Peter HodsonColabor Group Inc.GCL.TOWATCHMar 27, 2017

(A Top Pick August 21/2017, Down 58%) Likes turnaround stories like this. Started out well, but then the wheels fell off. Has kept nibbling at the stock. Management has been refreshed. 1B in revenue on a 40M market cap. He’s anticipating 30M per year of extra EBITDA. Starting to see light at the end of the tunnel.

(A Past Top Pick Dec 2/16, Down 45%) It was a turnaround that checked all the boxes. It started off okay but the wheels have fallen off. A vice chair has invested a lot of money and this gives him hope. Q3 of this year was supposed to have been the bottom. If they turn it around the stock could triple.

A Top Pick in December and August. Did well at first and then had a couple of bad quarters and they lost a contract. The insiders keep buying it, so he is still Long and has high hopes for it. Hoping that when earnings come out in about 2 weeks, there will be a positive surprise.

It is a turnaround story. We had three good quarters and then three bad quarters. The insiders keep buying a LOT of stock. (Analysts’ target: $1.20).

They were having major financial difficulties and then went through a reorganization. It is a low margin business with lots of competition.

A food distributor in Quebec/Ontario. He bought more on a dip. It used to be higher. They took on a lot of debt and they recapitalized with a rights issue. An investor put $5.5 Million into it and joined the board. If you hold it for 2-3 years you will see a $4 stock price. It is a conviction buy.

This is a food distributor, and is a turnaround idea. In a turnaround, there are a few things he likes to see. 1.) It should be a really simple business, because he doesn’t want some tech company that could be supplanted by something else. The company distributes food to restaurants and grocers, very simple and easy to understand. 2.) He also likes a long history, because then you could look at past financials and figure out where it might go. The stock price used to be much higher, $12, and now $1. 3.) 3.) Signs of improvement. Their business got hurt because they acquired debts, bought businesses, and didn’t pay attention to their margins which got crushed. We have now seen 2 quarters of improving margins. There has been a rights issue to fix the balance sheet to pay off some debt. They brought in an insider, someone with an impeccable 25-year track record in that business, which put $5.5 million of his own money into the rights issue. (Analysts’ price target is $0.95.)

This is a matter of a company that has been poorly managed. Cash flows that are being generated are just not enough for the obligations that it has. What makes it even tougher is that there are competitors in that same grocery distribution space that are literally eating their lunch.

(Market Call Minute.) Cut their dividend. There are lots of margin pressures as costs are going up. In the restaurant service business. No need to own it.

Food distribution business. Restaurants and convenience stores. A bit of a turnaround story. 5.1% yield and generates a huge amount of free cash flow that is being used to de-lever the balance sheet. Might be a target down the road. Believes dividend is now safe.