KeyStone’s Stock Talk Show, Episode 200.

Great to be back with you for our 200th episode – we are working hard prepping for our upcoming Live Webinars on March 7th and 9th.  To start we will briefly touch on Bing’s ChatGPT integration which has faced some growing pains. In our Your Stock Our Take segment, I will start by answering a listener question on Enghouse Systems Limited (ENGH:TSX), a Canadian software serial acquirer with two primary divisions, one that sells a suite of software to manage contact centres, while the other provides solutions for networks and transit management. The stock has rebounded 46% from its Fall 2022 lows. We will let you know our current rating on the stock.  Brennan will then answer a viewer question on MamaMancini’s Holdings Inc. (MMMB:NASDAQ), a manufacturer and distributor of all-natural food products that contain no artificial ingredients including beef meatballs with sauce, turkey meatballs with sauce, beef meat loaf, chicken parmesan and other similar meats and sauces. After a tough couple of years, the company jumped back into profitability in its latest quarter and the shares jumped. Driven by recent acquisitions, we will let you know if the recent growth is sustainable. Brett will answer a viewer question on a new US withholding tax and how it can affect some specific securities, primarily “Partnerships” type business structures. We will let you know how it could affect you. Last, and certainly least, Aaron reviews how a company’s balance sheet affects risk and your investment decision.

Live DIY Stock Investing Webinar – “A Better Way to Build a Stock Portfolio in 2023”


  1. March 7 @ 7:00PM Pacific
  2. March 9 @ 7:00PM Eastern

$29.95 | $79.95


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Who should attend? Individuals or families who want further information on how to build a simple 15-25 stock portfolio. I am happy to say, the tickets always sell out, so if you are interested in what KeyStone does and want to change the way you build your portfolio, why not sign-up. You also will get…

What is included?

  • 8 Profitable Stocks You Can Buy Today – KeyStone’s top dividend growth stock, top SaaS tech, top healthcare, top FAANG, top gold-related, top unknown cash-rich small-cap, and more.
  • Find out if 2023 is a Great Opportunity to BUY with the NASDAQ down 33%, TSX-Venture down 39%, or is it a Dead Cat Bounce 
  •  how higher interest rates affect stocks in your portfolio.
  • How the Big Banks Are Killing Your Returns – 8 Simple Steps to Build Your Stock Portfolio – how to build a 15-25 growth & dividend growth stock portfolio designed to enrich you, not your advisor.
  • We will look at AI & ChatGPT Set to Power Tech to New High? – how to invest in an AI future and what to avoid!
  • The Future of Energy Investing – Oil & Gas vs. Renewables – solar, wind, nuclear, EV’s and battery tech – the case for investing in each – to buy or sell and which stocks?
  • 5 Simple Steps to Review Any Stock in 5 Minutes or Less.



Enghouse Systems Limited (ENGH:TSX)

Price: $42.68

Market Cap: $2.35 Billion

Recommended: Feb 2011

Recommendation Price: $4.17

The stock is up roughly 950% including dividends. 

What does the company do?

Enghouse serves a number of distinct vertical markets through two divisions. The Interactive Management Group (IMG) division sells a suite of software to manage contact centres, while the Asset Management Group (AMG) business provides solutions for networks and transit management.

Recent Financials (FY 2022)

Revenue declined to $427.6 million from $467.2 million in the prior year – negatively impacted by the decline in the company Vidyo revenue (post-COVID), a $15.7 million of unfavourable foreign exchange and the growing shift from on-premise solutions to SaaS.

Operating Income was $129.7 million compared to $155.2 million in the prior year.

Net income increased to $94.5 million compared to $92.8 million in fiscal 2021 as a result of lower nonoperating expenses and taxes.


Enghouse has been a Canadian software success story. The company knows how to grow profitably via strategic acquisitions from cash flow. Management has completed 51 acquisitions since 2002, which has helped to expand the company’s revenue more than 29x from $14 million in FY 2002 to $428 million in FY 2022. However, 2020 through 2022 was a difficult time for Enghouse to execute its growth-by acquisition strategy. The enterprise software market which the company acquires has been bid up to historic multiples and Enghouse, which is very disciplined in its fundamental approach to acquisitions, was unable to find value in its traditional pool of candidate companies. As such, growth declined. Broadly, 2022 began to shift the environment as turbulent global markets, rising interest rates, and high inflation have led to a decline in valuations. As such, the environment has become more fruitful once again for Enghouse.

Enghouse has ~$228 million of cash and we expect it to generate $80-$100 million of FCF in the NTM. The company has started to deploy this capital in 2023:

  1. US$18 million acquisition of Qumu Corporation (QUMU:NASDAQ) – provider of cloud-based enterprise video technology: revenue > US$20 million.
  2. Acquired Mobi All Tecnologia S.A. (Navita) – provider of SaaS based Enterprise Mobility Management solutions: revenue of US$7.5 million.

Near-term growth challenged: Expecting continued y/y revenue decline (~10) in the next quarter against a lack of acquisitions – but getting better.

Fair Value: Trading at 15.7x forward EBITDA, which is below its acquisitive Canadian Enterprise Software peer group at 19.5x and its historical trading average of 16.3x. Given negative growth we apply a multiple of 16 and arrive at fair value in the range of $42 – $44.

Near-Term: HOLD (awaiting growth acquisition catalysts for next buy).

MamaMancini’s Holdings Inc. (MMMB:NASDAQ)

Price: $1.90

Market Cap: $69.1 Million


MamaMancini’s is a manufacturer and distributor of all-natural food products that contain no artificial ingredients including beef meatballs with sauce, turkey meatballs with sauce, beef meat loaf, chicken parmesan and other similar meats and sauces. In addition, the company continues to diversify its product line by introducing new products such as ready to serve dinners, single-size Pasta Bowls, bulk deli, packaged refrigerated and frozen products.

Slide 2

Operational Updates:

In June 2022, CEO Carl Wolf stepped down as CEO and was replaced with Adam Michael’s, who worked for Mondelez International, a multinational food and beverage company with operations in over 150 countries.

December 2021 the company acquired two gourmet food manufacturers located in New York for $14M including:

  • T&L Creative Salads (T&L) 
    1. Owned by brothers Anthony, Michael, and Joseph Morello which offers a full line of foods for retail food chains and club stores, delis, bagel stores, caterers and distributors.

  • Olive Branch, premier gourmet food manufacturers based in New York.
    1. sells olives, olive mixes, and savory products to a limited number of large retail customers, primarily in pre-packaged containers.

The new acquisitions are expected to generate $35 million in 2022 sales with products that are symbiotic with the existing MamaMancini’s distribution network. The acquisition has added new national and regional customers and provided an estimated 3,000+ new locations and over 10,000 spots on retailer shelves in January. MULTIPLE OF 0.5x sales.

Slide 3

Recent Financials (Q3 2022)


$USQ3 22Q2 22Q1 22Q4 21Q3 21Q2 21Q1 21Q4 20
Revenue $25.7M $22.9M $21.8M $13.9M $10.9M $12.1M $10.3M $10.0M
Net Profit$1.1M$(0.7)M$0.1M$(1.3)M$0.0M$0.4M$0.6M$1.7M


  • Q3 2022 revenue was $25.7 million, an increase of 137% from $10.9 million.
    • The increase in revenue for the third quarter was driven by organic growth across all divisions – chiefly through cross selling – as well as by inorganic growth through the acquisition of T&L and Olive Branch.
  • Q3 2022 Adjusted EBITDA was $2.1 million compared to just $300K.
  • Net income for Q3 2022 was $1.1 million or $0.03 per share compared to nil for Q3 2021.
  • As at Q3 2022, MamaMancini’s held $3.5 million in cash and Debt & leases of $11.7 million, providing a net debt position of $8.2 million and a net debt to EBITDA multiple of 5.3 times.
  • Trailing earnings are negative so we cannot look at the PE multiple, but on an EV to EBITDA multiple the business trades at 50x. And just for fun, if we anticipate that the company can replicate its Q3 EPS of $0.03 over the next 3 quarters, the business would be trading at 16 times forward earnings.


MamaMancini’s is a name that we have monitored for some time as the business has shown a strong track record of revenue growth – although earnings have fluctuated on a quarterly basis – especially as of recent while the company has battled with cost inflation. Looking at the company’s Q3 2022 results, the business appears to be on the tail end of these cost headwinds, posting strong growth and profitability driven by both organic growth and its acquisitions.


Ryan and I have interviewed Carl Wolf, the previous CEO in early 2022, and at that time he indicated the business was dealing with elevated costs such as chicken, ground beef and plastic packaging. However, he noted that the company was implementing their own price increases and saw potential cost saving synergies of over $1.0M through its recent acquisitions. And he included recent growth pillars for the business including its:

  • Jumbo meatballs which are being sold through club stores.
  • Frozen Meals for 1 or 2 – 14oz high quality frozen dinner – they were getting these in a lot of stores.
  • Meatballs in a cup – Which is in the infancy stage, but these are frozen meatballs which are defrosted at the store and sold as a lunch takeaway. And they were beginning to sell these in convenience stores last summer.

More recently, during the Q3 conference call the new CEO Adam Michaels indicated that commodity costs continued to improve in the quarter, and he also said, “While it’s still very early, preliminarily, the fourth quarter is shaping up well and we are on a healthy trajectory moving into Calendar Year ‘23 and beyond”.

Though the trajectory appears promising, we continue to monitor the business at this time, as (1) the business does have relatively high net debt and leverage ratios, (2) the business is trading at relatively pricey multiples, and (3) for the company to continue to grow through acquisitions it will likely need to take on more debt or issue shares.

US Withholding Tax

As many of you may have received from your broker, the US now withholds 10% of the amount from specific securities, even those that trade on Canadian and other foreign exchanges. So, how does this withholding tax work and what companies does it impact?

The relevant tax code is Partnership withholding or IRC section 1446 (f).

The withholding only applies to non-US investors, so for any US listeners, you’re safe. This withholding tax applies to 10% of the total proceeds from the sale of an applicable security. So, if you sold 100 shares of a security for $10 each, you would receive $1,000 but of that $1000 the US tax authority the IRS would take 10%, leaving you with $900. This isn’t applying to gains like other taxes it is applied to the total received. So, even if you lost money on the investment let’s say using the example above the stock fell from $20 to $10, you would still owe 10% or $100 in this case. So this withholding is more penalizing than other forms of taxes to the security holder. [Put Example calculations]

Moving to the securities it impacts,

As the name implies this applies to Partnerships a type of business structure. A partnership is simply a relationship between two or more parties that do trade or business with each party receiving a share of the profits and losses. The specific type of partnership this is relevant to is publicly traded partnerships or PTPs.

Unfortunately, the securities that this impacts is NOT always clear on the surface.  Some Real Estate Investment Trusts or REITs are impacted for example, and as the name suggests these are Trusts not partnerships. This complexity is due to the overall corporate structure. Some REITs have subsidiaries that are partnerships. If the overarching company is a partnership or is the parent company to a subsidiary that has operations within the US, it could be impacted.

A common security we’ve been asked about is Brookfield Infrastructure L.P.  symbol BIP.UN on the TSX. As the name suggests it is a partnership, is publicly traded, and has exposure to the US, meeting the criteria for withholding. But, the next complexity is exemptions, where the corporate structure is key. For BIP, you are purchasing a share in Brookfield Infrastructure L.P. which holds a subsidiary in the US, Brookfield US Holdings Corporation. All of BIP’s US operations and assets are under the US holding company, meaning they are valid for an exemption of the withholding tax, meaning you don’t need to pay it and the company won’t be penalized for you not paying. [insert BIPs qualified notice slide]

I will warn you that even though the company is exempt and would likely still continue to be so in their current form if the company for some reason were to fail to apply for the exemption they would have the withholding tax applied to them. This is unlikely and would be a massive oversight by the company, but is a risk nonetheless.

Without doing an in-depth analysis of the company’s corporate structure, the easiest way to find if the company is checking a list from a broker, I’ll add a link to an IBKR one in the description. But bear in mind that these lists are moving and aren’t always correct or up to date. The second way if you are looking to purchase is simply looking on the company’s website or googling the company’s name and 1446 tax withholding, if it applies to them they will have likely issued a notice or exemption filing.

I hope this information helps those who have been concerned about their holdings or potential investments.


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