Is Torrent Capital (TORR.V) a safer way to play Sona Nanotech

Sona Nanotech has been catching a lot of attention lately for the development of its Rapid Screening Lateral Flow Covid-19 Antigen Test. The company went from a low of 0.01$ in 2019 to reaching an all-time high of 3.80, 2 weeks ago. Lately, investors have been rushing to buy shares of this small Canadian biotech in anticipation of validation of its test, which could offer a serious worldwide solution to this pandemic.

The company recently completed the optimization and third-party verification phase of its development and hired MRIlglobal for validation studies of its Covid-19 Antigen test. This study will be used towards validation with the Food and Drug Administration and Health Canada.

After seeing such an increase in SONA’s share price, one may wonder if it is too late to get aboard or if SONA still has fuel in the tank to go much higher. Either way, I believe there might be an alternative way to play and benefit from Sona’s breakthrough technology, with a fraction of the risk.

TORRENT Capital is a small-cap investment firm based in Nova Scotia. The company is focused on investing in companies “trading at a discount to their intrinsic value or early stage businesses offering a high return on investment”
Torrent also happens to be a major Shareholder of Sona Nanotech, owning 1.34 million shares as of March 2019.

On top of having significant holdings in Sona, Torrent is directly involved in the management of the company.

TORRENT’s CEO, Wade Dawe was also Sona’s board director until December 2019. At this point , Mr Dawe stepped down and was replaced by Jim Megann, also one of Torrent’s board member.

TORRENT’s CEO, Wade Dawe was also Sona’s board director until December 2019. At this point , Mr Dawe stepped down and was replaced by Jim Megann, also one of Torrent’s board member.

Torrent owns several other small cap Canadian stocks such as IMV Inc., kneat.com and WilBrain LTD. It also is an early investor in Ruckify, Bruce Linton’s recent startup that focuses on bringing a platform to rent or lend personnal goods. While Ruckify must have been hit quite hard by the Covid pandemic, Linton is still eyeing a NASDAQ IPO in 2020 which could make the company’s valuation skyrocket.

WildBrain, which is also one of Torrent’s major holdings with 2,000,000 shares owned as of March 31st is a producer and broadcaster of family and children television. It has seen its share price recover nicely after the latest market crash.

Torrent Capital had total assets of roughly $11M as of March 31st while trading for a market cap of 9M. Since then, Sona skyrocketed to an all time high of $3.80 and WildBrain spiked 50% in a single day on June 4th. We believe Torrent’s assets must be worth well over 15M as of now while still trading for a market cap around 10M.

Bruce Linton and Steve Cody, Ruckify’s founders

Torrent hasn’t seen much upside in 2020 so far, with most of its portfolio probably still recovering from the last Covid-related market crash. However, being a major shareholder of Sona, Torrent should largely benefit from the small Canadian biotech’s phenomenal rise, and we believe this has not been fully reflected in Torrent’s share price just yet.

Furthermore, Torrent’s net asset value per share, grew nearly 100% in the last 3 years going from 0.278 in 2016, to .60 at the end of 2019, beating S&P 500, Nasdaq and TSX.

Torrent Capital remains an indirect way to benefit from Sona Nanotech’s success as its portfolio is also composed of several other companies. However, it offers an opportuinity to benefit from Sona with an entry at a much earlier stage. The reward may not be as sharp and intense compared to directly holding SONA, but sooner rather than later, it will be reflected in TORR.V share price.

Conclusion


Sona Nanotech’s disruptive technology defnitely caught the eye of many investors both in Canada and in the U.S. Many of those investors dream they could haven got into SONA back in december when it was trading for pennies. Torrent is one of the lucky shareholders who happened to do so and could still give a chance for retail investors to benefit from this massive outbreak.

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