Avigilon Corp (AVO.TO)

(A Top Pick Oct 16/15. Down 2.43%.) It looks like they are back on track as far as making money. In the near term, the next couple of quarters won’t be great, but looking out over the next 1-1.5 years, it should be interesting.

He has historically been short this and still has a tiny bit but has been covering it. They didn’t have very efficient use of capital. The main negative though, has been on the cost side, which seems to be under control now.

This has been a letdown. He has stayed away from it. It is hard to get a grasp on what they are doing. He likes the technology and the fundamentals. It is very lumpy. He needs to feel comfortable with management teams running these things. He is not getting a clear vision on how they are going to build the business.

This had been a darling, a dog, a darling all in a couple of years’ time. The CEO is a super driven guy. The market was always concerned that they had revenue, but they weren’t really seeing that translate into earnings. The most recent quarter really did translate into earnings, and the stock had a huge move up.

Every quarter they say they are investing for growth and to get market share, but investors are saying that they don’t like spending or the impact on earnings, and the stock has been decimated. We won’t know if it is the right strategy for another 5 years, but at least they are willing to do it as opposed to a lot of others that will toe to the shareholders to just get quarterly numbers.

It is getting to the point where he will start covering his short position. Management has not delivered on what they promised.

A hardware company that essentially provides cameras for surveillance and other analysis tools. They have just been kicked out of a bunch of indices, and he shorted the stock based on that. They seem to be very focused on growing their revenues rather than their profitability. Also, they are facing some competition from Chinese competitors. He doesn’t think people are willing to pay up for higher end cameras. Their margins are really taking a hit.

Fundamentals have always fundamentally looked good, but it has just been sliding down. They have a bit of a strategy shift, going to a loss leader strategy, where they are going to sell cheaper surveillance cameras to get their foot in the door with customers, and then up-sell them with higher quality versions of their product. Longer-term, that is probably not a bad strategy, but it was not what they sold investors in the 1^st place. It is really a “show me” story.

(Market Call Minute) They are experiencing significant pressure from Chinese suppliers. Wait for revenue growth to stabilize.

Their technology is pretty cutting edge. They provide digital security cameras and related software for large-scale corporate, retail and industrial applications. Had been a pretty good growth stock for a number of years. Feels management has lost a lot of credibility. They missed numbers. Also, they have a revolving door in the C suite with the CFO, etc. Too risky for his clients.

This has been a tough one for investors in the last few years. They were really focused on hitting this $500 million revenue target, and from all accounts it looks like they are going to succeed. However, they have done it at the cost of being profitable and being cash flow positive. Sold his holdings at significant higher prices. It is probably a takeover candidate once they turn that profitability around.

This is in the surveillance business. They meet his criteria, but he doesn’t own it because the stock has been technically weak. They seem to be chronically undervalued, but is not sure why. He would wait for more technical strength in the stock.

(Market Call Minute.) Just reported crummy results. Not a cheap stock, so he would avoid it.

This is down about 25%. They had to cut their guidance going forward because of having to take some price cuts on some of their older surveillance equipment. When you are a smaller company, revenue misses have a more meaningful impact on the bottom line. She would not be inclined to make an investment now.

(Market Call Minute) The revenue growth has been in decline for years.