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Sep
25
For shareholders of Noble Iron there is still money on the table
Posted by: Gerry Wimmer
09/25/2022
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TOP IDEAS: Noble Iron Inc.’s (TSXV: NIR) recent divesture of its SaaS business may yield up to a 400% gain for investors since becoming a Top Idea for Investorfile. Total cash distributions to shareholders could range from C$1.10 to C$1.24 per share.



We acknowledge that Noble Iron Inc. (TSXV: NIR -$0.90) may be the most under-the-radar stock on Investorfile’s list of Top Ideas for small cap value opportunities. But under-the-radar does not mean that this stock is not a big money maker for its investors.

The Investorfile blog first recommended the shares of Noble Iron Inc. as an undiscovered investment opportunity in February of 2021. At that time, the stock was trading at C$0.25 (See: Noble Iron is an attractively valued SaaS company with cash). Later that same year, with the stock’s trading price 140% higher, we provided an update blog post on the Company based on its subsequent financial releases (See: Noble Iron and its financial results should not go unnoticed). Today the shares of Noble Iron trade at a stock price which is 260% higher since we introduced the story, but there is still money on the table for its shareholders.

For several years, Noble Iron Inc., through its wholly owned subsidiary Texada Software (based in Guelph, Ontario),was scaling its Software-as-Service (SaaS) business. Texada offers cloud software solutions for equipment rental companies, equipment dealerships, construction companies, contractors, and customers who own or use construction or industrial equipment.

In the Spring 2022, the value of Texada’s SaaS business caught the attention of a United States-based private equity fund with an offer. After receiving shareholder approval, the Noble Iron subsidiary was sold for C$37.2 million in cash to this fund. Of note, C$4.2 million of the purchase price was required to be used to acquire the rollover interest in the private equity fund’s controlled entity that now owns Texada. All transactions closed on June 30, 2022 and all cash escrows/holdbacks will be removed 90 days thereafter and at the end of this month.

So now what is left on the table for shareholders of Nobel Iron?

The recent disclosure of the Company’s financial statements as of June 30, 2022and the most current Management Discussion and Analysis (MD&A) which reflects the divesture of Texada, provides all the information investors need. A look at Noble Iron’s Balance Sheet indicates that the Company has working capital balance in cash of approximately C$33 million. On a fully diluted share count basis this equates to about C$1.10 per share. The Company also holds the aforementioned transaction roll-over interest, a non-current financial asset with a face value of C$4.2 million, which is equivalent to additional C$0.14 per share.

In the MD&A, the Company has disclosed that it will assess options to return capital to shareholders. While there can not be one hundred percent assurance this will occur, we recently spoke with the CEO who is a major shareholder of Noble Iron, and he confirmed that it is the Company’s intent to return capital to shareholders in the most efficient means possible (subject regulatory approvals if necessary), in the near term.

We acknowledged Noble Iron was a very under-promoted small public company, with its past financial results and subsequent divesture going largely unnoticed by the investment community. But, Investorfile is of the opinion that there is still money left on the table for the shareholders and potential investors. Based on the current trading price, there is upside opportunity to continue to own and/or buy the stock based on our assumptions that the total of future cash distribution (return capital to shareholders) could be as high as C$1.24 per share.

As for the early investors in Noble Iron, they could stand to gain earn up to a 400% return since Investorfile recommended the stock.

Noble Iron Inc. has approximately 29.7 million shares outstanding, fully diluted.

Author Ownership Disclosure: TSXV: NIR – Yes


Investorfile's share price accumulation target of C$0.60 for Noble Iron Inc. was initially reached at the market close on February 8, 2021.


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 Noble Iron Inc. nor has it received any compensation from Noble Iron Inc. for the preparation or distribution of this article.

The author of this article has acquired and may trade shares of Noble Iron 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.