Currency Exchange Intl. (CXI-T)

They've executed well. Has a reasonably valuation. Maybe after some quarters he may look into it, but he's not 100% sold on the demand for their currency services.

A very good small cap. They gapped up. Volume is sporadic, because it's a small cap. Had an 8% rise on March 15. Continues to rally. Would like to see more volume and it could consolidate around $23-26. There are positive signs of a break-out. Reduce around $26.75. It's now above resistance at $27, which is very positive. Consider adding to it now.

Supplies physical foreign exchange. They’ve diversified into the payments business, which has caused a few headaches for them in the last few years. It is still not in profit mode. There was a lot of excitement last Sept/16, when they got their bank license, and it was thought they would take the Canadian market by storm. The reality is that it has been a tougher slog in the Canadian market. Incumbents were a little more resilient than what had been thought. Q3 had record revenues, but expenses were a little higher than expected. Expenses continue to grow. Sold his holdings this summer, largely on valuations. It is difficult to justify the stock given its outlook for growth and profitability.

Thinks this is a buy. It commands the space in terms of being outside the bank, doing big contract work on thin margins. Suffered about a year ago because the US$ was strong, which affected their income. A one-of-a-kind company, except for a British one which is private.

Has been involved with it since its IPO. After a four year wait they got their bank license. Within 6 months they expected to land the 6 big banks. It has not happened since the bank license came out. The growth has happened in the top line, but not in the bottom line.

This has come up a lot this year, down about 33% YTD, partly due to the last 2 conference calls. Earnings had disappointed in both. Investors waited about 4 years for them to get their bank license which came in September, and it was going to be 6 months before benefits would be seen. In the last quarter, there wasn’t a lot of evidence of that. About 3 years ago, the company went into the payments business, and have been building up a business in that, so there were a lot of expenses, but no sales. Because of this, expenses have grown much faster than sales growth. They’ve built a lot of infrastructure, and they now need to grow into that. He has a lot of confidence in the CEO. Expects that the next quarter is also not going to be a great one.

Apathy is the real problem. Most of their business comes in the summer time. There is no real news, takeovers, dividend, etc. The stock is quite attractive at the $20 level. It may get a kick start in the summer.

Just got their banking license which allows them to expand and deal more with the chartered banks on currency exchange. That is where their big business is. It has taken a little longer for it to get integrated into the growth mode, so you are seeing a little fatigue by investors, who waited for a long time for the license to come through. Their retail business is not their main focus or the driver. You just need to be patient.

On a broad, broad picture, this is still making higher lows, which is positive. However, it has been long enough that it hasn’t made a new high. The chart is neutral, so he is cautious on this.

(A Top Pick Feb 8/16. Up 20.45%.) Got their Schedule 1 license as a bank in September. Unfortunately, when the results came out in early January, people were looking for immediate benefits, but it normally takes 3-6 months to see the benefits. He still really likes this.

An extremely interesting business. They do a lot of wholesale currency. Now they can get funds cheaper. They can go to the Fed or the central bank to get funds. Getting that kind of volume on currency may allow them to get some bigger clients. Just starting to prove the model out now. If you own, he would continue to Hold until you see the model prove out. He likes the business.

(A Top Pick Feb 8/16. Up 24.94%.) Recently got their bank license after about 4 years of waiting, so they are now a Schedule 1 bank, which operates as the Exchange Bank of Canada. They are specialists in foreign exchange. The growth profile, now that they have their bank license, is going to be much, much better.

Now that they have their bank license, it is really going to help in terms of marketing. One of their biggest clients was TD Bank (TD-T). TD said they will deal bank to bank as a lot of the banks want to do, partly from compliance purposes, but the other from capital provisioning. In the next 6 months, he expects they are going to land a lot of the Canadian banks. On top of that, they landed one of the top 3 US banks last summer, and that will start trickling into their earnings which are coming early January. Using the existing customer base, he calculates they are going to be growing revenue at 22% next year, and earnings are going to be up 44%. If you compare that to any of the 8 Canadian listed banks, he would rather have this one. (Analysts’ price target is $38.50.)

A wholesaler of foreign exchange. They recently got their Schedule 1 Canadian bank license after a 4-year wait. They now have a subsidiary bank, Currency Exchange Bank of Canada. Within the next 6 months, he thinks they will land most of the big 5 banks. Last quarter, they announced a top 3 US bank with 800 branches, that has signed on as a client. He can see a lot of organic growth for the company.