James Hodgins Redknee Solutions RKN-T WAIT Oct 17, 2014

An interesting business. They saw a number of great contracts being signed. We haven’t seen the numbers from them yet. When they came out with them, the costs were higher than expected. Management thinks you will see the numbers over the next few quarters. He thinks it will recover. He sold previously, but may consider again in the future.

It had a huge run up after their acquisition, but then the margins weren’t what investors thought. Now things are on track and things look better for the next 12 months. Balance sheet is in good shape. Won some new contracts in recently.

Market cap of about $590 million, and is in the top quarter of his database. Acquired a huge business from Nokia (NOK-N), and have been able to turn that around, and start to make some decent money. There is huge optimism that this will be very successful. They are still going through some teething times, but overall he thinks they are doing quite well with it. ROE is reasonable at 12%. Earnings growth is okay. Sales have been up 33% in the last quarter when they reported in April. The coming quarter is expected to have a 45% earnings growth, and then slows down the quarter after that to 15%.

This company bought the Nokia-Siemans systems business, 5X the size of their previous business. Got it for a good price, but it has been bumpy in converting customers. He is Short this company, but it is starting to get to a level where he might think about buying it back.

Continues to be very bullish on this. Raised a little money in the last while, and this was followed by the tech sector getting hit because of a general pullback. Fundamentals have not changed, but in fact they have improved. Have signed additional contracts. They have extremely sticky customers. The shoring up of the balance sheet gives them additional ability to bid for more business with their existing customer base, as well as new business. Trading at an extremely cheap multiple.

He sold. Good management, but a very volatile stock that can swing on a quarterly results.

Bought a big division from Nokia. The concern was why Nokia was selling this. Margins were not that good last quarter. Three times in a row margins were not that good in that division. They need to improve those. He would rather wait for this to turn before buying them.

Had quite a drop in the last couple of years. This is a company that made a large acquisition and has not delivered on predicted synergies. Disappointed a lot of people over the last couple of years. Avoid it until they show better execution.

Had been Short on this for a little over a year. Has now covered, meaning it is probably at the bottom. This is a management team that he has always liked. Did a massive acquisition. This was followed by a huge run up, and got way overdone. In the meantime the business they had acquired was in decline and they had to do some restructuring. Thinks they are mostly that now and have turned the corner. He likes the name here. Has a small position, but wants to see how the next quarter or 2 play out.