If you follow the DTM5 blog, you may be familiar with the characteristics I look for when evaluating investments. I look for Merit and Leverage, and want to invest at the right Price and Time.

As an equation, it would look something like this:

(Merit + Leverage) x (Price +Time) = Best Odds of Success.

Merit is my evaluation of the ‘fundamentals’ of a company – The Company’s balance sheet, cash management, capital structure and management competence, among other things.

Leverage is my determination of the investment’s ability to grow at an exceptional / exponential rate based on the business model

Price is valuation – Buying at the right price – preferably a massive discount to anticipated future value – is critical

Time is buying at the right time in the price cycle of an investment;

To summarize, I’m looking for investments that have the strongest mix of these four characteristics.

Which brings me to Nubeva Technologies, a little known microcap trading on the TSX Venture exchange under the symbol NBVA. From NBVA’s website:

Nubeva develops and licenses next-generation decryption technology to enable enterprise cybersecurity and application monitoring systems. 

Further, from a recent news release

We have successfully validated our core-intellectual property, reliable encryption key discovery, can be adapted for the ransomware use case

In other words, Nubeva has developed software that is an improvement on current encryption / decryption technology, and also are developing and testing additional software in the areas of ransomware reversal and decryption.

So, I’m checking off the box for Leverage. Cyber-security, privacy, threat detection, ransomware – This is a huge sector with massive growth ahead of it. I like the idea of a little company in the middle of it trying to do something huge.

What about the Merit? Well, check that box off too. Relatively low number of shares outstanding, high insider and management ownership, credible and experienced leadership, small but decent balance sheet with no evident monkey business.

Next is Price. This one I’m not so sure about. The company has basically no revenue, a small balance sheet and a market cap of 83 million dollars (CAD). Now, software is an amazing thing. If this technology proves legitimate and novel, 83 million may end up looking like chump change. Software development and sales can be an incredibly lucrative business.

And as for Time – I’m also 50 / 50 on this one. It could be a great time to invest if revenue comes on strong or perhaps if their technology is so good that a much larger company does a major licencing deal or acquires them. If not, and if we are a long way from any major development, owning this, especially from current price levels, is risky. I prefer making my investments before the stock starts its move, not during.

One thing I look at when evaluating a company is market communication / news. I like NBVA’s profile in this regard. NBVA press releases are quality and not pumpy. They occasionally release videos which are informative and can be found here: https://www.youtube.com/results?search_query=nubeva

This month (Dec) they’ve held some demonstration seminars on their technology. People are starting to pay attention to this interesting little company.

Full Disclosure – fortune favors the bold so I’ve been building a position. I like the fact that it is so small that it isn’t behaving in line with the general tech market. And getting into a great business premise early is what the DTM5 is all about. I’m going to keep a super close eye on this position, it is not a ‘set and forget’ position for me. I will take smart profits if they come available and mitigate my losses should it be necessary.

GLTA!