KeyStone’s Stock Talk Podcast Episode 116 Show Notes

Listen to the full podcast here.

We have a packed show for you this week. We start by looking at Thursday’s sell-off on the heels of new record highs for the S&P 500 and NASDAQ. In our Ask Us Anything segment we answer a listener question on how to use SEDAR, a useful but awkward tool for looking at all documents filed by every public company in Canada.

In our Your Stock, Our Take segment start by taking a listener question on Canadian Small-Cap dividend payer, Pivot Technology Solutions (PTG: TSX). Pivot is an IT (information technology) infrastructure and service provider. The listener asks whether its high 8.5% dividend yield is sustainable if Pivot passed KeyStone’s growth and value criteria? Finally, after our appeal for questions on gold related growth and value stocks, we have been flooded with listener questions and put together a quick segment on some of the more frequently submitted gold names including SandStorm Royalty (SSL:TSX), Premier Gold Mines (PG:TSX), and Roxgold (ROXG:TSX).

We pick up from last week’s topic, “Is the Stock Market Showcasing Economic Reality?” a question to which we answered no!

The markets began this week with a bang. Both the S&P 500 and Nasdaq ended the regular session Wednesday at their highest-ever closing levels. The Dow spiked above 29,000 for the first time since February and came within 500 points of its all-time record level.

However, by mid Thursday, the had dropped over 800 points or 2.85%. The tech-heavy Nasdaq Composite — which has led the rally off the late February lows — faced a sharper decline of roughly 5%. 

Some of the sector’s strongest-performers in recent months were off considerably Thursday: Amazon (-5%), Apple (-7%), Microsoft (-5%), Tesla (-7%), Zoom (-11%), Square (-7%) to name a few. Given the run-up in these names, the one-day declines amount to plucking a couple hairs from a hearty play-off beard. But the reversal is notable. 

There was no specific negative catalyst for the drop. For me, it all comes down to valuations.

A pullback or sell-off is completely understandable and warranted. The Nasdaq has advanced violently since March and many names are at absurd valuations. Tesla is a great company and it recently broke into profitability. But the business trades at roughly 1,000 times its earnings over the last 12-months. The average PE on the S&P 500 is in the range of 18-20. That is a massive premium. While Tesla has good growth, I think many listeners would be shocked to know that the company’s revenues only grew 14.5% last year. Decent growth, but by no means great growth.

From a Big Picture Research perspective – We find great growth businesses daily, but few trading a reasonable prices. We find more priced almost to perfection. High historical valuations, coupled with weakness on main street, are the biggest reasons for a sell-off or correction at present. Stocks no not go up in a straight line. Period. 

Final Point – Not all jobs are coming back near-term.

This is a concept we have discussed a number of times on this Podcast. It has been our belief that businesses will not be so quick to add back all jobs lost during the COVID-19 Shutdown. In the US, ADP’s closely watched monthly private payrolls report showed just 428,000 new jobs were added back in August, or fewer than half the 1 million that had been expected. 

Many companies likely use the Crisis and a way to “cut the fat” in their organizations and with Main Street looking weak or at least cautious, there is no need to aggressively get back to the employment levels seen prior to COVID-19.

The jump earlier this week came as investors continued to bet on a protracted era of accommodation from the Federal Reserve and other global central banks as policymakers work to offer ongoing support the virus-stricken economy. Hopes that a coronavirus vaccine will be available in the near-term – and thereby allow more businesses to reopen and consumers to spend more confidently – have also supported equities. Media outlets including Bloomberg reported Wednesday that the U.S. Centers for Disease Control and Prevention has told states to prepare for a Covid-19 vaccine that would be ready for distribution by the beginning of November.


Any chance of explaining how to use the Sedar website. It is very difficult to use that sight for the average person.



Great question Terry. SEDAR can be tough to navigate and is set up terribly for the average investor. In fact, we answered this question in video format in our June DIY Investor seminar – you can access the full version which details how to look at any “Hot Stock Tip” you receive and categorize it as either pure speculation or potentially investment worthy, by using SEDAR. But I will give you the “Coles Notes” version today.

First off, what is SEDAR or S.E.D.A.R. – System for Electronic Document Analysis and Retrieval. You can see why we needed an acronym.

SEDAR is a mandatory document filing and retrieval system for Canadian public companies. It is administered by the Canadian Securities Administrators, a coordinating body comprising the 13 Canadian provincial and territorial securities commissions, and operated on their behalf since 2014 by the Alberta Securities Commission.

Filing with SEDAR started January 1, 1997, today all Canadian publicly traded companies are required to file their documents in the SEDAR system. Here you will find all companies annual and quarterly statements, institutional holdings and many other forms. 

You can find SEDAR at Or just google SEDAR.

  1. This will bring you to the site’s home page. Terry, you are correct, it is ugly as sin and as about as easy to navigate as a Costco on Saturday, but it will have to do for our purposes. 
  2. Click on “Search Database” and navigate to the “Search for Company Documents” and click there.
  3. Armed with the name of a stock you are seeking information on – type it into the “Company Name” field and hit “Search”. 
  4. Here you will find documents on the company you searched for. Here is where the layout is silly. To find the latest documents, you need to click one of the linked “Company Names” under the Company Name heading and you are brought to another name with Address and Contact info for the stock. Here you click on the “View” This companies’ documents link and it will bring up the latest document in order. 
  5. We would suggest clicking and reading the latest quarterly MD&A or management discussion and analysis document for the latest quarterly info. You can also look at the latest “Interim financial statements/report” for a quick look at the income statement, cashflow statement and balance sheet. You can also find all recent press releases here and for some bedtime reading, because it will likely put you to sleep, check out the latest annual report.

I hope that helps you navigate SEDAR, a useful but awkward tool for looking at all documents filed by every public company in Canada.

In the US they try to make the info as easy as possible to access…the opposite is true in Canada.

Your Stock, Our Take

I’m looking for value in the technology sector and came across Pivot Technologies which currently has an 8.5% dividend yield. Is the dividend sustainable and does Pivot pass your growth and value criteria? 


  • Pauli – via email. 



Pivot Technology Solutions (PTG: TSX)

Current Price: $1.91

Market Cap: $73 Million 

What does the company do?

Pivot is an IT (information technology) infrastructure and service provider. The company designs, builds and services complex IT systems for companies of all sizes. Pivot operates through 6 individual subsidiaries but earns the majority of its revenue through a single subsidiary called ProSys. Prosys sells storage, server, and IT infrastructure consulting solutions to enterprises. Clients include government, education and healthcare providers and most of the business is conducted in the United States. 

Key Points: 

Pivot is unique given the fact that it is one of only about 6 technology stocks on the Toronto exchange that pays a dividend. As the listener stated, the dividend yield is 8.5% which also makes Pivot the technology stock with the highest yield in Canada. 

However, I will caution people before they get too excited. We have reviewed Pivot many times over the years and the unfortunately the company comes far from meeting our rigorous financial tests for investibility. 

One of the things that is important to understand about the technology sector is that there is a big difference between proprietary software companies and hardware providers. When we think about consistent double-digit growth, high margins and high valuations, we are generally thinking about software stocks. Hardware stocks, on the other hand, are much more likely to have higher costs, which means lower margins, lower and less stable growth and also higher levels of debt. 

Recent Financial Performance

  • Pivot operates in the hardware and IT services side of the technology sector. One of the first things to note about the company is that it is a very low margin business. Operating margins for this company are about 1%. That is tiny. Just to contrast, operating margins for other tech stocks that we cover like Microsoft are in the range of 35% to 40%. That’s a massive difference and 1% operating margins are extremely low for any industry.
  • Pivot’s revenue has been in decline for the last few years and operating income is very volatile.
  • In the most recent quarter, Q2 2020, revenue was down 28%, and operating income declined almost 65%. 
  • The company also has about $180 million in debt to service which is more than twice the current market value of the company. 


The listener asked if we had confidence in the sustainability of the dividend and if the company passed our financial tests for growth and value. The answer on both questions is “no”. Extremely low margins, volatile financial performance and high debt place make the company very risky in our opinion and we would not recommend the stock to investors. 

Fundamental Gold Stock Ask Us Anything

Your Stock Our Take – Gold Comparison

With gold on a tear in recent months, we asked listeners of the podcast and followers of our social media accounts to send in their favourite Gold Stocks that are showcasing GARP (growth at a reasonable price).

We had a few come in and we gave them a quick analysis. 

The first thing that I want to briefly discuss is the price of Gold which has been steadily increasing from about late 2019 where it traded around $1200US/Oz and has recently surpassed its all-time highs made in 2011, now trading at $1900US/Oz. 

Now if you are familiar with KeyStone you will know that we are not very fond of investing in stocks that are reliant on the price of an underlying commodity – as no one truly knows where the price of gold will be tomorrow, or a year from now. As even if management executes perfectly, if the price of gold turns downward, there isn’t much you can do. So, during my analysis here – I do want you to keep that in mind. 

As well I should mention that we did have a few gold projects that listeners had submitted but considering these companies or I guess projects do not generate any revenue – they are considered highly speculative, and very difficult to analyze. 

The first two stocks that I am going to look at and contrast are Premier Gold Mines (PG:TSX) and Roxgold Inc. (ROXG:TSX) which both came in from Ronald via Email. 

Premier Gold Mines (PG:TSX)

Current Price: $2.62

Market Cap: $643 Million

Premier is a Canadian based gold and silver producer engaged in the exploration, development and production of gold and silver deposits in Canada, the United States and Mexico. The company currently has an interest in 6 mines in these locations. 

Looking at the company’s financial results:

Revenue has been decreasing quite steadily, with trailing twelve-month (TTM) revenue at $57.5m, representing a decrease of 35% from the same TTM period last year. Now that is including a sharp decrease of revenue from a in the last two quarters from a slowdown in operations from the COVID-19 pandemic, but even if you normalize revenue, we are still seeing a decrease in growth. Keeping in mind that over this same period Gold has appreciated substantially. 

Net Income and CFO tell a similar story compared to revenue, with a net loss of $34.9m and Cash used in operations of $8.3m – so just on this brief analysis we would likely pass on the company. 

Roxgold Inc. (ROXG:TSX)

Current Price: $1.65

Market Cap: $600 Million

Roxgold is a Canadian-based gold mining company with its key asset, the Yaramoko Gold Mine, located in West Africa and is advancing the development and exploration of its Séguéla Gold Project also located in West Africa. The Yaramoko Gold Mine consists of two high-grade underground gold mines: the 55 Zone and Bagassi South.

Looking at the company’s financial results:

Roxgold is a much prettier story than Premier Gold, generating TTM revenue of $220.5m which represents growth of 44% for the same TTM period last year. Along with the increase in gold price which was realized, I did want to note that revenue was positively influenced by the increase in ore being processed but negatively impacted by the grade of the ore decreasing.

The company is profitable having TTM Net Income of $16m and TTM cash flow from operations of $110.4m – both representing solid increases from the same TTM period last year. 

Right now the company trades with an EV/CF mining operation of ~4.1x, as well, the company currently has a net cash balance of $5.3m on its balance sheet, which is also attractive. 

So to conclude on these two stocks, if someone wanted exposure to a gold company, I would recommend that you avoid Premier Gold Mines (PG:TSX) and Roxgold Inc. (ROXG:TSX) might not be a bad choice for a gold miner (showing decent growth, trading at a reasonable valuation and maintaining a healthy balance sheet). 

The next two companies that I am going to compare are both royalty companies, the first being SandStorm Gold Ltd. (SSL:TSX) which came in from JP via email, and the second is, Franco Nevada (FNV:) which came in from Annabel. 

SandStorm Ltd. Gold (SSL:TSX)

Current Price: $11.78

Market Cap: $2.23 Billion

Sandstorm is a company that seeks to acquire royalties and gold and other metals purchase agreements from companies that have advanced stage development projects or operating mines. 

Looking at the company’s financial results:

Revenue for the past TTM period was $89.9m, representing an increase of 21% compared to the same TTM period last year. 

The company had TTM Net Income of $8.2m, down slightly from the period last year but CFO was up 17% to $57.65m. 

EV/CFO was 29x, which is higher than the previous companies and should be expected since it is a royalty streaming company. Additionally, the company has $41m in net cash which is attractive.  

Franco Nevada Corp. (FNV:TSX)

Current Price: $194.03

Market Cap: $37 Billion

Franco Nevada is a royalty and stream company focused on precious metals (gold, silver, and platinum-group metals) and has a diversity of revenue sources with a target of no more than 20% of revenue from energy (oil, gas and natural gas liquids). The company owns a portfolio of royalty, stream and working interests, covering properties at various stages, from production to early exploration located in Latin America, United States, Canada, Australia, Europe and Africa.

Looking at the company’s financial results:

Revenue for the last TTM period were approximately $930m, showing good growth from last year of approximately 39%. 

As well Net Income and CFO also increased drastically for the past TTM period to $210m and $488m respectively. Representing an over 40% increase from the past TTM period. So astonishing growth there. 

And on a valuation basis the company has a EV/CFO multiple of 40x which, in relation to SandStorm is higher, but this makes sense as Franco Nevada is a premium company compared to Sandstorm and has exhibited excellent growth over the past year. Lastly, they also have a very nice balance sheet with net cash of $378.5m.

So, to conclude on these royalty streamers, if I was going to purchase any of the Gold companies, I mentioned today I would probably choose Franco-Nevada or SandStorm. The growth in Revenue and profitability has been very attractive, and the cash generation power of these royalty businesses have allowed each to maintain strong balance sheets.  

End Commentary

For a full analysis of each of these companies we would have to look at all in sustaining cash costs on each, the mine lives on each project, the grade, the balance sheets, projects under development etc.

Roxgold for example – we would assign a lower multiple to the company due to where it operates geopolitically. We would want to know the mine life and what the production growth potential is, noting that production was slightly lower in the last period. In the last quarter, revenue was obviously higher due to the price of gold.

In the end, each of these companies will have to execute well on growth and cost control initiatives, which is difficult in itself, but the primary factor to their success which is the price of gold, is beyond their control. If they execute well, and gold stays in the same range or moved higher, there is the potential for growth. If the opposite occurs, even if they execute well, shares in each company, will go down. 

This is the essence of commodity stock risk from an investor perspective. 





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