DH Corporation (DH.TO)

(Market Call Minute.) He used to like the old business when they only did cheques, but doesn’t like what they do now.

Chart shows a long downtrend from August to February followed by a nascent uptrend with a lot of volatility. It is forming a base and the next hurdle will be $38. He would suggest you take a little position now and once it gets above $30, then add to your holdings.

A transaction processing, loan administration type of business. A Short report came out talking about a big acquisition they did giving them a global platform to sell and cross sell their services. The report said they were not going to be able to get any growth, legal issues, etc., but the company released an earnings report which squashed the report. That was followed by another release which wasn’t a great quarter. It is now pretty cheap at about 12X earnings and pays a 4% dividend, and has potential for dividend growth. He likes this.

(A Top Pick Sept 18/15. Down 17.75%.) Recently there was a hedge fund that had a Short position, and came out with a bad report on their accounting practices. He exited his position at about $34.50.

(A Top Pick June 18/15. Down 19.7%.) Had thought you could get paid a really good dividend with a low payout ratio and be investing in US banks and FINTECH. That is a very important area for investors to get into. Thinks the downside has been way over exaggerated on this. A Short seller had scared everybody, but that was discredited. Thinks value will surface as growth returns to US lending. Still a Hold.

(A top Pick July 8/15. Down 15.37%.) These are the people that originally made cheques, but now it is more of a Fin Tech company, mostly in the US. He likes the company and thinks there is good growth in it. The Fin Tech side in the US will be far more important, because of the many small banks, which are happy to use third-party providers. Still a Buy.

Cheques, but also a mixture of things, and more US than Canada. Feels it has OK growth plus a dividend. As it has pulled back from its peak, you might see 10% on it, but not enough for him to get excited. Has a decent yield.

(Market Call Minute.) In FINTECH he owns a number of companies. Has owned this in the past, but would prefer Visa (V-N).

(Market Call Minute.) Not a big fan of this. He liked the old business, but is not crazy about the current one.

He would be a little cautious on this. There have been some questions around some of their accounting practices, as well as their very aggressive acquisition strategy.

They seemed to have a few surprises in their last quarter. There were fewer contract renewals. If the price were to move a lot lower, he might take another look at this. Paid a lot to get into FinTech and the school is still out on this move. He would like to see more stabilization in their other areas.

Think you need to be a little fearful of this. A month ago a Short report came out. They are often wrong or right. Today there was a pretty bad report coming out from a brokerage house going from a Buy to a Sell. In the last quarter, they missed the top line and margins contracted. If you are in a business where you are not making your revenue numbers and your margins are contracting, it means there is something wrong on the underlying business.

About a year ago, it got really pounded. All the Canadian companies that were doing acquisitions in the US came under a kind of cloud. The 2^nd hit was when the tech sector in the US came under a cloud, and everything that was in that sector got sideswiped. Thinks this company will recover. They have transformed a very old cheque printing business into a very strong technology business, where they do the back office technology for some of the 9000 banks in the US. There is lots of potential for growth, and at some point one of the big system integrators will decide to make this an acquisition.

One of Canada’s best companies. They’ve really transformed the business over the last 4-6 years. Used to be a cheque manufacturing company for Canadian banks, but are now focused more on technology. Has a very highly predictable and highly secure revenue stream. Was under attack recently by short-sellers, but he believes the allegations were misplaced. This is going to be a very solid long-term hold for years to come.

Basically an administrative FinTech play. Technically it has a short-term resistance. Not a supremely strong entry point, and he would let it settle down.