Strathcona Resources (SCR.TO)

He would not short this because there is an ongoing big run up in anything associated with sports gambling and it looks as though the US will legalize that. Market cap is $100 million which would be easy to buy. He expects this to be acquired--no longer publicly traded--within a year, probably at a higher price.

The stock popped significantly after the approval of online sports betting in the US. It then pulled back a little and has advanced again. There is a lot of optimism for the future of this stock. However, the two analysts that cover the company expect either break even or loss of a penny per share at year end in August 2019. Thus, even though the company is worth more than it was a few months ago, its P/E ratio is extremely high and the actual value of the company is uncertain. (Analysts’ price target is $0.52)

This is the second-leading app in sports news and data in North America. The US Supreme Court effectively legalized sports betting today, causing a spike in theScore’s price. It has over 4 million unique mobile users but a market cap of only $75 million. The Stars Group, which has a market cap of $10 billion, was to heavily expand sports betting in the US and could easily tuck in theScore as its news feed. He expects this company to be sold for a much higher price. (Analysts’ price target is 0.30$)

He loves the management team and used to own a lot more of this stock. It has proved very difficult to generate results from this type of app. In the short term, they have a lot of problems to fix.

He likes what has been happening with the company, but is disappointed with the share price. They were going to get into daily fantasy betting, he says, and that had given the company a bump up in value. He has been buying it back lately on weakness and believes the users of the sports content will stick with the company as customers. He thinks this makes the company an excellent take-over target.

He is a long suffering shareholder. They are having trouble commercializing it and getting their revenues. It is tougher than they thought it would be. It’s a great management team.

As the growth slowed in the adoption of the app, the stock declined. However, the company still has plenty of cash and they are getting a big tax refund. Thinks they are going to be “break even” in the 3^rd quarter this year. They’ve taken their user base of about 11 million people or so, and are starting to break into some really larger advertising accounts. Revenue growth has been quite nice, and he sees that continuing. They also have a good relation with Facebook (FB-Q) where they get a lot of traffic. Sees more upside than downside.

The CEO, who owns a significant amount of stock, has been purchasing even more recently. The end of tax loss selling plus insider buying and a cheap stock. You can’t find fast-growing app or software stocks that are trading at 1.5X sales. There is a significant amount of long term upside in this company. (Analysts’ price target is $0.55.)

It is too small cap for him, but it scores in the bottom 10 present on valuation and momentum. Negative ROE, and no price to earnings. Debt is not troubling, but they are not cash flowing. You want to see them making money.

The core business has slow growth but they got to a critical mass were the advertising growth is significant. He is looking at purchasing it again. The valuation is sustaining them. Fantasy sports people love it.

This is an app run by a superb management team which has built and sold a couple of businesses. They own a lot of stock. Having a really hard time monetizing their traffic. Sports, sports betting and traffic is growing, it’s just the monetization that is tough for them. He thinks they will figure it out, but it is going to take time, so you have to be patient.

Still trying to grow the business, but are burning a lot of cash in the process. Has a very high respect for management, but a pure data company like this is a tough business to try and grow. The burn rate hasn’t diminished that much.