Quinsam Capital Corporation

Quinsam Capital Corporation

April 07, 2015 07:45 ET

Quinsam Outperforms Major Canadian Indices in Q1/2015 and Provides Update on Activities for the Quarter

TORONTO, ONTARIO--(Marketwired - April 7, 2015) -


Quinsam Capital Corporation (CSE:QCA) ("Quinsam" or the "Company") today announced an update on activities for the first quarter of 2015.

Quinsam Outperforms the TSX Indices

The TSX Composite Index rose a little under 2% in Q1/2015 to close at 14902.44. The Canadian small cap market had a slightly negative quarter, with the TSX-V Index declining about 2% to close at 680.07 on March 31, 2015.

Quinsam's asset value grew significantly in the first quarter. "The slightly negative overall performance of the TSX-V does not tell the full story" said Roger Dent, CEO of Quinsam. "Several stocks in health care and technology delivered highly positive results in the quarter, while the oil & gas sector was under significant pressure. We are striving to maximize performance on an ongoing basis. While this often means that we will take a contrarian stance, we do not think that oil & gas presents the best risk/return trade-off at this time. Accordingly, our current oil & gas exposure is under 2% of assets."

"Quinsam actively invests in warrants and convertible securities related to small cap issuers. Quinsam believes that the most meaningful indicator of the value of these securities is the underlying intrinsic value. When you are dealing with unlisted derivative securities on microcap stocks, intrinsic value provides an unambiguous and readily verifiable figure. However, IFRS accounting does not always agree with this accounting treatment. We now have a security in our portfolio (convertible debentures issued by Axios), where the IFRS value assigned by our auditors is less than intrinsic value.

As at the end of last week, our portfolio had a value of $2.9 million to $3.0 million if we carry Axios at intrinsic value, and a value of $2.8 million to $2.9 million if we carry Axios using IFRS accounting. In comparison, at the end of 2014 our portfolio had a value of $2.7 million to $2.8 million using intrinsic value and $2.6 million to $2.7 million using IFRS accounting. Our portfolio growth in the quarter was after the payment of the quarter's operating expenses plus the quarterly dividend.

Quinsam currently has a large cash position of over $500,000 available for new investments.

New Investments in Q1

We made a number of new investments in the first quarter. We made a pre-listing investment in Data Deposit Box (DDB) units at $0.30. The stock commenced trading in March and closed last week at $0.45. Our 500,000 warrants, which strike at $0.50, are carried at nil. DDB provides cloud data storage using a recurring revenue model.

We accumulated a position in Quantum International Income Corp. (QIC) when the stock was under pressure from a large warrant expiry in mid-March. As we expected, the stock lifted nicely once the warrants expired. We are seeing strong market interest in cash flow generating health care stocks. We expect the market also to latch on to QIC as its business (privately-owned US hospitals) develops.

Quinsam also invested in two private companies in the quarter: Quinsam Opportunities I Inc. and Primaria Medical (Canada) Inc. (Primaria). Primaria is targeting the international rehab clinic market. The model has similarities to that of Convalo Health International Corp., which has been a very successful stock on the TSX-V.

We currently expect to close two additional pre-listing investments in April.

We ended the quarter with nearly 9 million warrants, which are all carried at the lesser of intrinsic value or nil. We exercised our Nuvo Research warrants and a portion of our Cynapsus warrants during the quarter.

About Quinsam Capital Corporation

Quinsam is a merchant bank based in Canada. Our merchant banking business encompasses a range of activities including advisory services, lending activities and portfolio investments. Quinsam invests its capital for its own account in assets, companies or projects which we believe are undervalued and where we see a viable plan for unlocking such value. We do not invest on behalf of any third party and we do not offer investment advice.

Generally, Quinsam does not believe that individual investments are material reportable events. Quinsam chooses to announce certain investments once the company is certain that it has finished buying its position because the Company feels that this information helps investors in Quinsam understand its investment decision making process. Generally, Quinsam does not announce the sale of investments.

This press release may contain forward-looking statements relating to anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent our beliefs regarding future events, which are inherently uncertain. Forward-looking statements can often, but not always, be identified by forward-looking words such as "anticipate", "believe", "continue", "expect", "goal", "plan", "intend", "estimate", "may", "project", "predict", "potential", "target", and "will" or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance.

By their nature, forward-looking statements require us to make assumptions which include, among other things, that (i) Quinsam will have sufficient capital under management to effect its business strategies, (ii) the business strategies will produce the results intended by Quinsam, and (iii) the markets will react and perform in a manner consistent with the business strategies.

Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. The Company believes that the expectations reflected in the forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct. Some of the risks and other factors that could cause actual results to differ materially from those expressed in forward-looking information expressed in this press release include, but are not limited to: market and general economic conditions, interest rates, regulatory and statutory developments, the nature of the Company's investments, the available opportunities and competition for investments, the concentration of the Company's investments in certain industries and sectors, reliance on key personnel, risks affecting the Company's investments, management of the growth of the Company, and exchange rate fluctuations. Readers are cautioned that the foregoing list of risks and factors is not exhaustive. Although the Company has attempted to identify important factors that could cause actual events or results to differ materially from those described in forward-looking information, there may be other factors that cause events or results to differ from those intended, anticipated or estimated.

The forward-looking information contained herein is provided as at the date of the date of this press release, based upon the opinions and estimates of management and information available to management as at the date of this press release. The Company does not undertake and specifically disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable law. Readers are cautioned not to place undue reliance on forward-looking information contained in this press release.

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