AnalytixInsight should have a big 2020, this investor says

There’s more upside to come for fintech microcap AnalytixInsight (AnalytixInsight Stock Quote, Chart, News TSXV:ALY), says fund manager Robert McWhirter, who thinks 2020 will be a major leap for the AI and financial analysis firm.

For more than a year, ALY was trading in a pretty narrow range before breaking out in November, climbing more than 50 per cent in the process.

But there could be more fireworks ahead, says McWhirter, president of Selective Asset Management, who spoke about the company on BNN Bloomberg last Friday.

“It’s one of the best opportunities for AI investing,” said McWhirter. “They have a relationship with the bank Intesa Sanpaolo which is a very large bank in Italy. It’s equivalent in size to the Bank of Montreal here in Canada. [AnalytixInsight] is working on getting a trading license to be the discount brokerage arm for Sanpaolo, which we think will be awarded, as a guess, in three months. They’ve been at it for a fair while and that will provide a great opportunity.”

“The market cap of the company is starting to reflect a little bit of that opportunity but we think that there’s still big upside,” he added.

Earlier this year, Sanpaolo announced a 2.8-billion Euro investment over the next three years to increase its digitized banking business to 70 per cent. AnalytixInsight is a 49 per cent owner of Marketwall, which is a provider to Sanpaolo’s digitization initiative along with having developed the bank’s stock-trading app.

McWhirter says ALY’s market cap is starting to reflect some of the opportunity inherent in Marketwall and its CapitalCube analytics platform, which has lots of potential in the North American market.

“The [Sanpaolo] deal that they have is basically a semi-exclusive in parts of Europe but there are many other opportunities particularly in Egypt and other locations, so we think that 2020 will be the year of opportunity particularly with their relationship with Sanpaolo,” said McWhirter.

“They have their visible site which is called capitalcube.com —it’s one of the few locations where you can get insights on what’s called the Rule of 20. It’s been used very successfully on technology stocks and on the professional version you can end up saying, ‘Okay, what’s the year-over-year sales per share growth plus the EBITDA margin, positive or negative?’ If the two of them are above 40, then it’s quite positive. National Bank Financial did a piece of research back about four months ago saying this works
really great on mid-cap US technology stocks but also on Canadian technology stocks, and CapitalCube is one of the few locations that offers that,” McWhirter said.

AnalytixInsight’s latest quarterly results came at the end of November where the company reported revenue of $755,000 and a net income loss of $0.01 per share for the period ended September 30. That compared to a top line of $1.3 million a year ago with a net income loss of $0.01 per share.

For the quarter, Marketwall posted revenue of $3.5 million on a net loss of $628,000. The company finished the quarter with $2.2 million in working capital and no debt.

Disclosure: Robert McWhirter has an investment in AnalytixInsight and is a paid consultant to the company.