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Q2 2020 Portfolio Update

Welcome to my Q2 2020 portfolio update. I still don’t have a set format for these updates. For this update I’ll give one or two lines on each position and what I think about them.

I mentioned in my Q1 update that I was fortunate to have some cash on the sidelines to deploy. This has greatly helped my psyche as I watched my portfolio get hammered in Q1. This was more luck than strategy.

I continued to deploy capital in Q2. I exited my Jemtec position right at the beginning of Q2 and moved that money to Kraken Robotics. In addition, I added to NamSys, Network Media Group and Atlas Engineered Products in the quarter.

Q2 2020 Portfolio

Q2 2020 Portfolio
Portfolio as of June 30th, 2020

Exited Position

Jemtec Inc. (JTC.V): I sold Jemtec right at the beginning of the quarter. After doing some research on electronic monitoring and its efficacy I wasn’t convinced the government believes in electronic monitoring. There are concerns about false positives and invasion of privacy of the offender’s privacy. I also don’t any reinvestment opportunities for Jemtec.

New Position

Kraken Robotics (PNG.V): Kraken is a really interesting company I have been loosely following for awhile. They have signed some really nice contracts and are beating out billion-dollar companies for contracts. They recently confirmed a major contract, $40 million with the Royal Danish Navy. I also like the attitude of CEO Karl Kenny and the statement he made in 2017, “Innovate or Die”.

Q2 2020 Portfolio Positions

Namesilo (URL.CN)

Domain count was stagnated and ancillary services have taken longer to roll out than anticipated. At the end of 2019 Namesilo was in breach of their debt covenants. Debt service is an issue but the company also owns 2.5 million shares of Immunoprecise Antibodies which has done well in 2020.

Polaris Infrastructure (PIF.TO)

Polaris announced expansion into Panama and got their Peru hydro assets online. Some execution issues have been disappointing but I’m willing to give management some time to correct them. Polaris is my only dividend payer in the portfolio.

Riwi Corp (RIWI.CN)

Riwi had a very nice Q1 and I expect Q2 to be similar. They are working very hard to build a competent sales staff and have signed some contracts to provide COVID-19 data.

Well Health Technologies (WELL.TO)

Well continues to make acquisitions in the electronic medical records space. They recently acquired a cybersecurity firm which I found interesting. Well launched their telehealth offering, VirtualClinic+. The family doctor’s office model in Ontario is a horrible experience. This is a bet that telehealth will gain popularity in Canada.

Atlas Engineered Products (AEP.V)

Atlas has been punished in the COVID-19 environment but did product 14% revenue growth in Q1. I like CEO Dirk Maritz and his passion for the business. They are projecting 20% organic revenue growth for all territories. I expect an acquisition or two in the second half of 2020. Getting them right will be critical for Atlas.

CO2 Gro Inc (GROW.V)

I’ve written quite a bit on GROW. I believe in their technology but have been disappointed by management. They are getting their technology to growers but haven’t had any meaningful revenue yet. Some orders should start to trickle in during the second half of 2020.

Amazon (AMZN)

Amazon doesn’t fit with my microcap theme but why sell it now. The stock has done wonderfully since I bought it. I will say that my experience on Amazon hasn’t been great lately which causes me some concern. The amount of junk on Amazon seems to have grown exponentially.

NamSys Inc (CTZ.V)

Another company I have written a lot about. NamSys has grown revenue in a very tough business environment. There is potential for continued growth with the launch of Brinks Complete. An excellent balance sheet with no debt.

Kraken Robotics (PNG.V)

Kraken is a really interesting company. I try and find companies with super clear value propositions. Kraken has products that are of higher quality than competitors. They are able to sell them at a fraction of the cost of their competitors. This has lead to some significant contracts being awarded to them.

Crescita Therapeutics (CTX.TO)

Crescita has a cash-rich balance sheet and an excellent asset in Pliaglis. It’s the commercial skincare line that I am not convinced is a good business. I think the company is far too cheap at its current prices. Q2 is going to be a tough quarter.

Ianthus (IAN.CN)

Ianthus is a total dog and likely going all the way to zero. Management preached alignment with shareholders but the former CEO was taking personal loans from the company lenders. Very shady stuff and very disappointing from a company that preached about protecting shareholders. It was just announced shareholders are getting wiped out.

Recro Pharma (REPH)

Recro took a 40% hit after a poor Q1 and reduced guidance. There is a push to bring drug manufacturing back to the U.S. and Recro should benefit from that tailwind. The search for a new CEO is underway and a debt refinance would be a big boost.

Datable Technology Corp (DAC.V)

Datable has signed some bigger contracts and is showing revenue growth. They raised money via a private placement that had mostly funded by management selling their own shares to buy the PP shares at a higher price. Shareholders have been massively diluted. I’m waiting for a reasonable price to exit. I should have sold when it was back to $0.05.

Network Media Group (NTE.V)

NTE had some really good success in 2019. They released numerous documentaries and broke into docu-series with the Age of A.I. More content than ever is needed to support all the streaming services and NTE will benefit from that tailwind. The accounting they use is difficult to understand. I’m closely watching distribution revenue.

Watchlist

Onesoft Solutions Inc. (OSS.V)

Onesoft is another company with a super clear value proposition. They can identify much more accurately, and cheaply, defects in a pipeline that need repaired. Onesoft is becoming a platform and not just a product with their possible expansion into other infrastructure.

I will likely start a position in OSS, probably when I sell my Datable position.

Q2 2020 Portfolio Conclusion

I haven’t calculated what my year to date return. I know I am nowhere near the S&P 500 return. The companies I own have yet to rebound from the hit they took from COVID-19 fears.

I still have a lot of confidence in the companies I hold. and am patiently waiting for a rebound to pre-COVID-19 levels. I try not to focus so much on share price, instead, I focus on actual business performance.

CO2 Gro and Namesilo might be my biggest concerns at this point. CO2 Gro is running out of cash and Namesilo domain count growth has slowed down. Namesilo’s debt is due at the end of the year unless the agreement is amended.

The only position I sold during the market downturn was Jemtec. That was mainly because I felt Kraken was a better investment with plenty of runway for growth.

I don’t think I want to take on anymore positions than I have currently. I am at the peak number that I can keep up with so if I’m looking to add a company it needs to be better than something I already own.

In addition to He-Man, Hans Mole man is a pretty good representation of how my portfolio is performing. (sorry I couldn’t figure out how to make the GIF smaller)


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This Post Has 2 Comments

  1. dean

    I like the GIF lol. I own some REPH too. That came out of nowhere.

    This is such a weird market it’s hard to draw any conclusions on performance at this point. I’m sure your results will outperform over a year or two.

    Dean

    1. Blair

      Hopefully, Recro bounces back. In hindsight, I should have spent more time looking at the business model and weighted customer concentration higher on the risk scale. I think it will rebound before the end of the year.

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