Patient Home Monitoring (PHM.V)

(Market Call Minute.) Lots of cash flow and lots of revenues. This is probably on the sale block and will probably be sold in the next 12 months. It looks cheap to him and he thinks it is near its bottom.

All of these types of stocks have had a rough go with the Valeant (VRX-T) saga, and this one falls into that same category of being a rollup stock using high priced currency to buy other businesses with the prospects that they will grow into the cash flow. Overvalued by any measure. Not something he would own.

It is only covered by one or two analysts. It is out of favour, but undervalued. It is all about sentiment. It is about management selling shares into a health care fund, appearing to abandon the company. That is in fact not what they were doing.

Volatility spooked him, and management credibility really spooked him when they did their transferring of stock. The challenge he has with rollup strategies is that the business model is premised upon using your cost of capital because you are a public company and buying private companies that are at a cheaper multiple. Eventually they stumble and lose their multiple, and are usually left with a bunch of crappy low growth rate company. This company is a little different in that they are able to cross sell multiple products. Organic growth last quarter was 20%, which is fairly high for a rollup company. Not a name he would want to buy today.

Had a rollup acquisition strategy buying companies left right and centre. Had a very big financing to load up their balance sheet, and then it all came crashing down with insider selling and transferring. It was a big, ugly mess and the company handled it pretty poorly. Now back in the $0.55 range and about half the market cap is cash, but they have been very quiet in terms of acquisitions. The valuation is interesting at this time. Still has this in his Aggressive Growth portfolio and hasn’t given up on it yet. The next couple of quarters are going to be quite telling in terms of where this company is going to go in the future, what they can buy and how their acquisition strategy is impacted by their stock decline.

Chart shows this is on the verge of cracking the downtrend. The last 2 lows were at about the same level. Officially we need to break that. Currently trading at about the last high. There have been 2 lows that were literally equal to each other, which is good, we have stopped making lower lows. Now it needs to take out the old high, and if that happens you could be into a new uptrend.

He has bought it back. It is at a ridiculously low multiple. It is at a 5 times multiple when it should be at least 15 when they are growing this much.

Has been in a down trend since Apr/14. It has no sign of basing. Until it starts basing, he would not look at it.

This was hit, first of all by the general decline, and then it was hit by shenanigans concerning the issuance and transfer of shares to a fund. This confused high net worth brokers. The company is superb. Mr. Dalsin is an entrepreneur and is very impressive. The company buys lists, and these lists are immediately accretive in the form of revenues and earnings.

It underscores how volatile small cap stocks can be. They moved from growth to consolidating acquisitions. Now they don’t have the market catalyst of an acquisition every 6 weeks. He thinks the business is sound. There may be tax loss selling and he is waiting for that to be out of the way.

(A Top Pick Oct 22/14. Up 5.81%.) This has been very volatile. Has just added back to his holdings recently. You now have a management team in place that has been outstanding at growing their business. Probably trading at less than 5X EBITDA and is probably going to grow at over 20%.

(A Top Pick Dec 24/14. Down 39.73%.) Has gone from $0.44 to $2 and back to $0.44 again, a round trip. There was too much hype and they acquired things too fast, and then got caught in the downdraft along with all of the others. His numbers have them trading at about 2.5X earnings and approaching 0.5X BV. Expects the stock will come back to some extent.

This has a PE of 6X and a forecasted ROE of 24%. Earnings estimates are down 7% over the last 90 days, which is why people are having concerns.

This has been a disaster in terms of PR and how they handled it. No one is talking about it anymore, so it probably creates an opportunity. He would view this as a higher risk Buy, which is exactly how he would have viewed it above a dollar as well. They have done a good job of acquiring companies. Have set a good annual run rate and a good EBITDA rate. Have a new CEO. They’ve done a financing and they have the cash. Post the whole disaster, they’ve done 1 acquisition and he would like to see a few more. This is looking much, much better down at this range. Nothing has changed in terms of their strategy.

He does not see a bounce for this company. They need to digest their acquisitions. There are better places in the sector than this company.