Peter Hodson Currency Exchange Intl. CXI-T HOLD Mar 27, 2017

On a broad, broad picture, this is still making higher lows, which is positive. However, it has been long enough that it hasn’t made a new high. The chart is neutral, so he is cautious on this.

Just got their banking license which allows them to expand and deal more with the chartered banks on currency exchange. That is where their big business is. It has taken a little longer for it to get integrated into the growth mode, so you are seeing a little fatigue by investors, who waited for a long time for the license to come through. Their retail business is not their main focus or the driver. You just need to be patient.

This has come up a lot this year, down about 33% YTD, partly due to the last 2 conference calls. Earnings had disappointed in both. Investors waited about 4 years for them to get their bank license which came in September, and it was going to be 6 months before benefits would be seen. In the last quarter, there wasn’t a lot of evidence of that. About 3 years ago, the company went into the payments business, and have been building up a business in that, so there were a lot of expenses, but no sales. Because of this, expenses have grown much faster than sales growth. They’ve built a lot of infrastructure, and they now need to grow into that. He has a lot of confidence in the CEO. Expects that the next quarter is also not going to be a great one.

Has been involved with it since its IPO. After a four year wait they got their bank license. Within 6 months they expected to land the 6 big banks. It has not happened since the bank license came out. The growth has happened in the top line, but not in the bottom line.

Thinks this is a buy. It commands the space in terms of being outside the bank, doing big contract work on thin margins. Suffered about a year ago because the US$ was strong, which affected their income. A one-of-a-kind company, except for a British one which is private.

Supplies physical foreign exchange. They’ve diversified into the payments business, which has caused a few headaches for them in the last few years. It is still not in profit mode. There was a lot of excitement last Sept/16, when they got their bank license, and it was thought they would take the Canadian market by storm. The reality is that it has been a tougher slog in the Canadian market. Incumbents were a little more resilient than what had been thought. Q3 had record revenues, but expenses were a little higher than expected. Expenses continue to grow. Sold his holdings this summer, largely on valuations. It is difficult to justify the stock given its outlook for growth and profitability.

A very good small cap. They gapped up. Volume is sporadic, because it's a small cap. Had an 8% rise on March 15. Continues to rally. Would like to see more volume and it could consolidate around $23-26. There are positive signs of a break-out. Reduce around $26.75. It's now above resistance at $27, which is very positive. Consider adding to it now.

They've executed well. Has a reasonably valuation. Maybe after some quarters he may look into it, but he's not 100% sold on the demand for their currency services.