Edward Vranic, CFA's  Instablog

Edward Vranic, CFA
Send Message
I am a private investor based out of Toronto, Canada and I have been investing since 2003. After 8 years in Corporate Finance with a Canadian Telecom company I have decided to dedicate myself full-time to the capital markets. I write on Seeking Alpha to demonstrate my financial analysis and... More
My company:
Edward Vranic
My blog:
E. Vranic's Canadian Smallcap Investment Blog
  • More Thoughts On LX Ventures And Other Companies On The TSXV 3 comments
    Feb 5, 2014 12:18 PM | about stocks: SLXXF, LXVTF, FRWRF, AUNFF, ITMTF

    Here are some random thoughts of mine on several stocks of the TSX Venture. Ever since my write up on Mobio and LX Ventures (OTCQX:LXVTF), people have started to care about what I think so being the opportunist that I am I figured that I will add some more commentary on to several stocks that I follow closely.

    LX Ventures - It is a very good time to be LXV right now. Cash is flowing easily to them while it is not so easy to come by for many of its peers. There is a lot of opportunity for them to pick up some Venture companies relatively cheap although the prime focus needs to be Mobio and integrating the recently acquired technologies into that brand.

    As Mobio evolves, a new opportunity has arisen. If you look at the "Brands" section, several small businesses have signed up - Arnprior Golf Club, MMckinneyPhotography and Lenny's Garage Games being the leading three right now. This is a very smart move on their part and is beneficial both to Mobio and to them through co-branding opportunities. As Mobio increases in popularity, they are going to be some of the highest ranked leaders on the site thanks to joining up and being active from the beginning. If Mobio becomes huge, this is an opportunity for very high exposure. If Mobio doesn't become huge, they are no worse off for trying. On the flip side, these businesses have an incentive to see Mobio succeed so I believe you will see links to their Mobio accounts or Mobio in general pop up on their websites soon. Everyone wins and when other small businesses catch on to this opportunity, I believe the sign ups will come in droves.

    My initial research into the Copper.io business looks like they got a great deal. Copper compares to Brightcove (NASDAQ:BCOV), a company that trades close to $300M in market cap. If you take a look at Pandastream's pricing page, it competes directly with Zencoder, Brightcove's brand. BCOV paid $30M for Zencoder in 2012. So if Copper can become even 10% of what BCOV has become, LXV shareholders win big time.

    SelectCore (OTC:SLXXF) - I had a brief conversation with this company a while ago. They said by mid-2013 they expect to be profitable. I thought there was no chance that they could pull it off. But they made $20K in Q3 2013. You can view their quarterly income statement here, going back to Q3 2012. The net income profile:

    Q3 2013: $20K

    Q2 2013: -$651K

    Q1 2013: -$1,114K

    Q4 2012: -$3,571K

    Q3 2012: -$1,985K

    As you can see by these numbers, I was right to be doubtful. But somehow SCG managed pulled it off. With all the empty promises with regards to future profitability I have heard from many money-losing small caps, SCG has been the ONE company which made good on the promise to be profitable within the stated time.

    Because of their honesty I will always root for this company. I believe aggressive cost cutting had a lot to do with it as SCG's working capital would put them on the edge of insolvency with continued losses. SCG has been unable to access the capital markets as the balance sheet eroded so behind the curtains I would assume they made some kind of deal or promise with the creditors that helped to keep them around which included a restructuring. After all, who would force a profitable company into bankruptcy?

    I am waiting with earnest for the Q4 financials in April. If Q4 shows another positive quarter I will buy shares hand over fist. The company is also restating Q3 financials although it claims this is for more comparative commentary with no changes to reported numbers.

    Intertainment Media (OTCPK:ITMTF) - The Stockhouse INT message board is the epitome of what's wrong with the site. How people can hide behind one or multiple screen names to bash a company endlessly while it's down is an embarrassment and they should be ashamed of themselves. If INT was a person instead of a corporation, those people would be found and charged with cyberbullying. When I voiced my concerns about INT not being a viable investment 2-3 years ago, I at least did it on the company's Facebook page, not hiding behind a screen name.

    That being said, the quicker this company goes away, the better. Its severe drop in stock price is poisoning other similar stocks and the Venture at large. LXV is getting compared to INT all the time when they could not be more opposite from each other.

    It took me about 10 minutes of research to figure out LXV's business plan and how the company plans to become profitable. It's three years later and I STILL don't understand how exactly INT plans to make money. I recall some vague plan to spin out entities and provide shareholders value from that, but so far all they have spun out is Yappn (OTCQB:YPPN) which has a grand total of $6M in market cap and sold off a bunch of its divisions to fund working capital. I don't see any scenario where INT will end up providing any value to its shareholders unless a white knight comes out of nowhere and buys them out for a few pennies higher than the stock price of today.

    Aurcana (OTCPK:AUNFF) - I have a theory. Poorly managed mining companies with good properties represent great value if their stock prices are depressed because no matter how inept management is, they can't screw up the value lying in the ground. AUN is pretty much the perfect definition of that. The risk of an investment in AUN is if management goes the Mercator (OTC:MLKKF) route of doing things in order to protect their overpaid jobs for as long as possible. Then the next thing you know the stock is bought out by a white knight at pennies to the dollar. If the price of silver tanks, AUN is susceptible to that risk. If it has a lengthy stay above $20/oz, it wouldn't surprise me to see a buyout offer come Aurcana's way in the next 6-12 months.

    Fireswirl (OTC:FRWRF) - I have written before about how much I like the potential in the Chinese e-Commerce industry. Between FSW and LXV, that is about 40% of my portfolio. That is how confident I am in both. Not only is the Chinese e-Commerce industry as a whole a great investment opportunity, FSW is undervalued relative to the other players within it. Just to be on even ground with DANG it needs to double in price or more. The private placements were disappointing in price but limited in dilutive impact so I can live with them if it helps the business to grow.

    Grand Power Logistics - Like FSW, another Chinese play. They are a freight shipping company (sea and air) in the world's highest export economy. All that really needs to be said is that they earned a 2 cent trailing annual EPS and trade at a 6 cent stock price. The biggest issue is that the company's receivables are high and have been growing the past few quarters.

    Disclosure: I am long SLXXF, LXVTF, FRWRF.

Back To Edward Vranic, CFA's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (3)
Track new comments
  • Edward Vranic, CFA
    , contributor
    Comments (1095) | Send Message
    Author’s reply » Had to take some info down on SBL because the company mentioned today that the RIOM deal has been discontinued. I will re-evaluate.
    7 Feb 2014, 09:33 AM Reply Like
  • Edward Vranic, CFA
    , contributor
    Comments (1095) | Send Message
    Author’s reply » Another page of mine on Mobio:


    11 Mar 2014, 01:55 AM Reply Like
  • Joe_Retail
    , contributor
    Comments (347) | Send Message
    INT on the venture has started moving up....
    1 Apr 2015, 06:06 PM Reply Like
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.