James HodginsGreenspace Brands IncJTR.VTOP PICKDec 22, 2016

Doesn't know this company. Loves the space. Names with a good name, like "green" move well. They produce organic foods, and people are looking to eat healthier. Fancy name. Fancy products.

Owns a small position. Low margins. They've done a very good job with distribution and getting their revenues up, but he needs to see their margins rise. They're too low. He won't add to his position until then. They have some good products.

(A Top Pick Oct 27/17, Down 32%) Excellent brands. He cut back his holdings recently. They made some acquisitions and have not integrated them as well as hoped and it impacted profitability. They grew revenue and grew their brands. If they make operational improvements, there is a lot of upside.

It is a well run business. They have been pretty successful. A lot of the products have done well. They are getting distribution and growing the revenue line but also ramping up costs. A recent recall was not a big deal. Over time there will be value creation there.

A small micro-cap name that he holds that has been disappointing. They have done a good job on recent acquisitions, however, he has yet to see margin expansion. On a price to sales level it trades cheaply, but on an EBIDA basis it is too expensive. They will eventually get taken out he thinks.

This is an organic food player. He owned this for a long time. They did everything they said they were going to do. The stock went up, close to $1.70 and he exited most of it and sold the recent after they announced their recent acquisition of Galaxy Nutrition in the US, which will double their size. He doesn’t see synergies in the acquisitions and thinks they might have overpaid.

He stills owns it in his funds, likes the company. Met with the CEO and thinks they are doing all the right things. He thinks that small-cap Canadian stocks are generally out of favor and this stock is suffering from that broader problem. The stock is not widely followed. They are also being penalized for lower EBITDA margins than expected. Positives: the company is aggressively investing in its brands and growing rapidly. They are in the right spaces--as organic foods. A comparable company in the US would trade at 3 to 5x revenue and Greenspace is trading at just over 1x. He thinks this is very cheap. If it can’t grow into its own multiple, he thinks it might be taken over. (Analysts’ price target is 2.37$)

He met the company a few years ago and follows it on the side. They acquired mum and pop kinds of brands and are trying to consolidate the industry. They are up against giants in each space. They will have to invest heavily in advertizing. He passed on it.

There is nothing comparable to this in the market, which is one reason he likes it. An organic foods business. They’ve done a great job of acquiring and building brands, and getting great shelf space in some of the grocery stores such as Walmart and Loblaw's. Trading at a pretty significant discount on Price to Sales to their US comparables, and there is nothing comparable in the Canadian market. A unique way for Canadian investor to get exposure to the ongoing growth of organic consumption by consumers.

A really interesting company. Had an announcement out today about their brands starting to gain traction. Expects this means that in the next quarter or 2, you are probably going to see a ramp up in earnings. This company has specialty organic brands. They’ve been basically buying the brands and integrating them into their distribution network. What he would like to see in order to take the stock from the level it's been, to a significantly higher level, it is for them to translate revenue to the bottom line, so that we would see a higher earnings number. We are probably not going to see that, but when it does happen, the stock should really take a jump. At that point in time, they would probably get taken out.

It is a great business and one of the only publicly traded organic food companies. They have great distribution through L-T and EMP-T etc. Organic brands are gaining more market share. He thinks eventually they will be bought. It has come off recently but not for any particular reason. He is adding at these levels. (Analysts’ target: $2.10).

This is one that is a really exciting, growing segment of the grocery store. They are organically and niche focused. They are rolling up smaller players. This will eventually get bought out by a consumer packaging company. You want to see them showing progress at integrating the acquisitions they make. He thinks the stock will go higher long term but may be a trading opportunity also.

He likes this a lot. They just reported earnings which were fine. This is not really an earnings story yet, it is a revenue growth story. Their strategy is to acquire organic food and beverage companies, and use their distribution relationships to gain shelf space in the organic food aisles.

(A Top Pick Feb 7/17. Up 4%.) A developer and an acquirer of natural foods that they distribute through supermarkets and health food stores. Last quarter was a little iffy because of some integration issues, but feels it is something the company will get through.

A developer brand in organic food space. Recently broke into Loblaw’s (L-T) and some other food chains. An acquisition driven story. They have quite strong organic growth of 20%+ a year, but will continue to acquire brands, develop them, and expand them from within. It is everything from baby food to pet food to drinks. Expects they will come out with a lot of new names that will appeal to the millennial generation. (Analysts’ price target is $2.10.)