Hedge fund manager James Hodgins says investors should be looking at Aastra Technologies (TSX:AAH).
Hodgins, Chief Investment Officer with Curvature Hedge Strategies, was on BNN’s Market Call with Host Mark Bunting yesterday to talk about small and midcap stocks.
Hodgins says he believes investor sentiment has become overly bullish of late. He says margin debt on the New York Stock Exchange, for instance, is back near levels seen in 2007 and in 2000. He also points out that there has been a tremendous amount of short covering of late, and this has sent shares of companies such as Tesla Motors to levels that are perhaps unrealistic for their businesses at present.
Hodgins says he believes we are close to a major peak in risk assets, globally.
One midcap Hodgins does think will outperform the overall market is Aastra Technologies. He says Aastra has been hurt by its heavy exposure to Europe. And although that area, he says, is slowly improving, investors don’t necessarily need it to because Aastra is trading at its net tangible working capital. He also notes that the company’s aggressive share buybacks have shrunk its float by about 20%.
Hodgins points out that Aastra recently launched a strategic review, and he believes the result will be one of three catalysts; the company will make a material acquisition, issue a sizable one time dividend, or be taken private. He says the last option could mean a buyout north of $30.
Concord, Ontario based Aastra, which markets a range of telephony solutions for large businesses, has a surprisingly exciting stock chart for a business that seems inherently low beta. The company hit a high of more than $36 in 2010 before retreating to under $14 in 2011 on European exposure concerns. Most of 2012 was stable for Aastra, which is consistently profitable and routinely delivers its success back to shareholders in the form of share buybacks and ever-increasing dividends.
At press time, shares of Aastra Technologies were up 1.6% to $19.65.