Real Matters - Stocktrades Canada

Looked through the Q&A and there has not been much comment on Real Matters in the Q&A (maybe more discussion on Discord but not a fan of Discord).

I have what I consider a decent personal position in the stock, all of it purchased between $7.75 – $18.00 per share, and all of it allocated in my TFSA (no potential to write off any loss). Analysts suggest to Hold and price targets are between $5.00 – $5.50. They are to next report Nov. 16, 2022. Based on the following post from May 2022, it appears the company feels their current share price does not reflect the underlying value of the company (sounds like something positive unless Real Matters simply wants to go down with the ship).

Posted May 6, 2022:
– Toronto Stock Exchange approved an amendment to Real Matters Inc (TSX:REAL) (OTC:RLLMF) current Normal Course Issuer Bid (NCIB) to increase the number of common shares from 6 million common shares to 7.6 million common shares that the company may purchase for cancellation. No other terms of the NCIB have changed.
– Real Matters believes that the prevailing share price for its common shares does not currently reflect its underlying value.
– Since the commencement of the NCIB, Real Matters has purchased for cancellation 4.1 million common shares.
– The amended NCIB will commence on May 10, 2022, and continue until June 10, 2022.
– Real Matters has allocated up to C$70 million towards the NCIB, of which ~C$48.86 million has been spent, leaving C$21.1 million available for purchases.
– Price Action: REAL shares are trading lower by 6.16% at C$4.57 on TSX, and RLLMF is lower by 5.77% at $3.59 on the last check Friday.

My questions…
Is that May 2022 announcement considered good news?
What are your thoughts on the company in the next 1 year… next 5 years.
If the shares were in a regular margin account would the suggestion to buy, sell, or hold be the same compared to being held in a TFSA?

Thanks.

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Asked on July 29, 2022 10:14 am

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Private answer

Ok Real is another one that is struggling, in large part because of the macro environment - its easy to see why refinances are down.

I like the fact it is buying back shares during these times, at the end of the day this too shall pass and the company will be well positioned when the market turns. It is however, tied to the housing market so rising rates is not helping them at the moment.

I do however, question why it has not yet revised long-term targets downwards. While I appreciate management's desire to remain positive, it is hard to see how they can hit 2025 targets in this environment. I'm guesstimating, the targets will be revised downwards at the end of this fiscal year. Since there is no tax advantage to selling in a registered account, I am keeping my position. Had it been in a non-registered account, I would certainly look at it as a tax loss opportunity.

To be honest, I am somewhat surprised at the positive reaction to the company's quarterly report. I'm less optimistic on this one, than say a company like ARE which you asked about in a previous question.

Mat

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Posted by Mathieu Litalien

Answered on July 29, 2022 12:22 pm

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