Patient Home Monitoring (PHM.V)

(A Top Pick May 13/15. Down 76.49%.) Has an acquisition strategy where they buy companies that do everything in homes from sleep management to simple monitoring. It is a nice business. Company fundamentals are solid, but this is what can happen with a small-cap stock. Sold his holdings at a loss. Over time, it probably regains some ground.

(A Top Pick March 11/15. Down 65.38%.) Funding has been cut as of Jan 1^st on their Ventilator business in the US by about 40%, which will show up in the next quarter. Super cheap and ranks well. Still likes it, but is waiting to see how that cut will affect their business.

Wouldn’t own this. A former market darling that had a market multiple with which they could transact and accumulate a lot of businesses. When you lose the market multiple you had, you can no longer transact, and you are stuck with a bunch of businesses that are typically lower growth rate.

He thinks it is very good and they make acquisitions that are immediately accretive. They can cross market things to aging people who tend to have the same sorts of things going on. The US government announced that they would be reimbursing less for some of their products.

A rollup health care services company. Had a high profile last year and people made a lot of money on it, but in the last 6 months there has been a lot of negative news. Has concerns about the management set up. Not sure they have the structure in place for it to be a successful long-term business. He would want to see better execution for a number of quarters.

(A Top Pick Feb 2/15. Down 59%.)

A lot of people were concerned about the quarter, but the quarter came in quite nicely. They still have lots of cash. Have had a management change in the last 6 months after the management fiasco of last year. That is all behind it now. The true question is how active they’ll be on acquisitions. Thinks the worst is over. A couple of new acquisitions and a better market environment and the stock still has good potential.

(A Top Pick Jan 14/15. Down 25.3%.) Still has a small piece. Had a pretty rocky ride in the last 6 months or so. Last quarter came out with fairly good numbers. Have pretty much shut their acquisition format down now, and are just growing organically. Had bought Sleep Management in the US, and that CO is now the CEO of this company. They think they are going to continue to grow in the 25%-30% range.

This probably looks cheap. His fear is that there have been so many acquisitions that it is hard to see exactly how they have done after the acquisitions. Thinks they should just let the acquisitions play out, get the synergies that they can and let the numbers speak for themselves.

He has been selling (trimming). He still owns some. The problem is that now that the numbers look good, you need a macro change in the sector outlook, or they need to get out there and tell everyone about the growth. It is cheap.

A rollup story with some organic growth. The challenge with many of these names is low organic growth. On rollup strategies, once you lose your multiple, you are left with a bunch of lower growth companies that the market used to pay a higher multiple for. This has been such a dog that he thinks it is going to take quarters for them to be able to demonstrate they do have organic growth. The other challenge is that a lot of the growth comes from cross-selling products, and that matures pretty quickly. Once you run out of cross-selling, your organic growth rate starts to decline.

Has been a pretty controversial name. Made something like 20 acquisitions over an 18 month period. The latest acquisition was Sleep Management which doubled the size of the company. Sleep Management team has now become the management team for Patient Home Monitoring. He likes the company here. Scaling back on acquisitions and focusing on organic growth is probably a good thing, and the market is going to like that. $1.50 would be a pretty good return from here.

(A Top Pick Dec 24/14. Down 10.96%.) Have a new CEO based out of New Orleans, who is doing a great job. He understands that everything is performing well. Their year-end results should be out soon. Trading at 4X earnings. A lot of cash on the balance sheet.

He is out of it. He got in because he felt management was going to succeed. Management transferred all their shares to another company and is handing over to a new management team. It is hard to tell how the new management team is going to do.

(A Top Pick Dec 10/14. 0.00% return.) Had a great move up and a great move down. Has been pretty volatile. Still really likes it. Patient Home Monitoring 1.0 was the acquisition story and Patient Home Monitoring 2.0 is the operation of the acquisitions. That seems to be going very well. Has been really beaten down because of tax loss selling in the last few months; however in the last few weeks that has started to subside. Year-end numbers will be reported in January followed shortly thereafter by Q1 numbers. From all indications, the business is going really well.