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John Leonard, CFA  

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  • The Bullish Case For Fortegra Financial [View article]
    Price target exceeded after company acquired by Tiptree Financial.
    Aug 16, 2014. 07:33 AM | Likes Like |Link to Comment
  • Blount International Is Attractive As Pullback Overdiscounts Fading Negative Catalysts [View article]
    BLT exceeds price target after positive earnings report, raised guidance and buyback announcement.
    Aug 16, 2014. 07:28 AM | Likes Like |Link to Comment
  • Hennessy Advisors Would Be A Perfect Addition To One Of Its Own Funds [View article]
    The earnings report last week reinforced my bullish view on the stock. As shown in the two key highlights below, the investment thesis is playing out as expected as the combination of higher AUM and high operating leverage is driving significant top and bottom line growth. As a result, the growth story (yes asset managers can post strong growth!) and by extension the recent gains (the stock is up ~12% since the initiation report three weeks ago) should be considered in the early innings.

    AUM increased 50% to $5.4 billion due primarily to strong net inflows (+$872 million) and market appreciation (+$915 million). Redemptions as a % of AUM decreased from an average of 3.2% per month to 2.2%.

    Revenue increased 35% to $8.8 million while OpEx (as a % of revenue) decreased 420 bps to 57.7%. As a result, net income increased 49% to $2 million. Moreover, there was continued net profit margin expansion (up 220 bps to 23.3% on a y-y basis and up 210 bps on a q-q basis).

    From a technical perspective, the stock is testing the critical $17 resistance level - this bullish report looks like it will be the catalyst to break through for the next leg higher
    Aug 10, 2014. 08:18 AM | Likes Like |Link to Comment
  • Cloud Marketer Lyris Could Double And Still Be Undervalued [View article]
    This is in response to the comments posted by Envoy and Digital Alex.

    Re the first, obviously I am more constructive on the outlook. I provided multiple examples of how management is working to reverse the decline and capture market share with its differentiated platform/offerings. While I would like to see the staggered board changed to annual elections, the tax benefit preservation plan is not as concerning as a “pure” poison pill.

    Re the second, see the multiple examples of how they are growing business by gaining customer wallet share – often at the expense of competitors.
    Aug 5, 2014. 09:26 AM | Likes Like |Link to Comment
  • Cloud Marketer Lyris Could Double And Still Be Undervalued [View article]
    You are correct that its peers have higher top line growth. For example, in the mrq MKTO’s revenue increased 60%, MRIN’s increased 33% and CTCT’s increased 16%. However, I expect LYRI’s top line to improve over the next several quarters. In the interim, risk is reduced due to the low expectations implied by the 4x EBITDA multiple.
    Aug 4, 2014. 07:31 PM | Likes Like |Link to Comment
  • Sierra Monitor Is Undervalued With A Bullish Growth Outlook, Increasing FCF And A Strong Balance Sheet [View article]
    Gas detection (the same line as SRMC - not for packaging) is a relatively small part of their revs. Also the stock trades at ~13x LTM EBITDA. I'm not bearish on the name - it's just not a good comp for SRMC.
    Jul 31, 2014. 12:04 PM | Likes Like |Link to Comment
  • InfoSonics Is Attractive After The Extreme Negative Swing In Sentiment [View article]
    Thanks. IFON looks to be following the same trajectory as BBRY, another handset manufacturer that was left for dead yet provided two significant asymmetric opportunities over the past year.
    Jul 28, 2014. 07:30 AM | Likes Like |Link to Comment
  • The Good Times Should Get Even Better For Good Times Restaurants [View article]
    Although that is currently one of the largest concerns facing the QSR industry, I do not believe it was solely responsible for the drop - especially considering that the stock recovered most of the intraday loss and rallied ~10% from the low.
    Jul 24, 2014. 06:47 AM | Likes Like |Link to Comment
  • Hennessy Advisors Would Be A Perfect Addition To One Of Its Own Funds [View article]
    A few thoughts re the above comments (in order), which were all very on point.

    Re the first, I agree a case can be made for using market cap or EV however I chose the former for two reasons. First, asset managers are primarily valued based on market cap/AUM so I wanted to be consistent. Second, and with that being said, I believe it is appropriate to use market cap because the high (and increasing) FCF enables rapid deleveraging.

    Re the second, I’ll just add that the combination of the NASDAQ listing and the market cap approaching the $100 million mark should attract more institutional attention. These investors know that the run rate (rather than LTM numbers) paints a more accurate picture of normalized earnings. The only reason I did not in this case (see the peer comp) is because my price targets (and the assumptions that support them) tend to be on the conservative side.

    Re the third, again just to reiterate what I’ve said multiple times - almost by definition the microcap stocks I cover have low liquidity and require more patience/diligence in terms of execution.
    Jul 23, 2014. 11:35 AM | 1 Like Like |Link to Comment
  • U.S. Concrete Is Still Attractive Even After More Than Doubling This Year [View article]
    Although USCR barely exceeded the price target last week, the near term price outlook is still bullish as the stock broke out above resistance at 25.75. USCR should be able to return to its YTD high at 28 within the next few months.
    Jul 19, 2014. 09:14 AM | Likes Like |Link to Comment
  • Forbes Energy Services Is An Attractive Oilfield Services Provider With Multiple Catalysts [View article]
    Price target exceeded after 22% gain last week.
    Jul 19, 2014. 09:05 AM | Likes Like |Link to Comment
  • Enercare Is An Attractive LBO Candidate [View article]
    Price target exceeded after 15% gain last week on heavy volume.
    Jul 19, 2014. 09:01 AM | Likes Like |Link to Comment
  • CCA Industries Is A Classic Value With A Catalyst Special Situation [View article]
    The negative reaction from the 2Q14 earnings release this morning (stock down 9%) does not alter my bullish stance for the reasons mentioned below. If anything, the pullback to the ~$3.5 breakout area provides an attractive entry point for new investors (or for existing investors to add to their position).

    First, the large net loss would be less concerning if investors read through the entire 10-Q rather than just skimmed it as only focusing on the headline numbers fails to provide the context necessary to gauge the impact on a go-forward basis.

    For example, the loss was due primarily to returns for the Gel Perfect color nail polish and Mega-T dietary supplement product lines. However, management said it is discontinuing the Gel Perfect line (effective the end of 2Q14) due to poor sales. As management has effectively “lanced the boil”, this line will no longer be a drag on performance. This decision to focus on the core/strongest brands and cut off the weakest again highlights the shareholder friendly decisions made by management (the first was the outsourcing decision). As a result, I would not be surprised to see management exit the Mega-T line within the next year if there are not signs of stabilization.

    Just to put the strength of the core business in context, excluding Gel Perfect and Mega-T, net sales actually increased 22% in 2Q14, driven primarily by the two core product lines (skin care and oral care), which accounted for 82% of “adjusted” net sales (excluding Mega-T).

    Second, the turnaround on the cost side is still track as CAW is about halfway through the workforce reduction (expected to be complete by October 2014) yet has already paid 83% of the estimated severance cost of ~$531,000, which was reduced by ~$17,000. SG&A decreased 16% primarily due to lower shipping costs (as part of logistics outsourcing to OHL) and personnel costs as a result of the previously mentioned workforce reduction.

    One area of concern is the ~50% decrease in working capital to $6.6 million and lower cash position (only $2 million). However, CAW is currently negotiating with a lender for a LOC. This, along with the outsourcing savings, continued strength in the core product lines and discontinuing of the Gel Perfect line should generate sufficient cash to fund operations.
    Jul 16, 2014. 05:35 PM | Likes Like |Link to Comment
  • Fusion Telecommunications Is Not Given Enough Credit For Its Transition [View article]
    If anything, I see this as creating some short term pressure on the stock as this sale does not negate the transformation.
    Jul 14, 2014. 01:36 PM | 2 Likes Like |Link to Comment
  • The Good Times Should Get Even Better For Good Times Restaurants [View article]
    I am not that concerned as there is a huge difference between a proposal and an actual law that has been passed and survived legal challenges.
    Jul 14, 2014. 08:14 AM | Likes Like |Link to Comment