Descartes (DSG.TO)

There is no reason to sell it unless it becomes overweight.

CEO is stepping down, but will still be involved in the business. An issue that he has always had with this company is their accounting. Somewhat opaque and they tend to use adjusted EBITDA, which tends to be a bit of a red flag for him. Likes the robustness of their business and the resilience of their customers. A play on international growing trade.

(A Top Pick June 4/12. Up 49.03%.) They are extremely good about taking earnings, ploughing them back and acquiring small companies that have interesting technology. Doesn’t own as he thinks there are multiple opportunities in smaller companies, to really go up but it’s not to downplay these Top Picks.

(A Top Pick Feb 3/12. Up 15.68%.)

(A Top Pick Feb 3/12. Up 5.43%.) Still thinks it is very attractive. Ranks in the top 5% of his ranking system. Has approximately a 6% free cash flow yield. Trading at roughly 13X price-earnings multiple. 85% of their revenue is recurring so odds are very high that they will continue to make money.

Announced a contract this morning. Works well with his current revenue model. Sold 3 weeks ago because it was under performing. He still likes it and it ranks well in his models but it has lagged on performance. Will watch when it next reports. Looking to buy it back over the next 2 to 4 weeks. He is looking for it to go up more than 5%.

Phenomenal job over last 5 years. One caveat is that growth is mostly through acquisition. Has had a nice run and is not as cheap as it once was, 14 times. Thinks we wont see a lot of growth over the next 12-24 months.