RE:RE:RE:NamSys Reports Results of Operations for the Second QuarterDear Blair,
Thank you for the informative post. I am very grateful for your detail Battleship Investing blogs (especially the insights from management) and have listed a link to them in my previous posts. They are probably the best write-ups about NamSys that I found on the internet.
It is very nice to read different perspectives and learn about details I have omitted during my own readings/analysis. I hope other readers/posters will be inspired by you and also contribute to the discussion with their thoughts and findings.
I apologize if I came across a little negative. I am quite a neurotic person and I tend to be rather distrustful and skeptical. I have been very deeply burnt by several small cap companies (the venture and even TSX index are a minefield in my experience), including several in the software sector. For example, I have lost more than half my investment in Computer Modelling Group (CMG) and have been waiting for years to recoup my losses. I do not want the same thing to happen to me with CTZ. Recovering from a 50% loss requires at least 100% gain, which takes a lot longer and for many stocks might never come.
The repricing of a growth stock to a value stock once it runs out of steam is horrendous. Especially with small companies, their valuation can be permanently wiped out since there are only relatively few people willing to invest in the small space and the smaller the market cap, the fewer potential investors. I own several such "broken" stocks, some of which trade at below 2x free cash flow and their price as well as volume have been stagnant for years with no catalyst to help them recover. Once there are no institutional or bigger independent investors, the management also usually stops or drastically reduces disclosure and this only further decreases interest in the company since no one in the public markets knows what is going on.
I think we are both aligned in hoping for the best future for NamSys. My CTZ holdings in terms of % of my portfolio are about the same as yours (~8%). I believe we are both buy-and-hold investors as well. With all of this in mind, what is your long-term vision for NamSys? What do you think will happen at the end of 2021, when the COO bonus plan will reach its maturity? Do you read the bonus clause as something discouraging or encouraging a take over? How do you value the company?
As you write in your post, there are a lot of things in the oven in NamSys, but until we see actual subscription growth, it is difficult to estimate how much impact that might have, especially after the growth in expenses. I might be very impetious young boy, but to me there also seems to be quite a delay with some of the previously anounced onboarding (for e.g. Dunbar). If you read about their partners/competitors you will also discover some negative industry developments - for e.g. Burroughs (https://namsys.com/insights/case-studies/leading-the-pack-with-smarter-cash-automation-services) partnered with NamSys's competitor KAL early in the year (https://5212462.hs-sites.com/blog/burroughs-and-kal-partner-to-deliver-innovative-software-solutions). Is this an opportunity for NamSys, will it be a challenge? I am not sure.
Have a wonderful day and best of luck!