Specific Portfolio Updates:
AtmanCo
AtmanCo released their updated investor deck including information on the Voxtel Acquisition to SecretCaps first. We are very excited as to the possible synergies of the acquisition (namely since Voxtel owns the dating site Atman rolled out its psychometric testing on with 2 million members), since the positive expected $1M EBITDA from Voxtel can propel bloomed.com and since Voxtel's industry relationships can open doors for meetings for Atman.
Granted most M&A fails, nearly 70% to 90% per Harvard Business School. its a known fact. So we are keeping a close eye as to the interest for the private placement. We don't think it will be a hard sell to investors since the purchase price of Voxtel was cheap at 0.25x 2015 sales, or $3.4M CAD.
We already spoke with management when the news broke, but we plan to follow up again next week and we will again update investors. There is a lot to go through on the investor deck, so we welcome all questions below.
We have not expanded our position yet, but we will update investors if we do. Also, the floor price for the PP is 0.075 CAD, which still offers an arbitrage opportunity we penned in our original post from when shares were trading at .04, if the PP closes. We are very excited as to this opportunity and we continue to dig into it. Original Post: AtmanCo: Past Personality Is An Indicator Of Future Results
We checked out Bloomed.com , the company's fully owned dating site, and its pretty interesting. Note, the company has not yet rolled out the service mainstream, so its not heavily used right now.
Regardless, following the 5-10 minute quiz, we we're given our personality and the free option to compare with others, our Facebook friends and more! Beyond the uses for Business, HR and Hiring, this is interesting.
Actually matching with people whose personality you match with is very cool. With the success of Tinder and Bumble, they are great, but once you match and actually talk to someone it falls through if you're not compatible. Thats why we think psychometric testing in dating is very cool.
Remember, Voxtel owns the dating site Atman rolled out their service on. With 2M members (not sure how many are active, but thats a lot of emails), being able to leverage this at will can be synergistic to bloomed when the official roll out begins.
Bloomed is one piece of Atman, but sums of the psychometric aspect on the dating side. The business HR side is proven as well.
We also spent time answering the question on eHarmony.com, since we know their test can take about an hour - and if tons of people were willing to sit through that we know that Atman's 5-10 minute psychometric quiz won't be a deterrent based on time.
We're no experts, but E-Harmony's test looks to match people based on adjectives (how happy / confident are you etc) whereas Atmans' dives into the underlying reasoning for a persons behaviors. We're still comparing.
SharpSpring:
Following news of now over 4K businesses using the company's marketing automation platform, SharpSpring sold their legacy relay business for $15M. Now the company is a pure play marketing automation company, and we are thrilled by this news.
With $15M in fresh working capital and a pure focus on Marketing Automation, SharpSpring is firing on all cylinders. Keep in mind that the company is already successful competing with Marketo and Hubspot since the company offers comparable / better marketing automations services for 1/10 the price and it gives the power to the agencies reselling the solution (competitors own the customer, agencies hate that).
“This transaction represents the continued execution of our strategy to strengthen our focus and alignment behind our marketing automation business,” said SharpSpring CEO Rick Carlson. “By divesting the SMTP business, we are able to strengthen our balance sheet and commit 100% of our resources to the success of our higher-growth marketing automation platform.”
Carlson continued: “In addition to divesting the SMTP business, we are also announcing that we have completed the migration of GraphicMail customers to the SharpSpring Marketing Platform. Today, more than 12,000 businesses are using the SharpSpring Marketing Platform to drive leads and revenue into their businesses. With our entire operations now streamlined, we can more effectively leverage our price and product advantages in the marketing automation market, and continue to capture significant market share from incumbent industry players like Hubspot, Marketo, Act-On and Pardot."
Graphic Mail ended up being a success. The lead growth and international expansion to fuel SS's marketing automation panned out. We're thrilled. See our original reserach report .
Research Solutions:
RSSS announced a $5.2M private placement at $1 per share and shares climbed to nearly $1.10 following the news. The company produces a net income, so the raise clearly isn't to fund operations.
We believe the raise is to seriously push the company's already successful Article Galaxy in 2017, the scientific, technical and medical SaaS article database.
Sometimes investors are on the sidelines since the float doesn't allow the to invest in a significant enough size. RSSS's shares moving up following the news is a clear indicator that the market is rewarding the company's decision. Its one thing to fund a solution with a raise, its another to fund a proven solution. We're pretty sure the company can attract enough interest for the raise.
Further, insiders participated in the raise, buying 230K shares to the PP at $1. A great, aligned sign.
AcuityAds:
One of our most successful Canadian plays, AcuityAds, announced their 100th customer for their self-serve programmatic marketing platform.
Ad-tech is a very, very hot market right now. Acuity's shares are up ~40% since our report and we are invested in AT.V (programmatic) and SharpSpring (automation)
Getting Started: People Might Not Accept Your Ideas
SecretCaps Member Trevor penned an excellent article on how people might not accept your decision to be a MicroCap investor. Its absolutely worth a read. Stick to your plan, your goals and your vision.
Are Companies That Trade Under Net Cash Risk-Free Buys?
Sujan penned an excellent read on what to keep in mind when companies are trading under net cash. Check it out here.
MicroCaps The Last Frontier:
I penned an introduction article for new investors who are interested in MicroCap investing. Make sure to check it out.
Spectra:
I (Sujan) had a call with Andy Mallion, CEO of Spectra, for an update on how things are going. The share price won't budge, so I wondered if there are any catalysts that could bump our investments in the right direction. Here are the rough notes:
- The show 'let's truck' was a great week
- 10000's fleets registered in the US, owner operative market untapped. Big market.
- teaming up with Kevin and his wife, radio shows do quite the trick.
- things are looking very good, actually never has looked as good as now.
- crux of the story is sales growth in the US
- next earnings report is due in one month
- exchange rate unhedged, but looking favorable
- endgame is to be taken over by a larger company (he said this literally)
- spectra is pioneering
- brake adjustments are mandated by law in the US and Canada, but many 'experts' don't know, including inspectors
- CEO too busy for stock promotion, mighty eventually do in the future. He acknowledges some stock promotion could be helpful.
- extra sales will add to the bottom line, no need to increase expenses (maybe 1 more FTE).
Overall, the outlook looks promising. Granted, patience is need here, but with an offer at 2 cents, I think it's a good buy.
RSY International Systems:
I (Sujan) also reached out to RSY International to ask for an update; same as with Spectra, shares aren't performing. They told me that they are going to hire an IR person in-house to spread the word. We are typically against stock promotion, but some good old IR is simply a must.
Memex:
We updated on this last week when we saw the SEDAR filings come in, but Memex PR'd their news regarding the early payout of their loan.
Management exercised their warrants at 0.16 (above market price, $40K in total premium above market) to pay off the loan to avoid higher interest rates in the future.
We're hard pressed to find a more aligned management team than David McPhail and his executive team.
Memex is a Top Holding For SecretCaps: MEMEX: Highly Scalable Manufacturing Intelligence Software’s 300% IRR Driving Significant Market Adoption
Reliq Health:
Our recorded CEO interview and product demo with Lisa Crossley of Reliq is extremely informative, check it out here.
Direct Insite:
We're expecting some news from Direct Insite soon. Find out why: Eight Reasons Why Direct Insite’s Earnings Call Has Us Bullish
Watchlist:
Slyce reported their Q2 earnings this week, the visual search provider which is on our watch-list. While the company's deals are interesting, American Eagle just closed, the company's losses are too great and persistent for us to invest here. We understand deals precede revenue, but the timing on when isn't a good fit for us.
Intema an e-flyer maker company we came across when diving into the ad-tech worlds of AcuityAds and SharpSpring released an update for integration with Wordpress, Facebook and Magneto. Running our site on Wordpress, we see plugins release these updates normally, so we are going to wait to see if it provides the company with meaningful action - this will be hit or miss.
3TL Technologies signed Fandango to its rewards program, great news for the company. Interestingly, the company is the same 5.5M CAD market cap as Ackroo , but 3TL trades at 15x Sales! (Ackroo trades at 2.3x sales). 3TL might arguably have more momentum (deals) under its wing, but Ackroo has executed and is much cheaper. We're not invested in either, but it makes for a fun comparison - it might be worth a dive into each's offering on the tech level.
Determine (DTRM) on our watch-list shot up 16% as news broke that a major holder wants to purchase additional shares. We've never come across an 8-k like this as insiders usually just add during private placements, in blocks through private transactions or even in the open market. Regardless its great news for the company and we are keeping our eyes on this one.
MicroCap Minutes:
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