Tucows needs a New Strategy or a New Management Style

                     Tucows has been  a stockmarket darling for the last 2 to 2/12 years.It was trading at about $12 per share two and a half years ago and moved up to the $48 to $50 area.And in the last year or so has moved from $48 to $50 area to $90.But in the last month it has fallen to $68.This blog and other investors find it's approach too eclectic.It's business is selling internet services, domaine names and mobile services.And it has one software  subsidiary called ENOM.But it also has a position in several small internet and ecommerce software companies .And it gets much of it's revenues and earnings from here.
     This blog thought recently that it was heading for $100 a share and that it's eclectic management style was being successful.But in the last 1 to 2 months it has dropped about 20%.Part of this is due to a couple of lawsuits that have been made against TC. But this blog believes another factor is that perhaps too much of it's revenue comes from government contracts.This can be remedied easily.It needs to have it's revenue more concentrated and take majority or control positions in 3 or 4 of it's more successful subsidiaries.Then it can focus on one or two internet areas instead of  being in 8 to 10 companies.This can be easily done by raising more equity.Presently it only has 10 million outstanding shares and this blog believes that situation has added to the instability of the stock.Very few technology companies with a billion dollar market capitalization have such a small number of shares outstanding.So one of our recommendations is to raise more equity and use the funds to solidify their postion in three or maybe four of their internet software companies.They need to streamline like the rapid transit train below.    

Areas of Improvement

What got Tucows from $12 to $50 a share did not get it from $50 to $90 a share. This management style is described in posts on Workathon dated December19,2016 and February 20,2017.And now it needs to change it's management style.This blog believes that most of it's subsidiaries are in e-commerce software and it needs a larger position in both 3 or 4 of these companies and in their resources.This can be done by raising more equity which will broaden it's equity base.It has fourth quarter results coming up soon and investors will be looking for some of these changes to be implemented as well as satisfactory EBITDA. This blog is looking for adjusted EBITDA of $30 to $34 million and e.p.s. of more than $3.00 per share.         use Workathon for analysis of technology  companies;use Workathon for news on technology companies

Street Capital Bank my worst forecast of 2017 and worst performing bank

   
     

    If Kirkland Lake Gold was my best forecast for 2017 then Street Capital Bank was the worst.As in the caption above the train is only pulling away from the station.It was trading around $2.00 per share in December 2016 when I bought shares and forecasted a large price improvement after February when it got it's Schedule 1 bank licence.Now it trades at $.98 per share.However parts of my forecast were correct.It is taking on deposits and it has increased it's customer loans by 50%.But revenues and operating income have fallen by about 50% over 2015.Although net income has remained almost constant.It still has a long way to go but it will have a credit card availability this year and interest margins will increase in 2018.
       A Banker's  Dip in 2017
      Often a junior company after a major revenue-creating event will slow down or even move backwards for a period of time.This often happens when a new banking licence is obtained or a patent or even a new major oil field.The reason being that the new company shows more established companies that it is open for business.And this gives them more attention and causes more competitive pressures.Once the new company adjusts to this increased competition it will return to it's natural growth path.And SCB is still adjusting.For example,both revenues and operating income must grow for Street Capital Bank to reach 2015 levels.
  Revenues and operating income are expected to be flat with 2016 levels in 2017.While net income may be a little less than 2016.However loans and deposits and the interest rate margin will be better than 2016.The interest rate margin has improved in the second half of 2017 and again in 2018.      

                Improvements
         As shown in my blog on Linkedin entitled If They Only Knew  SCB had about 130,000 customers at the time of getting their licence.Now I an guessing they have about 150,000 customers and their loans have increased by about 50%.This blog expects only average results for 2017.But they will introduce credit cards in 2018 and have higher interest rate margins.So look for Street Capital Bank to move closer to it's natural growth path.It is mereley an adjustment process.
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Kirkland Lake Gold -- stock of the year(2017)

Yes,Kirkland Lake Gold has had a very successful year.But it all started with Crocodile Gold.Crocodile Gold bought for  small compensation two (supposedly almost depleted) Australian mines,

namely Stawell and Fosterville to accompany their existing Cosmo mine.And then Crocodile Gold bought Newmarket Gold and  the new company became Newmarket Gold.Kirkland Lake bought Newmarket and that was when Kirkland Lake discovered that the Fosterville mine was much bigger and had a richer grade of ore than originally thought.
                Financial Results for Q4 and 2017 
   KL acquired St. Andrew's Gold and Newmarket Gold in 2016 and the stock increased in value by174% in 2017.Total consolidated production in 2017 increased from 543,000 ounces to 597,000 ounces.As well  KL beat their own production guidance but revenue figures are not yet available.And Q4 production also increased by 10% over 2016 production.This enabled KL to pay down convertible debentures in June and December of 2017.The debentures were converted into 4.5 million common shares at a lower share price.In addition, they doubled the size of their dividend to $.02 per share.
                 The Fosterville mine
     It is highly unusual that the stock price moved up 174% simply because of a 10% increase in total production.So this blog believes that most investors realize the gold reserves at Fosterville are larger than recorded.Their annual production statement shows the Fosterville reserves at 1.03 million ounces but an earlier statement in 2017 by KL stated the Australian reserves at about 3.7 million ounces.With .7 million ounces at Cosmo and almost no reserves at the Stawell mine that means that they estimated in 2017 there were 3 million ounces at Fosterville.This blog believes that this is a low estimate. As Crocodile Gold way back in 2013 said that the Fosterville ore deposit was bigger than 2.5 million ounces.My blog in Workathon dated October21,2016 shows that,Newmarket Gold,  before selling the company discovered 2 new faults called the Lower Phoenix fault system and the Eagle fault system.And the ore grade is richer than in the existing Phoenix fault.This blog calculated that  the total reserves at Fosterville were now about 4 to 5 million ounces.But Fosterville has extensions at each of their major faults.So it is possible that the size of the ore body (with extensions) can be as big as 5 to 6 million ounces.This cannot be said with certainty but it is certain that it is not 1.03 million ounces.
                             The best Estimate             

         Kirkland Lake Gold's share price had a good year in 2017 but it will likely do well in 2018 also.It has ,for example, moved up $2 in the last month.But it is not moving on the increase in production alone.This blog believes that most investors understand that the ore body at the Fosterville mine is much  bigger than reported.In their annual production report KL claims that Fosterville has a reserve of 1.03 million ounces and earlier they estimated the mine size to be 3 million ounces.This blog believes that 6 million ounces may be high but 4 to 5 million ounces is a reasonable estimate and at current prices of gold that is worth about $6-$7 billion.My earlier blog in Econothon II dated  December2,2017 states "the fair market value of the Fosterville mine has not yet been realized".And this is still true, so 2018 should be a good year for Kirkland Lake Gold.
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