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  • Stock Whisperer At TIGER 21 Builds A 10 Bagger Plus At Tiny Carmanah Technologies Corp 1 comment
    Aug 4, 2014 11:31 AM | about stocks: CMHXF

    Lift off for Carmanah Technologies Corp (OTC:CMHXF)

    It's not often that you see a financial whisperer to $18 billion in assets take control of what was a $15 million public company - but when you do, you can be pretty sure he has some interesting ideas as to what to do.

    Well, that's exactly what happened in April 2013, when Michael Sonnenfeldt took over at CMHXF - a doggy little Canadian tech company (mostly solar) that was in the process of going out of business.

    A look at CMHXF - the set up:


    Carmanah Technologies Corporation designs, develops, and distributes solar-power LED lighting, and solar powered systems and equipment worldwide. The company's Signals segment is focused on the sale of self-contained solar power LED lights for marine, aviation, obstruction, and traffic applications. Its Outdoor Lighting segment provides products for use in general illumination applications, such as pathways, parking lots, and pedestrian areas, as well as highway/street lighting and perimeter lighting. This segment serves local and federal government facilities, government ministries, departments of defense, private utilities, highway concession owners, national and multi-national commercial facilities, and public institutions. The company's GoPower! segment distributes solar kits, solar panels, inverters, chargers, batteries, and other power accessories for the recreational vehicle, utility and fleet vehicles, and marine markets under the Go Power! brand name to RV dealers, marine resellers, and fleet owners. Its Solar EPC segment provides solar engineering procurement and construction services, and focuses on the development and construction of roof top solar grid-connected systems for commercial customers, which include developers, commercial property owners, and government entities. Carmanah Technologies Corporation was incorporated in 1996 and is headquartered in Victoria, Canada (source Yahoo finance). Source: Yahoo Finance


    The stock had gone from a high of $4 to $.30.

    Sales were declining at a double digit pace.

    CMHXF was losing around $5 million on a regular basis.

    Shares outstanding were 50 million.

    Carmanah Annual Profit/Loss
    US $ thousands 2013 2012 2011
    Sales $25,902 $26,442 $35,904
    Gross Margin $ 7,384 $ 8,239 $11,262
    Operating Losses -$ 5,564 -$ 3,921 -$ 8,553
    Loss/Share -$.10 -$.09 -$.20
    Total Assets $14,957 $13,176 $15,441

    (click to enlarge)Source: Annual Report

    Source: Yahoo Finance

    (click to enlarge)

    Source: Yahoo Finance

    Who is Michael Sonnefeldt?

    Michael is the founder, leader and coordinator of TIGER 21 (The Investment Group for Enhanced Results in the 21st Century) - a peer-run investment group. He is the investment whisperer to his members -among his other roles.

    Here's what Forbes had to say about TIGER 21:

    "Tiger 21: Meet the Wealthiest, Most Powerful Social Networking Group In The World

    When I asked Tiger 21 Member Louis David Spagnuolo about the network he explained it to me this way: "In the most purest sense, Tiger 21 is a fraternity of ultra-successful professionals, who all work in conjunction to advance each other both personally and professionally," he told me, "In relation to both aspects, Tiger 21 has been a game changer for me and has helped elevate me to a new frontier of success that I only could have dreamed of prior to joining.

    60% of the members are former entrepreneurs that had a large liquidity event, while the rest are a mix of business executives, investment bankers and real estate moguls. "

    Source: Forbes

    Penta Daily interviewed Michael:

    "TIGER 21: Tough Love For the Very Rich

    TIGER 21's 190 members, according to Sonnenfeldt, are sitting on $18 billion - that averages out to $95 million a head - and a press release further claims its members spend $1 billion to $1.5 billion annually on "living and travel expenses, capital purchases, insurance, and legal investment and professional fees." No wonder everyone from George Soros to Mohammed El-Erian have addressed TIGER 21 meetings.

    When I went up to Sonnendfeldt's Central Park West apartment in New York, I asked the soft-spoken club founder what trends were emerging from his members. He said that most were "taking risk off the table," earning 2% to 5% on their hyper-conservative portfolios. But they were coming around to the fact that this sort of return over a long period, and the income needed to fund their current lifestyle, requires a continuous and dangerous draw dawn of assets. So many are "rolling back their shirtsleeves" and going back to work, often as advisors to companies in their old field of expertise."

    Source: Penta Daily

    And, this is what Michael Sonnefeldt is doing with CMHXF; he's rolling up his shirt sleeves and getting to work. Michael is the Chairman of CMH.TO - and he is an "active" Chairman.

    So - How's that working out?

    A major capital raise was completed at $.12

    Nov 13, 2013 - Carmanah issued a total of 50,294,200 common shares (the "Rights Shares") under the Offering at a price of $0.12 per Rights Share, for gross proceeds of $6,035,304.

    Another capital raise was completed at $.22

    March 31, 2014 -

    Carmanah Technologies Corporation is pleased to announce that it plans to conduct a non-brokered private placement of up to 19,300,000 common shares in the capital of Carmanah at a price of $0.22 per Share for gross proceeds of up to $4,246,000.

    Of the 19,300,000 Shares expected to be issued, 10,000,000 are anticipated to be purchased by insiders of the Company. This represents less than 10% of the issued and outstanding shares of the Company, which is the upper limit set by the Toronto Stock Exchange for private placements of this nature. The following insiders with holdings around or above 10% are anticipated to partake in the Private Placement:

    Michael Sonnenfeldt, Carmanah's largest shareholder and Chairman of the Board, intends to subscribe for at least 3,500,000 Shares under the Private Placement. Mr. Sonnenfeldt currently holds 24,537,778 common shares, representing approximately 24.4% of the Company's issued and outstanding common shares. Assuming Mr. Sonnenfeldt acquires 3,500,000 Shares under the Private Placement and that 19,300,000 Shares are issued as part of the Private Placement, immediately following the closing of the Private Placement, he will hold 28,037,778 common shares, representing approximately 23.4% of Carmanah's issued and outstanding common shares.

    Jim Meekison intends to subscribe for 3,000,000 Shares under the Private Placement. Mr. Meekison sits on the Company's Board of Directors and currently holds 10,178,000 common shares. Assuming Mr. Meekison acquires 3,000,000 Shares under the Private Placement and that 19,300,000 Shares are issued as part of the Private Placement, immediately following the closing of the Private Placement, he will hold 13,178,000 common shares, representing approximately 11.0% of Carmanah's issued and outstanding common shares.

    Another capital raise was completed at $.25

    July 17, 2014 - Carmanah Technologies Corporation" is pleased to announce that it has completed a non-brokered private placement of 12,000,000 common shares in the capital of Carmanah at a price of $0.25 per Share for gross proceeds of $3,000,000.

    "All of the Shares issued under the Private Placement were purchased by James Meekison and Terry Holland; both of whom are insiders of the Company. Additional details are as follows:

    - JDM Investment Holdings Inc. subscribed for 10,000,000 Shares under the Private Placement. JDM Investment Holdings Inc. is beneficially owned by James Meekison, who serves on the board of directors of the Company. Mr. Meekison now holds 23,178,000 common shares, representing approximately 13.6% of Carmanah's issued and outstanding common shares.

    - TMH Capital Corporation subscribed for 2,000,000 Shares under the Private Placement. TMH Capital Corporation is beneficially owned by Terry Holland, who serves on the board of directors of the Company. Mr. Holland now holds 4,679,000 common shares, representing approximately 2.75% of Carmanah's issued and outstanding common shares."

    As you can see from the above, the board has a very substantial stake in this company - and their interests are totally aligned with the other shareholders.

    Since November 2013 the stock price has more than doubled.

    (click to enlarge)

    Why raise this money? What's the plan?

    Well, first off Michael hired John Simmons as the new CEO. He assumed this position on April 30, 2013.

    John Simmons -Chief Executive Officer

    John Simmons began his career in 1976 by joining multi-national Deere & Company. In 1983 Mr. Simmons began a lifelong pursuit of entrepreneurial activities by founding (or co-founding) three companies in succession - Contour

    Window Fashions Ltd., InsulPro Industries Inc. and Integrated Paving Concepts Inc. - each of which grew from startup to become TSX listed. In 1998, Mr. Simmons briefly stepped away from operating management and founded JC

    Simmons & Associates, Inc., which participated, directly or indirectly, in the early stage financing of several companies including Aspreva Pharmaceuticals, Protox Therapeutics (now Sophiris Bio) and Contigo Systems.

    In 2000, Mr. Simmons was appointed CEO of TSX listed Bridges Transitions Inc. a position he held until its sale in 2006. Following this assignment Mr. Simmons returned to Integrated Paving Concepts Inc. as its CEO and led it to a successful restructuring and turnaround. Between 2011 and 2013 Integrated Paving spun out and divested two of the company's brands and businesses which were followed by a concluding sale in 2013. In 2008 Mr. Simmons acquired Boulevard Magazine. This company was sold to Black Press Group in 2013. Source: Annual Report.

    Their initial goal was to stop the red ink and get the company back to profitability.

    After that, John stated that the company was in 7 market segments but that they are too small in each of those to be secure. They plan to expand the most promising sectors through organic growth and acquisition. Solar is a primary target.

    Towards that end: on July 2, 2014 CMHXF announced that it completed a merger with SOL Inc., a privately-owned Florida-based company that designs, manufactures and sells solar outdoor LED lighting solutions ("SOL"), pursuant to which SOL has become a wholly owned subsidiary of CMHXF.

    "The acquisition of SOL speaks to CMHXF's belief in the growth potential for solar powered outdoor lighting" said John Simmons, CMHXF's President and Chief Executive Officer. "Combined with SOL, CMHXF becomes a far stronger competitor in the market with greater capability to serve an expanding global customer base."

    Under the terms of the Merger Agreement, CMHXF will issue approximately 37,858,606 common shares of CMHXF valued at $7.5 million.

    In its first quarter results (period ending 3/31/2014), CMHXF was able to grow Revenues from $6.965 million in 2013 to $9.119 million in 2014. Its Operating Income went from ($.694 million) to $.521 million.

    Income Before Taxes went from ($.710 million) to $76, 000.

    In a little over a year, they have managed to achieve breakeven.

    The addition of SOL should serve to bolster their successful performance

    Their second quarter results will be issued on August 8, 2014.

    The one analyst that follows CMHXF has a revenue target of $39 million for 2014 and $49 million for 2015.

    Post the SOL acquisition their share count should total around 170 million shares but they are setting up for a 10 for 1 reverse split.

    On 7/13/2014, John Simmons, Chief Executive Officer of the Company, commented "One year ago we began a process to restructure and refinance the Company. During this period we have grown revenues, improved margins and lowered operating costs, all of which have served to restore profitability. In that time we have also raised approximately $12 million to bolster our balance sheet and have completed the acquisition of Sol, Inc. The consolidation of our common shares is an important milestone for Carmanah. It signals our view that we have completed the restructuring process. We are now shifting our focus to a strategy of profitable growth both organically and by way of acquisitions."

    CMHXF announced today that it intends to complete a consolidation of its common shares on the basis of (1) post-Consolidation Common Share for every ten (10) pre-Consolidation Common Shares. Following the Consolidation, the Company will have approximately 16,977,062 Common Shares outstanding.

    Often, share prices fall back for a period following a reverse split, this could be an excellent time to begin accumulating shares in CMH.TO should this happen.

    What's in the future?

    I think management will continue to pursue their acquisition strategy.

    The company has substantial access to capital via Sonnefeldt, the other directors and TIGER21.

    They have cleared the break-even hurdle.

    Management has executed brilliantly in a very short period of time.

    I don't see any reason why their success should not continue to grow.

    This is a very small company - even modest accomplishments over time can make for very large returns.

    The next earning report with the inclusion of SOL should prove to be good reading.

    Investors today are not paying far above the price the major investors paid to establish their positions.

    The investors and shareholder have their future goals and rewards well aligned with each other.

    Technically - the stock seems poised to soon break through the shoulder line at $.30 this could mark a major trend change for the stock price.

    CMHXF is an interesting company, with excellent management, well aligned with shareholders, and very early on in its growth phase. It's highly leveraged to management's talent but isn't that always the case?

    Most of all, it seems highly unlikely that an executive of the caliber of Michael Sonnefeldt with the contacts, resources and money that he has at his disposal would be wasting his personal time on such a tiny enterprise unless he saw a major payoff in the future.

    They have already seen their stock double over the last year. I think this is only the beginning of something that could end up being really big.

    Disclosure: The author is long CMHXF. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: I am long at $.12 - but I did not buy enough.

    Stocks: CMHXF
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  • Marc Liu
    , contributor
    Comments (89) | Send Message
    Author’s reply » Carmanah notches a new high today at $3.95
    That's a 33% run since it broke out at $3 last week.
    12 Jan 2015, 02:09 PM Reply Like
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