Patient Home Monitoring (PHM.V)

Regarding the stock price actions, they had accelerated some warrants they had, which expire at the end of this month, and thinks a lot of people were selling the stock to exercise the warrants. That is probably all done now and has lifted the supply off of the stock allowing it to move up. A “growth by acquisition” story, but we are now seeing some fantastic organic growth. They have been buying all these little monitoring businesses, and have been able to cross sell. Numbers will be coming out mid to late January. This will be their 1^st quarter where they didn’t actually do a transaction, so he will be able to compare last quarter to the current quarter in order to see where their growth is. Thinks their phenomenal 20% organic growth could actually double. Because of this he expects that quarter over quarter they will probably see 10%-11% growth, which works on a run rate of about 40%-50% organic growth. They have a ton of deals they are still working on. Believes they have signed over 100 nondisclosure agreements, and understands they have several letters of intent they are working on. At any point in time, he expects we could see the stock halted and an announcement of another transaction. Looking into 2015 and given the transactions they have done and the cash flow they are generating, they could have free cash somewhere in the $800,000 to the $1 million range per month, which would allow them to pay a dividend.

Sees revenue/profit going up dramatically. Although this is Canadian listed, all of their business is in the US. They are buying up small companies that do home monitoring of patients. A huge growth business, because there is a huge effort to look after people, particularly with chronic disease, at home rather than in the far more expensive hospital setting. Thinks this company has a huge amount of growth ahead of them. They also have $20 million or so of capital on hand to buy businesses. He really likes this one for both steady performance, but also quite rapid growth. Try to buy this in the $0.40s rather than the $0.50s. You could see this as a double or triple over 1.5-2 years.

A great little junior concept stock. Actually based in LA and have operations all over the US. This is an American company listed on the TSE. Management is saying all the right things, but it is still early days right now. Growth looks good. Company is going to be profitable right from the get-go. Management is committed to not raising a lot of money through equities, so you are not going to get diluted. He has a very small position in this, and he is going to watch it quarter by quarter and just grow up with the company. Too early to back up the truck.

This is a great business. They have been growing by acquisition, but even better they have been growing even stronger organically. Have great growth and great bottom line. A stock that he thinks will continue to grow. They don’t have much competition from an acquisition standpoint. They buy small operators, and merge them into their business, allowing them to cross sell and generate a lot of organic growth.

(A Top Pick Sept 18/13. Up 61.54%.) Still likes the name. This is a consolidator in the healthcare space. They are acquiring businesses at relatively attractive multiples and using their paper as currency to finance them. This gives them the ability to cross sell their products. Feels there is a lot of potential within the healthcare space.

Business is great. They have been very successful in cross selling and creating organic growth. He holds both their debt and their equity.

(A Top Pick Sept 6/13. Up 100%.) Trimmed his position, but has bought some back in the last week or so when it got cheap. Put out earnings that were fantastic. This is a rollup of home monitoring services in the US. What is nice about it is that when you roll up, you add revenues just by bolting on new acquisitions. Typically you will get some synergies by trimming your overhead costs. In this case, they are getting organic growth as well. They are able to cross sell from one business to a new bunch of clients that they have acquired.

Tax inversion rules? Not being a tax lawyer, he has a real tough time with this. Looking at what he knows, this is not unlike a lot of other situations where there is a US company that is listed on the Canadian exchange but are still paying US taxes, so the inversion wouldn’t happen in this case. This is really where a US or foreign company tries to mitigate taxes, so he doesn’t think the inversion rule would really affect a company like this.

The US medical system is trying to get chronically ill patients to spend more time in their homes so will use this company’s products. The long term looks good on this company.

Had this as a Top Pick on July 30/14. Since then, they have come out with earnings which were fantastic. Not only are they seeing acquisition growth, they are also seeing organic growth with cross-selling between those different strategies. In their conference call they mentioned they had 5 different targets in their sights that they were hoping to execute on. They really have no competition at this point, as they sort of fly under the radar. They are producing earnings right now, which is very rare for a company of their size. Thinks the stock could double from here over the next year.

Consolidator within the health care space. Can cross sell within their space. An interesting play.

Really likes this. Part of broad health reform by monitoring patients at home. A mom and pop industry and they are consolidating it. Likes management which has done several very good acquisitions, and have cash to do some more.

Have an acquisition strategy where they are going out and buying monitoring companies. Have bought 3 in the last 12 months. Most acquisition companies are growing through acquisition, but this one is also growing organically. They are buying different companies, and then cross-selling between them. Thinks they can probably earn $.04-$.05 a share over the next 12 months. If you put a 10 or 15 times multiple on a company that is growing 20% plus per year, you can see the stock significantly higher.

This has been a good stock for him, and is starting to move now. Very well run. On the M&A side, they are rolling up a bunch of annuity type businesses in the healthcare space. Have lots cash, and are doing some financing. He could see this north of $0.45 by year end, and possibly higher. You have higher earnings, but you also get higher multiples as they get bigger, and more institutions are able to buy stock.

Good entry point for a higher risk/reward play? Made a couple of recent acquisitions, and is finally moving in the last little while. Thinks it should go to $.40-$.45. Guestlogix (GXI-T) looks very cheap to him, and would be another possibility.