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Avante Logixx has its ducks in a row for success
Posted by: Gerry Wimmer
4/22/2018
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TOP IDEAS: New leadership and shareholder base for Avante Logixx Inc. (TSXV: XX) signal a fresh perspective to create a leading national security business and to ignite the stock price.




Investorfile's share price accumulation target of $0.40 for Avante Logixx Inc. was reached on January 7, 2014. For the record, we do not revise share price targets for our Investorfile Top Ideas - Small Cap Value Stocks. We have positioned our blog to be one of the first providers of a pragmatic perspective of a small cap company stock's potential worth, where there may be uncovered value that has been largely overlooked by the investment community.


It was just six months ago when we thought that Avante Logixx could be sold (See: Investorfile Top Ideas have takeout possibilities brewing), given the strategic review that had been initiated by the Company’s Board of Directors. What has transpired since was not a sale but a rejuvenation, a new strategic plan led by a new CEO with an industry track record who has invested in the Company to become a major shareholder.

Based in Toronto, Avante Logixx Inc. (TSXV: XX – C$0.37) provides best-in-class and high-end residential and commercial security services, including system design and installation, rapid alarm response, alarm monitoring, video analytics, locksmith services and hardware and secure transport through the use of advanced technology, with a focus on client service.

In January of 2018, Craig Campbell was appointed CEO of Avante Logixx Inc. A month before his appointment, Mr. Campbell disclosed that he had acquired common shares of the Company, which equal close to 17 per cent of the shares outstanding. It seems that most, if not all, of these shares were acquired in the open market over a span of a few days in December of 2017 at an average share price of about C$0.38.

We note that Avante Logixx is now led by a CEO who is a veteran security industry entrepreneur. Prior to that, Mr. Campbell was the founder and CEO of Total Security Management (TSM), a full-service security provider to Fortune 500 clients. Under his leadership, TSM grew to become Canada’s largest privately held security firm, with over 3,000 employees and operations across the country. In 2013, Garda World Security acquired the TSM brand and guard division (representing 80% of the company) while the remaining business was rebranded Resilience Capital and was converted into an investment holding company that Mr. Campbell continues to oversee.

We met with Mr. Campbell during his first week as CEO of Avante Logixx. Not only do we feel he is a proven growth-oriented leader with significant security industry experience but, from our meeting, he articulated a pragmatic vision and growth plan to drive this Company forward, which we feel would ultimately be reflected in a higher stock price.

The impact of this CEO’s plans will start showing in fiscal 2019 (which began on April 1, 2018). But a recent news release by the Company outlined the realignment of its corporate structure by decentralizing strategic operating units of Protective Services, Monitoring & Managed Services, Electronic Security/Automation, and Security Devices & Hardware to create a more performance-oriented culture. The Company has also already started the amalgamation of its residential and commercial security units, which are its major subsidiaries to gain cost synergies. Mr. Campbell has said, "This reorganization will help unlock the value and growth potential of our businesses. It will drive focused investment of our largest growth opportunities. It is the logical next step in our effort to shift our company’s centre of gravity, accelerate our growth trajectory and maximize value for our shareholders.”

We believe there will be significant M&A activity with this CEO to take Avante Logixx to the next level. The focus will continue to be on acquiring high-quality security businesses to be a leader in local markets across Canada, with the possibility of consolidating its geographic presence through further strategic M&A to make it a national market leader. We think the Company will look to finance M&A activity through combinations consisting of cash, equity and debt. Currently Avante Logixx has over C$3.5 million in cash on hand and nominal debt. Today the Company’s businesses already generate very good cash-flow.

With this new CEO there is also a change occurring in the Company’s shareholder base. In a public filing, Polar Asset Management Partners Inc. disclosed that it recently purchased 9 million of the Company’s shares (at an average cost of about C$0.37) in the open market, raising its ownership stake to 16.52% in Avante Logixx. We view this as a positive endorsement of the new CEO and the future prospects of the Company.

Our last profile blog post on Avante Logixx was in September 2016 (See: Avante Logixx is a buying opportunity to take advantage of today). At that time the stock was trading at C$0.25 and we continued to reiterate our buy recommendation of the Company’s shares by suggesting that small cap investors should accumulate Avante Logixx’s stock up to a price of C$0.40. Given the major investments by the new CEO and institutional investors at the current trading levels, we are very comfortable continuing our above recommendation with the caveat that the stock’s upside may be much stronger now.

Avante Logixx has about 81.6 million shares outstanding.

Company website: www.avantelogixx.com

Author Ownership Disclosure: TSXV: XX - Yes


Read Disclaimer:

This article is for informational purposes only. This article is based on the author's independent analysis and judgment and does not guarantee the information's accuracy or completeness. The information contained in this article is subject to change without notice, and the author assumes no responsibility to update the information contained in this article. The information contained within this article should not be construed as offering of investment advice. Those seeking direct investment advice, should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock.

Investorfile.com is not engaged in an investor relations agreement with Avante Logixx Inc. nor has it received any compensation from Avante Logixx Inc. for the preparation or distribution of this article.

The author of this article has acquired and may trade shares of Avante Logixx Inc. through open market transactions and for investment purposes only.

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Hi Gerry, Your philosophy is focused on principles that have been shown to produce above average results over time and your record has clearly proven that. Congratulations on a great blog and thank you for the hard work that you do in sharing and updating your ideas; it is much appreciated.