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12
Takeover offer for RDM Corporation yields a total return of 708%
Posted by: Gerry Wimmer
3/12/2017
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TOP IDEAS: For Investorfile followers, RDM Corporation (TSX: RC) would be the 6th takeover for small cap value stock picks, with more to come.




Investorfile's share price accumulation target of $1.35 for RDM Corporation was reached on November 22, 2012. For the record, we do not revise share price targets for our Investorfile Top Ideas – Small Cap Value Stocks. We have positioned our blog to be one of the first providers of a pragmatic perspective of a small cap company’s stock's potential worth, where there may be uncovered value that has been largely overlooked by the investment community.


It was on January 29th of this year in our blog post about the takeover of IWG Technologies (an Investorfile stock pick), that we reiterated: "Any one of the small cap value stocks on our Top Ideas list could be subject to a takeover bid.” (See: Another takeover for an Investorfile stock pick.)

Fifteen days later we were true to our word.

On the morning of February 13th, it was announced that RDM Corporation (TSX: RC - C$5.42) had entered into a definitive agreement under which a subsidiary of NYSE-listed Deluxe Corporation is to acquire all of RDM’s issued and outstanding common shares. Shareholders of RDM Corporation will receive cash consideration of C$5.45 per share. The proposed takeover is subject to approval at a special meeting of RDM’s shareholders, expected to be held on March 27, 2017.

RDM Corporation provides payment processing services based on Remote Deposit Capture ("RDC”), a deposit-taking mechanism that uses technology to capture cheque images and data at corporate or merchant sites for the electronic transmission of these deposits to a financial institution. US Financials have steadily increased the deployment of RDC technology and, in particular, RDM’s Image and Transaction Management Systems ("ITMS®”) software to enable the elimination of many costly cheque processing steps while, at the same time, opening the door for new and improved service offerings to its commercial customers.

The Investorfile blog was one of the very first documented opinion providers on the merits of investing in the shares of RDM Corporation following its turnaround. Prior to this post, we have shared 11 investment updates about the Company over a five-year period. For Investorfile followers who invested early on by purchasing shares of RDM Corporation, the pending takeover looks to be a very rewarding financial outcome.

Since we first introduced this stock as a small cap value investment opportunity at a price of C$0.88 (See: RDM Corporation: Cash-rich small cap turnaround, offers value and opportunity), Deluxe Corp’s proposal to acquire RDM Corporation at C$5.45 values this stock at 519% higher. If you include the dividends paid to RDM shareholders during our coverage period, the total investment return rises to 708%.

Takeovers are never factored in for Investorfile’s Top Ideas or share price targets. That said we do believe a takeover will become an eventuality for many of Investorfile’s stock picks. Six of 18 Top Ideas profiled in the Investorfile blog, including RDM, have been subject to takeover or a privatization shareholder value-enhancing event to date. This has generated substantial investment gains and, just as important, instant liquidity for our small cap value stock ideas.

The Investorfile blog cannot predict with any certainty which will be the "next” small cap value stock on our Top Ideas list to be subject to a takeover offer, but we are almost certain there will be a "next” one. So, stay tuned and invested!

RDM Corporation has approximately 22.6 million shares outstanding.

Company website: www.rdmcorp.com.

Author's Ownership Position: TSX: RC - Yes


Read Disclaimer:

This article is for informational purposes only. This article is based on the author's independent analysis and judgment and does not guarantee the information's accuracy or completeness. The information contained in this article is subject to change without notice, and the author assumes no responsibility to update the information contained in this article. The information contained within this article should not be construed as offering of investment advice. Those seeking direct investment advice, should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock.

Investorfile.com is not engaged in an investor relations agreement with RDM Corporation nor has it received any compensation from RDM Corporation for the preparation or distribution of this article.

The author of this article has acquired and may trade shares of RDM Corporation through open market transactions and for investment purposes only.

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Gerry: Thanks for small cap stock suggestions over the past 5-years. Your record is very impressive and your analysis has been excellent over the years. I think small investors (and fund managers) should pay much more attention to your work. I look forward reading your blog over the next 5-years!