Sunday, August 5, 2018

My Faith Has Paid Off

Today, I will like to talk about my holding in Quarterhill Inc.

Before I continue on the main topic, I like to inform the readers that I will be joining the SGX Bull Charge Stock Challenge. Although I maybe putting my reputation on the line, and I will most probably lose as the tracking period is only 2.5 months, but I will just join for the fun of it. I will try my Big Ideas Theory Strategy with a slight tweak for this competition. In view of this, I will probably reveal some of my Big Ideas. Stay tuned!

Image Taken From InvestingNote

Back to Quarterhill Inc...

As per Wikipedia, Quarterhill Inc. (Quarterhill) is formerly known as WiLan Inc., and it is a Canadian public technology holding company, based in Ottawa, Ontario. It was founded in 1992 as a wireless technology company. In the mid-2000s, it gradually transitioned into a patent licensing company. In 2017, it renamed itself Quarterhill, and is attempting to become a holding company specializing in the Internet of Things. It is listed on the Toronto Stock Exchange and NASDAQ.

In summary, Quarterhill share price has been on the downtrend since the start of the year. This is because the earning for the last 2 quarters has been below expectation and huge losses were incurred in the last quarter.

Screenshot from Seekingalpha
When I first purchased this company, it was at a share price of US$1.9+. Over time, I had to average down more than 3 times in order to achieve a much more acceptable share price.

So what has kept my faith in Quarterhill? 

1. Positive Free-Cash-Flow - Despite making losses, the company is still able to generate high amount of Free-Cash-Flow.

2. Strong Balance Sheet With No Debt - Based on its latest financials, the company has a current ratio of over 4.11x and only a gearing ratio of 0.15x without any debt!

3. Margin Of Safety Over Its DCF Valuation - There is significant margin of safety from my calculated DCF Valuation, despite indicating no growth and high discount rate of 20%!

4. Transcript Of Management Discussion - I have gone through the transcript of the management discussion at least 3 times. There are many indications that have showcased the management is positive about its performance this year!

Thus, it was basically the theory of my Ultimate Scorecard as well as my belief in fundamental investing that has kept my faith in the company.

In Short

My faith was duly rewarded recently. The share price have regain and bounced back over 29% due to the following:

Screenshot from Seekingalpha
To sum up, if we invested fundamentally, we should not be worried about the short term changes in the share price. This is because time will eventually show that who is right.

Please do your own due diligence before you invest this counter.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of all the SGX counters now! 

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