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 took this meeting out of curiosity. I knew little about the business and had very modest expectations, but I always like to meet new companies and develop a first impression of the CEO.
In this case, I was very impressed!
Baylin doesn’t have a stellar track record as a business. The stock has been down over 80% during the last ten years. Leighton Carroll, the current CEO, took the helm in June 2021 when the company had $37 million in debt, negative working capital, declining revenues, no gross margins and significant operating losses. It was a mess.
In three years, he executed what looks like a solid turnaround. In its most recent quarter, Baylin showed modest revenue growth (3%), decent gross margins (42%), positive and growing adjusted EBITDA ($1.7 million), and a reduced debt load ($16.6 million).
Leighton walked me through his background and track record. You quickly realize this is not his first rodeo, and the results speak for themselves.
I need to do a lot more work to understand the business better, but so far, it looks interesting!