Sylogist Ltd. (SYZ.TO)

For about 4 years, this stock went straight up. Kept raising the dividends and made good acquisitions, and then it sort of stalled a little. This is a company that has made solid progress, created lots of shareholder value, the dividend has been raised 5 or 6 times in the past 4 years, and now it has paused. Sitting on about $41 million in cash. It is really a question of getting to the next acquisition or getting a large contract. Not cheap, but you don’t mind paying more for a company that has performed very, very well over 5 years. He likes this.

(A Top Pick Sept 28/12. Up 133.42%.) Still likes the operations of the company. Made a couple of acquisitions that he expects will be quite accretive going forward. They continue to raise their dividends. There are no analysts following the story, but are a few other mutual funds that are moving into the story. Expect they will continue to grow their cash flows over the next couple of years.

(Top Pick Sep 28/12, Up 84.17%) He is taking a little off the table. Management owns 40% and he owns 7%. Not sure if management team needs analyst overage. 2.9% yield, recently increased. In next quarters people will be surprised by the margins.

One of his favourite stories. A software company that continued to do very well on top line and bottom line. Increased their dividend. Cash flows are very strong. Has started to see price increases on their software. Expects you will see margins expand over the next couple of quarters. 3.5% dividend yield.

Software company out of Calgary. Well-run. Stock has done really well. Sell it! Not a reflection on the company but the stock is really, really expensive. A smaller software company that he likes and is really inexpensive is Softchoice (SO-T). He would sell Sylogist and buy Softchoice. (Also see Top Picks.)

They do a lot of payroll for teachers and school board workers in Alberta. Also, they do stuff for smaller cities in Alberta. A cash flow generating machine. Don’t have a ton in revenues but their margins are very, very large. Increased their dividend by 17%.