RDM Corporation (RC.TO)

He likes it. It is pretty small. The cash has been there pretty much forever. A few years ago they started the dividend and are accelerating it. They will continue to increase the dividend and have the cash capacity to do that. They have been looking at a cash acquisition for 4 or 5 years, but have not hit the trigger yet. It is tiny and limits the investor’s exposure. He cannot fault what they have done so far. 1.6% yield.

Have a fair amount of cash. Earnings expected to be $0.16 this year, compared to $.013 last year. Forecast for Sept 16 year is $0.19. Trading at about a 19X PE multiple. Working on some large contracts, and he thinks this is still a pretty good opportunity.

In the cheque capture photography for the financial industry. Serve a lot of banks in the US. Has done very, very well over the last couple of years. Initiated a dividend a couple of years ago and raised this by 50% recently, so they are starting to reward shareholders, and the stock has done exceptionally well. They still have a great balance sheet. This is not one that is going to go up tenfold, but a solid, solid company and he likes what they have done with the dividends.

It traded sideways, then came down and then came up nicely. Earnings are growing. There may be activist shareholders coming into the stock, but they are doing well according to their last conference call.

He increased his rating when they paid their first dividend a couple of years ago and it has doubled since then and they raised their dividend again recently. There is great growth potential. Longer term they will do what they have been doing. One day they might get taken over.

Interesting company with great cryptological technology. If you want to write a cheque and immediately put it into the system through a scanner, this is kind of what they do. They are growing at a nice clip right now, but it has a certain lumpiness between the processing business and the actual selling of its units. This is why the stock ran up earlier in the year and then sold off. Doesn’t quite have the growth that he is looking for. Have always had a lot of cash, but he hasn’t seen management as being a good acquirer. If there is a consolidation that is going to be done in the cheque payment processing area, this company has improved and they are the guys to do it. If he owned, it would be a Hold.

It has been weak so he has been adding to the position. A bit of a micro cap. Great balance sheet. Trades at a low multiple with a low market cap.

Great little company. Had a lot of cash, is doing well and could not get attention and so decided to pay a dividend this year. Business is much better than before. Fundamentals are solid.

Cheque processing electronically and are in bed with the top 4 banks in the US and he is starting to see more and more traction with those banks. Just reported and their earnings were up about 200%. New management came in about 3 years ago and really turned things around. Generated a significant amount of free cash flow over the past few years. Trading at a low multiple. Expects they will earn $0.13 this year. They have $1 a share in cash. Yield of 1.43%.

Image processing for financial institutions. This is a company that had a lot of cash and their business was okay but nothing was really getting investors excited. In the past couple of years they put it together. Earnings have started to accelerate. About a week ago, they announced a dividend for the 1^st time. From a fundamental basis, this is one of the best things he looks at in terms of its small company. Now investors can get paid to wait for this company to continue to perform. Clean balance sheet. Earnings have picked up quite nicely.

Hardware/software for financial sector. A very small company that is not covered by analysts. He has been told that the company will end up getting out of its own way and has the potential of being value at $2.25-$2.50 on a potential takeout within 12 months. (Not his words.) Has been frustrating in the very near term.

Does payment processing. Did a lot of business with cheques in the US where cheques are still popular. Their technology is quite robust. Just settled a lawsuit for $2 million. This takes $2 million off their balance sheet but removes an overhang and they still have lots of cash. Feels there is potential, but it is just so tiny that in this difficult market it is hard to get attention.