Mathieu Martin - Stocks and Stones A month ago, I travelled to Vancouver to attend a conference. Two of my favourite organizations in the microcap space, Planet MicroCap and Smallcap Discoveries, joined forces to create what I think was one of the best conferences I ever attended.
The two-day event had everything you’d want: a super high-quality company lineup, educational keynotes, and great people to meet during the breaks and cocktails. It was fantastic to reconnect with old friends and meet new ones.
When I attend conferences, I tend to have many one-on-one meetings with companies. Most microcaps aren’t covered by analysts, and little information is available publicly. You can really gain a deeper understanding of a business when you spend time asking the CEO questions.
For this conference, I had 17 meetings. Typically, I expect at least half of the meetings to be mediocre or even totally useless. The problem is that you can’t tell which ones in advance. I’ve been surprised countless times by a company I wasn’t super excited to meet, only to come away rushing to do more research (there’s one example below). That’s why I try to turn over as many rocks as possible - you never know what you’ll find. And honestly, the batting average at this conference was much higher. Most meetings were actually excellent.
I won’t provide a recap of all the companies I met, but I’ll give you some of my main highlights: the standouts, the companies I’m keeping at the top of my watch list, and the one that surprised me the most.
Let’s dive in!
I was looking forward to meeting with Covalon mainly because it would allow me to meet Brent Ashton, the new CEO, who was appointed earlier this year. Brent came in when the company had posted nine consecutive quarters of net losses alongside lumpy and unpredictable revenue patterns.
Brent quickly changed the org chart to improve collaboration between the different departments and employee morale.
Impressively, the company immediately swung from losses to strong profitability due to significant revenue growth and a tight focus on controlling expenses (he won’t take credit for everything, which is fair).
Brent looks pretty excited about the future and mentioned that growing the current product lines has a ton of upside. The company’s two main categories are wound care (collagen platform) and vascular access (silicon adhesive platform).
In wound care, Covalon’s two main competitors (Solventum and Medline) are very distracted, enabling the company to gain market share. Covalon estimates it has a mid-teens (~15%) market share.
The vascular access market share is less than 1%, and Brent thinks most of the growth will come from there. Over the long term (5 to 7 years), the vascular access category should overtake wound care as the primary revenue contributor. It is a large market where Covalon can establish itself as a strong second supplier next to 3M’s standard of care.
Overall, I came away very excited about the long-term growth prospects for Covalon and especially about the leader in charge.