughts on Market Activity

I’m sure you’ve heard of activity around wallstreetbets reddit board and the short squeeze on some heavily shorted names (Gamestop being the most well known). Sorry to disappoint, but I won’t be participating in the short or long side of that corner of the market. It’s too risky for me. It is absolutely fascinating to witness in real time. I have been overly curious to understand what the thought process is for the individuals on each side. I will admit I have probably spent too much time listening to finance and non-finance people explain why they feel the way they do about it. Anyone interested in hearing some anecdotal data I’ve collected can send me an email or DM on Twitter.

I am not a macro guy. I can say that I have been finding interesting ideas lately, but I have not stumbled across businesses that I feel warrant a very large position in the portfolio. I am sitting on a higher than normal amount of cash, but that can change in a few weeks.

Posts this month

Relevant News from Companies Profiled Recently

  • OneSoft Solutions ($OSS.v)
    • Another customer signs on to integrate CIM into their pipeline operations
      • 4th customer in 3 months
      • This is a big positive and shares are up a bit for the month (about 15%)
  • Information Services Corp ($ISV.to)
    • They announced that they ratified a collective agreement with their in-scope unionized employees
      • They did this virtually which is good to hear
      • Provides 6 years of stability with the members with modest wage increases
  • Sangoma Technologies Corp ($STC.v)
    • Update on cyberattack
      • Had no material impact on sales or additional risks to the business
    • Huge acquisition announced
      • The had a call on Jan 29th to discuss
      • More details to come in the next few weeks
      • On the surface the acquisition seems like it is a good fit for the business and will further increase their value to customers, but the valuation is not cheap
        • This is common for Sangoma; all previous acquisitions looked a little off at first glance, but ended up being very well executed
      • I’ll likely to a more in depth post to help myself digest the news
      • As of this morning the shares are halted
  • Velan ($VLN.to)
    • CFO resigned to join a private owned company
      • Doesn’t seem a material event on the surface as he is staying to help transition the role
      • Would like to see a new CFO within a reasonable amount of time
    • Reported fiscal Q3 2021
      • The quarte was better than expected though covid is still having an impact on the business
      • They were able to execute the V20 plan remotely
      • They have the highest backlog in 8 years
      • Sale of the montreal plant resulted in a gain on the balance sheet
        • To me this gives additional margin of safety as looking at this as net-net gives no value to PPE which obviously has some value
    • I honestly think that this is one of those weird names that could earn more ebitda in a few years than the market cap in 2020
      • But that needs to be monitored
    • The bulletin boards are dead from this
  • Viemed ($VMD.to)
    • Released details of a recent Non-invasive vent study
      • Study was led by their CMO
      • Data was between 2012 and 2018
      • Seems like a good validation of NI vents and a helpful data point to bring to the table
  • Sylogist ($SYZ.to)
    • CI purchased shares
      • Bought 1.032 shares since Nov 10, 2020
      • About 40% of trading volume
      • These likely happened at the start of December as there was a spike in volume
    • New CTIO announced
      • Pedigree seems well
      • 225 options at $11.78
        • 5 year term that vest in equal tranches on 1st, 2nd, 3rd anniversary of $15, $17 and $19
  • McCoy Global ($MCB.to)
    • New board member announced (Cory Janssen)
      • Was co-founder of Investopedia
      • He’s quite connected as McCoy commercializes some of their digital products
  • Freshii ($FRII.to)
    • Alternative Monthly Report stating that Silver Ring Value Partners Fund LP
      • During the month ended December 31, 2020, Silver Ring acquired 195,500 Common Shares through open market purchases on the facilities of the Exchange, resulting in Silver Ring holding an aggregate of 2,806,233 Common Shares as at December 31, 2020, representing approximately 10.65% of the issued and outstanding Common Shares.1 Prior to December 1, 2020, Silver Ring owned, or exercised control or direction over, 2,618,733 Common Shares, representing approximately 9.95% of the issued and outstanding Common Shares.
      • Seems like a decent value shop
      • Nice to have a capital allocator own a large amount of the shares outstanding
    • Update on Special Meeting Circular announced
      • Reason for the special meeting is to reduce the stated value of the A shares so they can institute a NCIB
      • This is a step in the right direction
  • Richardson Electronics ($RELL)
    • Reported fiscal Q2
      • Results were better than expected and guidance was strong
      • Looks like wafer side of their business is rebounding and the current cycle could match or eclipse previous cycle
      • The CT tubes are seeing an increase in demand versus what was previously communicated, particularly seeing strength in Europe
        • looks like they could get the healthcare part of the business to break even closer than anticipated
      • shares spiked 20% on the news
  • Martello Technologies Group Inc ($MTLO.v)
    • Provided an update on operations
      • GSX (which was acquired in May 2020) is now fully integrated
        • Gizmo coupled with solutions MTLO already provides is set to take their DEM strategy to another level
        • Sales from all GSX and Savision were about 58% of rev in Q2 fiscal 21
      • Reiterated that legacy products have been declining and will mask core business growth
        • They noted that expenses related to managing the legacy part of the business are minimal
  • Dawson Geophysical – ($DWSN)
    • Wilks Family disclosed a passive stake of 2.28mil shares or 9.7% of the outstanding shares

2 Comments

Filed under Company Updates, Random Thoughts

Buy and Hold Quality Forever? Viemed $VMD.to

Congrats. You did it. You found a company (thanks to Chip for pointing it out) that no one was really looking at and put a decent amount of money to work when it mattered. You held onto it through ups and downs all along the way there were doubters to the story. You may have trimmed along the way, but it’s still a larger part of your portfolio than you would like and no longer a cheap company.

We will take a look at my real life example in Viemed – $VMD.to.  It’s less a profile of a company and more of a place to store my thoughts and look for feedback from others. This will be a quick one.

Backstory

Viemed was originally split from a Healthcare roll-up darling in Canada Patient Home Monitoring. It was purchased by Patient Home Monitoring in 2015 and eventually traded on the Venture in Dec 2017 after the split. PHM has a colorful history that was part of the reason the opportunity presented itself.

Viemed Healthcare, Inc., through its subsidiaries, provides in-home durable medical equipment and health care solutions to patients in the United States. The company offers respiratory services and related equipment, including non-invasive ventilators; bi-level, continuous, and automatic continuous positive airway pressure (PAP) machines; and oxygen units, as well as services of respiratory therapists; and respiratory disease management, neuromuscular care, and oxygen therapy services. It also provides in-home sleep apnea testing services to determine the existence of sleep apnea at home. In addition, the company leases non-invasive and invasive ventilators, PAP machines, percussion vests, oxygen concentrator units, and respiratory equipment, as well as sells medical equipment and/or patient medical services. Further, it provides therapy and counseling to patients in their homes using its technology. The company was founded in 2006 and is headquartered in Lafayette, Louisiana.

The company has a high touch service model that send Respiratory Therapists into the home, mostly for the proper use and monitoring of non-invasive ventilators (NIVs). This high service model helps the company separate itself from local and larger competitors.

Their service of treating patients in the home has proven to extent life and reduce hospital re-admission. This is a win for the patient’s quality of life as well as reducing costs to treat patients.

High Growth with lots of TAM

They have been specifically focused on stage 4 COPD that are candidates for their therapy. We all know the demographic profile of the US is a tailwind for this type of service. Despite the growth in recent years, they estimate to have about a 5% NIV market penetration.

There are opportunities to increase presence in existing states, expand into new states, expand product offerings, as well support patients that aren’t quite as severe as stage 4 COPD.

Management & Execution

Casey Hoyt (CEO) and Todd Zehnder (CFO) stayed on after the split from Patient Home to run the business. Both have proven to be excellent operators. Below is a list of accomplishments since early 2018.

  • surveys to educate their stakeholders on the value of their service – I’m refering to a KPMG and Harvard Medical School study
  • investor calls early on to tell the story
  • investing heavily to support patients remotely
  • Veterans Affairs contract win
  • growing in existing states and expanding into new ones
  • have growth in other products
  • providing PPE products during pandemic – this shows how quickly they can respond and is a nice bonus for shareholders
  • actively diversifying payor base and reducing their risk from a Medicare reimbursement cut
  • US listing

You can see they have been busy in just a few years.

Conclusion

This is all great, but with a market cap of over 500 mil and many institutional eyes on this, my edge of dealing with small illiquid companies has eroded. I will have to pivot my thinking if I continue to hold shares.

For me, VMD still warrants a position, albeit smaller. I have trimmed to where it is a less meaningful part of my portfolio. They want to be the largest respirator company in the US long term. That’s quite ambitious, but does provide some context to the long term plan for the business. They seem to have the runway and the strong leadership. I will be curious to see how they manage acquisitions if they do go down that road. There are risks to the business for sure.

In the past I have tried to model out the future with a couple of different scenarios. Those models never seem to work for me. I’ve posted it below for entertainment purposes. This model doesn’t include any (temporary) sales of PPE made during the pandemic.

At the end of the day, this is a business with a long runway and a solid management team. Valuation is not cheap, but I think with a long enough time horizon it’s worth having a position.

Anyone else own Viemed?

Thanks,

Dean

*the author is long shares of Viemed at time of writing

1 Comment

Filed under Company Analysis, Random Thoughts