Q: Any updated thoughts on RE Royalties, are they cash flow positive yet? Better risk return now?
5i Research Answer:
RE has $26M in secured loans now, but cash flow in the 1Q was still negative $1.1M, more than twice as negative as last year. Revenue was $1.8M, more than triple the prior year and the company made just over $0.5M, vs a loss of $0.5M the prior year. The stock is up a small amount this year. The revenue growth rate is impressive, though it is from a small base. The balance sheet remains in good shape. The dividend has now been paid for four years (same rate). As assets grow and it becomes profitable risk does decline. However, it is still a tiny company at $33M market cap, and we would like to see at least neutral cash flow while it grows. We do not 'dislike' it but would just consider it too small and risky for most.