Freshii Inc (FRII-T)

It's struggled for a while. He knows it very well. When it was private, it was a great growth story. The valuation at the time of the IPO was ludicrously high with unrealistic growth expecations. He still feels this way.

He likes the business but is tricky. It was so hyped at IPO. It is still a very small company. Was predicated on very aggressive growth, but disappointed the street. Should bottom within the next year. Still has some fundamental building to do. Likes business longer term, but at this point is dead money.

Technically the chart has been in consolidation with highs just over $7. It remains in a sideways range until proven otherwise.

High profile IPO last year. Have to be careful with them. Small company. Good business model. Great revenue model. The stock is not going up unless there are short-term positive catalysts.

IPO’s are generally fools’ plays. If you buy into an IPO, odds are it is going to be down a year later. It’s great for the people selling. Often the price is inflated as they want to get it out there and make a lot of money. BV is about $1.70. There doesn’t seem to be tremendous value. He wouldn’t rush out to buy this, but it is certainly better value than it was at its IPO.

This came out in January at about $11.50. The valuation was about $300 million. To him that was absolutely insane. The company had revenues under $20 million, lots of hope, lots of hype. The people who sold this to clients should have said that the price is way too high. In terms of IPOs, about 90% are down in value about a year later. Often you get a pop at the beginning, and then comes way down. The changes they had were pretty dramatic.

Thinks this will be going down, because management has lost credibility. They don’t seem to have a very good grip on what they are doing.

Disappointed with recent results and guided down store openings. There hasn't been many successful IPOs in Canada in the last few years. They didn't have enough visibility in what was coming in the first few quarters to build a strong shareholder base and keep IPO shares price up.

Slashed its store opening forecast and the shares fell 35%. This hasn’t been seasoned enough to test the mettle of the management team. He would wait to see.

The growth trajectory is pretty big. You have the shift to more healthy food. The stock did not do that well after it went public, but the underlying business is pretty good. A couple of years from now you will see a lot more stores than people are expecting. They did what they said they would do. It is a 5 to 10 year story.

She doesn’t like the food, but you see them expanding everywhere. Apparently the millennial’s love it. She is giving it another couple of quarters to see what happens before she makes up her mind.