Sylogist Ltd. (SYZ.TO)

He recommended it at $2 his first time on BNN. It is too illiquid for the size of the fund he is managing. He likes the management team and thinks the stock will eventually go up.

They deal with a lot of payroll management systems, and with the retail systems for some gas stations. They do everything from municipal assets to fracing. A very small company, but do a lot of things that people just don’t do or care about. It falls below the radar. Hopefully over time they will be able to find further deals. When they bring a company on, they essentially aim to better price their products and get a lot of cash flow from it.

He covers this in his model portfolios, and really, really likes the company. They have great software for many different clients. Good management. Pays a good dividend which has had a very, very good growth rate. Revenues are starting to increase. They are buying back stock. Yet no one really cares, which is quite surprising. Business is starting to pick up. They signed a deal with Microsoft (MSFT-Q), which creates long-term opportunities. He wouldn’t get over excited about it this quarter, but it is a good deal to have for small Canadian company.

A software company that really hasn’t done a whole lot this year. Has it in his model portfolio. Investors are waiting for them to do an acquisition. Sitting on more than $40 million in cash and paying a nice dividend. Valuation is okay. A solid company. Insiders are starting to buy again. It is relatively expensive, but their past performance justifies that premium.

A software provider that focuses on government entities, CRM, healthcare and education. They basically just make their clients software work a little better in data access management. Relatively small. Pays a dividend. Sitting on $41 million in cash. Have done a couple of good acquisitions. Has a very solid reputation of raising their dividends. They have high margins. However, it has had a tough year being down 20%-25% this year. Thinks investors are just waiting for that next acquisition. You’ll probably see another deal in the balance of this year. Nice little company.

(Market Call Minute.) Software company based in Calgary. Does a lot of stuff with the government. Stock is expensive, otherwise it is great. Look to buy at something closer to $5.50-$6.

For about 4 years, this stock went straight up. Kept raising the dividends and made good acquisitions, and then it sort of stalled a little. This is a company that has made solid progress, created lots of shareholder value, the dividend has been raised 5 or 6 times in the past 4 years, and now it has paused. Sitting on about $41 million in cash. It is really a question of getting to the next acquisition or getting a large contract. Not cheap, but you don’t mind paying more for a company that has performed very, very well over 5 years. He likes this.

(A Top Pick Sept 28/12. Up 133.42%.) Still likes the operations of the company. Made a couple of acquisitions that he expects will be quite accretive going forward. They continue to raise their dividends. There are no analysts following the story, but are a few other mutual funds that are moving into the story. Expect they will continue to grow their cash flows over the next couple of years.

(Top Pick Sep 28/12, Up 84.17%) He is taking a little off the table. Management owns 40% and he owns 7%. Not sure if management team needs analyst overage. 2.9% yield, recently increased. In next quarters people will be surprised by the margins.

One of his favourite stories. A software company that continued to do very well on top line and bottom line. Increased their dividend. Cash flows are very strong. Has started to see price increases on their software. Expects you will see margins expand over the next couple of quarters. 3.5% dividend yield.

Software company out of Calgary. Well-run. Stock has done really well. Sell it! Not a reflection on the company but the stock is really, really expensive. A smaller software company that he likes and is really inexpensive is Softchoice (SO-T). He would sell Sylogist and buy Softchoice. (Also see Top Picks.)

They do a lot of payroll for teachers and school board workers in Alberta. Also, they do stuff for smaller cities in Alberta. A cash flow generating machine. Don’t have a ton in revenues but their margins are very, very large. Increased their dividend by 17%.