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Nov
5
Investorfile Top Ideas have takeout possibilities brewing
Posted by: Gerry Wimmer
11/5/2017
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Avante Logixx Inc. (TSXV: XX) and AirIQ Inc. (TSXV: IQ) could be next on the list of small cap stocks whose big investment gains are triggered from takeovers.

A shareholder value–enhancing event like a takeover is never factored into Investorfile’s share price targets for our Top Ideas. That said, for the most part, historically takeovers have been very rewarding for shareholders who have made investments in Investorfile’s Top Ideas small cap value stocks.

Of our 18 Top Ideas profiled to date in the Investorfile blog, six stocks are no longer publicly listed on a stock exchange as a result of a takeover or privatization. The average total investment return on our first six Top Ideas that were subject to a takeover or privatization is approximately 254%.

Investment gains for Investorfile Top Ideas triggered with help from takeovers or privatizations:

2017: RDM Corporation +708%
2017: IWG Technologies Inc. +95%
2015: Wanted Technologies Corp. +478%
2014: DDS Wireless International Inc. +48%
2013: Radiant Communications Corp. +180%
2013: Galvanic Applied Sciences Inc. +17%

It is our opinion that any one our Top Ideas could be subject to a takeover bid, but there are two stocks that have moved to the top of our list that may have near-term takeover possibilities:

  1. Avante Logixx Inc. (TSXV: XX – C$0.29): The Company just announced that the Board of Directors will be conducting a strategic review, which opens up the potential sale of the Company, which we believe could unlock the value for shareholders. In a recent research note issued by Cormark Securities, their view is that "Avante has successfully differentiated itself with its integrated security platform and niche high-end focus, making it an attractive takeout target for a larger security company looking to capture market share by expanding its product offering.” Cormark Securities has a $0.45 target price for this stock.

  2. AirIQ Inc. (TSXV: IQ - C$0.18): In a recent public filing, Vecima Networks announced it has acquired a large block of shares of AirIQ at a price equivalent to C$0.17 per share. It now has a 21.3 per cent ownership position in the Company. Vecima Networks provides fleet managers the key information and analytics they require to optimally manage their business under the Contigo, Nero Global Tracking and FleetLynx brands. Vecima Networks operates in the same business segment as AirIQ, which provides fleet operators and vehicle owners with a suite of asset management solutions to reduce cost, improve efficiency and monitor, manage and protect their assets. We believe in the scenario that Vecima Networks may make an offer to purchase the rest of the shares in AirIQ at premium to the current trading price.

The Investorfile blog thesis is all about investing in undervalued small cap companies that are fundamentally strong and which can be very rewarding. But, more often than not, a shareholder value–enhancing event like a takeover of such companies can generate significant premiums to the small cap’s stock price and, just as important, instant liquidity for such investments.

Author Ownership Disclosure: Yes - TSXV: XX, TSXV: IQ.


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 is not engaged in an investor relations agreement Avante Logixx Inc. and AirIQ Inc. nor has it received any compensation from Avante Logix Inc. and AirIQ Inc. for the preparation or distribution of this article.

The author of this article has acquired and may trade shares Avante Logixx Inc. and AirIQ Inc. through open market transactions and for investment purposes only.

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Hi Gerry, Your philosophy is focused on principles that have been shown to produce above average results over time and your record has clearly proven that. Congratulations on a great blog and thank you for the hard work that you do in sharing and updating your ideas; it is much appreciated.