Watch carefullyFor years there has been a disconnect between RDM's business activities and its share performance. Nothing illustrates this better than a couple of situations being played out in the market at present. Call it coincidence if you wish but smoke without fire is rare.
For some weeks Morgan Stanley or one of its clients has been a daily buyer of RDM shares, virtually all transactions based on 100 shares per trade. Very unusual for institutional buying but the limited daily volume, always spread out through the entire trading day, may indicate NCIB activity. A more likely explanation may be that we are watching a strategy of "slowly, slowly catch the money" being implemented by the activist group now represented on RDM's Board. Small transactions do not set off alarm bells.
The other situation meriting attention is the fairly constant purchases of shares, usuaslly in larger lots than above, by PI Financial or one of its clients. Of the dozen or so brokerage firms regularly trading RDM shares, only Morgan Stanley and PI are never on the 'sell' side. For those who may not remember, Perlus Microcap executed most of its acquisitions through PI. Perlus took its gains and left by 2014 never having requested Board representation despite a near-20% stake. Perhaps they've decided to come back or someone else has spotted an opportunity. Given the competitiveness of the payment solutions market in the U.S., and the success that has been achieved by certain firms, there are companies that might find RDM a very good addition. Obviously there will be no disclosure until someone buys 10% or more but the ground is moving.
Q4 results should be out in 3 or 4 weeks. The market is not signalling much in the way of expectations but the absence of very positive numbers will be further reason for activist pressure. Anything less and the Board's commitment to ensuring that "management operates the company's business in a way that can both achieve full current potential and create new opportunities" may begin to lose reasonance.