DH Corporation (DH.TO)

Used to be a cheque business, but that is getting to be a smaller and smaller part. Did a couple of really big deals in the US. It is really a technology company in the financial services industry and it is very unique. Executed on their last acquisition very, very well and it will do the same with the latest one.

This isn’t a cheque company anymore, but more of an information, analysis, storage, manipulation company. They keep expanding more and more into the computer area. Have made various acquisitions in the US that have turned out well. Below $40 would be a decent entry.

This was the biggest cheque processing company in Canada for over 100 years. It was a declining legacy business, so they decided they were going to have to look further for other opportunities. In 2013, they acquired a company that was in the fin-tech space, and as a result, the multiple on the stock started increasing because it was back in growth mode. Recently announced an acquisition of Fundtech, which further bolts them into this space. Also, gives them geographical diversification and an entry point into Asia. It gets them into 8 of the 10 top US banks and 30 of the top global banks. Has gone up, but is still attractive on a multiple basis and is only trading at 11 or 12 times, where the US comps are trading at 15 or 18 times. Yield of 3.12%.

It reinvented itself and then it broke out. He thinks it will just go higher and higher.

It did a tremendous thing in stepping into a banking software solution in the US. It is going through a bit of a consolidation.

A top quality company and a core holding. Canadian and US business exposure. The valuation is full here. You would have to pay up for the growth. He would wait and try to get a better entry point.

(A Top Pick Nov 12/14. Up 8.15%.) This is remembered as the cheque production people, but they have actually become a company that helps companies with their payables, their billables, basically everything to do with making their whole finance system run. They have been making acquisitions and expanding.

Convertible debenture. Should I convert now? If the bond still yields more than the stock, you should probably hold it. If that’s the case, it is likely that the company will force the conversion, which they can do.

Has made a great transformation from being strictly a cheque company. It has been really volatile. Technically if it breaks below $35, there is a significant moving average there. If you don’t own, try to get in at around $35.

Chart shows a rolling top. It has already broken down through some near-term support. It doesn’t mean that it is going to have a price drop, but it means the stock is sort of weakening. He would like to see it break above $10 with volume.

Very attractive dividend yield and a very stable business. Management has done a tremendous job over the last 5 years, transitioning from an old checking business to providing banking technology solutions, lending and payment solutions across North America. They have done a number of acquisitions. Have grown and compounded EBITDA by 18% over the last 5 years. At this level, the stock is not cheap. Doesn’t see a tremendous amount of upside, but he will continue to hold.

Very unique franchise here in Canada. An acquisition moved them into the US. They are now a technology company. There is some great growth coming. Does not think the dividend will go up as substantially as before. They may have to do some more debt for acquisitions. In the US the banking industry is more fragmented so their products are more beneficial to them. Buy them on a pullback. It will do well over the next few years. They executed on what they promised to do.

(A Top Pick Oct 4/13. Up 45.13%.) The deal they made in the US in the last 18 months was transformational. Has done very well along the way and has raised some money as well. Expects to see the stock continue to do well and grow significantly.

Cheques are now just a small component of their business. They provide electronic processing for so much financial services, including mortgages, payables, accounting, etc. Just made a US acquisition so that now 50% of their revenue will be coming out of the US. Dividend yield of 3.57%.

A great little company. Cheques are a very small part of their business now. In his view, they are effectively a financial technology company. Made a large acquisition in the US that is going really well and is changing the company. It is becoming more and more of a US company because there are many more banks in the US than in Canada. It has run up a lot, so he would look for a slight pullback. Nice dividend yield and they keep increasing their dividends all the time. Thinks they will take a break from this for the next little while as they want to pay down some debt.