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
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
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.
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.