Here is my Q2 2019 portfolio update. At the end of each year, I will give a comparison of how my portfolio and each individual stock performed compared to the S&P 500 index and the S&P/TSX index. Prices are as of the first week of July 2019
I have not included the cumulative return for my portfolio for the quarter. I think judging your portfolio based on quarterly returns is far too short-sighted and not something I am going concern myself with.
Q2 wasn’t a great quarter as I gave back a big chunk of my prior gains. Volatility is to be expected when investing in microcaps. I still have a lot of confidence in my holdings, with the exception of Good Life Networks which has raised some red flags. The companies I own are making progress in achieving their financial and operational goals which will lead to good things with enough patience.
CO2 Gro Inc. (GROW.V, BLONF) 14.20% of the portfolio | Return: 30.1%
CO2 Gro Inc’s mission is to accelerate plant growth by dissolving carbon dioxide gas in water. Dissolved CO2 water is sprayed onto plants using foliar spray. The plant absorbs the dissolved CO2 water and increases plant size and growth speed.
In Q1 2019 CO2 Gro reported revenue from their first two commercial contracts. This revenue is recurring for as long as the growers utilize the equipment. Aaron Archibald attended the GFIA Global Ag tech conference in Abu Dhabi where they were very well received and identified possible future contracts. GROW also announced an agreement with OrganicGrow Solutions to assist in accelerating the commercialization of their technology.
Xpel Inc. (DAP.U.VN, XPLT) 13.37% of portfolio | Return: 6.30%
XPEL is a leading provider of protective films and coatings, including automotive paint protection film, surface protection film, automotive and architectural window films and ceramic coatings. With a global footprint, a network of trained installers and proprietary DAP software.
Xpel was added to my portfolio this quarter after their stock dropped from $6.40 to $5.08 where I entered. I have been watching Xpel and was glad to start a position. Investors were scared off when they reported full-year 2018 numbers and future weakness in China. Xpel is an excellently run company and achieved a 47.82% return on invested capital in the past twelve months. Xpel has also diversified into commercial building window treatments. It will take time to meaningfully grow this business line but it could be very successful based on their past success.
Well Health Technologies Corp. (WELL.V, WLYYF) 11.05% of portfolio | Return: 125.77%
WELL is both a primary healthcare operator and a technology innovator, allowing them to combine professional healthcare expertise with technology to better empower physicians and patients resulting in improved experiences and health outcomes.
WELL had an eventful Q2 as well acquired two electronic medical records companies. The acquisition of KAI Innovations gave WELL their first exposure to the Ontario healthcare market. WELL also closed a $10.5 million private placement that had significant participation by management and renowned investor Sir Li Ka-Shing. As a result of their KAI acquisition WELL is the third largest electronic medical records provider in Canada.
iAnthus Capital Holdings. (IAN.CN, ITHUF) 10.62% of portfolio | Return: -40.14%
iAnthus Capital Holdings, Inc. owns and operates licensed cannabis cultivation, processing, and dispensary facilities in the United States. As of April 16, 2019, it operated 21 dispensaries in 11 states. The company is based in New York, New York.
iAnthus has had an interesting quarter. They announced and closed the acquisition of CBD For Life, announced the re-branding of all their dispensaries under the Be. brand, and opened two dispensaries in Florida. Any momentum from this execution was stopped dead in its tracks when management announced that it was repricing their own options from $7.08 to $5.35 Their rationale for this move was that they need to reprice the options to keep key personnel from leaving.
In response, social media exploded with a negative reaction. The stock price responded by tanking from $5.27 to a low of $3.87. Management responded to this reaction by announcing they would correct their mistake. They again repriced many of the options they had initially repriced to $7.50 to be more in line with shareholders like myself that are sitting on significant loses. Due to their mistake, it will take some time for iAnthus to gain back investor trust.
Namesilo Technologies. (URL.CN, URLOF) 10.13% of portfolio | Return: 32.71%
NameSilo Technologies provides domain name registration and management services in Canada and internationally. It also offers marketplace services for the buying and selling of domain names. The company was formerly known as Brisio Innovations Inc. and changed its name to NameSilo Technologies Corp. in December 2018. NameSilo Technologies Corp. is headquartered in Vancouver, Canada.
Namesilo had a successful quarter. They were able to finally launch some ancillary services. Namesilo recorded $6.5 in revenue, 87% driven by existing customers. More importantly, Namesilo was cash flow positive to the tune of $1.94 million. At the end of the month, Namesilo also grew to 3 million domains.
Amazon.com (AMZN) 7.56%of portfolio | Return: 37.81%
Amazon.com, Inc. engages in the retail sale of consumer products and subscriptions in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS) segments. It sells merchandise and content purchased for resale from third-party sellers through physical stores and online stores.
Amazon keeps chugging along. Amazon Web Services (AWS) is extremely profitable and still growing at a solid rate. They continue to look for new industries to disrupt. Amazon recently announced they will be rolling out one-day shipping in the United States on over 10 million items.
Enbridge (ENB.TO, ENB) 6.39% of portfolio | Return: 18.73%
Enbridge Inc. operates as an energy infrastructure company in Canada and the United States. The company operates through five segments: Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution, Green Power and Transmission, and Energy Services.
For the most part, Enbridge has been executing well since I purchased the shares in spring of 2018. They sold off non-essential assets and reduced their debt while also raising their dividend. They have brought numerous new projects online with more to come in 2019. The big question marker with Enbridge is their Line 3 pipeline replacement. Line 3 had been approved at all levels of government after the most extensive environmental study ever done for a pipeline. However, in the past week, Minnesota is reviewing the environmental assessment. Enbridge may have to push back to projected completion of the Line 3 replacement which will slow down revenue growth.
Good Life Networks (GOOD.V, GOOLF) 5.65% of portfolio | Return: 15.56%
Good Life Networks Inc., a programmatic advertising technology company, provides digital branding and advertising services in the United States. It builds a technology platform for video that allows advertisers to carefully select where their ads are placed safeguarding a brand’s reputation by ensuring their advertising is only associated with brand-safe inventory. The company is based in Vancouver, Canada.
Good Life Networks has been an interesting company to follow but it is testing my patience. They have a lot of debt coming due and were not cash flow positive in Q1. They announced a third acquisition called mPlore. To fund this acquisition they announced an equity raise at $0.27 for $5 million even though shares were trading under that price.
On June 20th, they announced their equity raise would be for $2 million and their acquisition of mPlore was now $2 million and not $5 million. Both of these adjustments strike me as odd. Their equity raise seemed doomed from the start and why did they agree to pay $5 million dollars for mPlore if it was only worth $2 million one month later. It is taking a lot of my patience not to get out of GOOD. GOOD revenues increase significantly as the year progresses toward Q4. I will continue to monitor their cash flow in hopes they can pay all their liabilities.
Seven Aces Limited (ACES.V) 5.64% of portfolio | 0% return
Seven Aces Limited, through its subsidiary, Lucky Bucks, LLC, owns and operates coin-operated amusement machines (COAMs) in the state of Georgia, the United States. It operates approximately 1,700 skill-based digital gaming machines across 360 locations.
A very quiet month for Seven Aces with no news releases. They have however been buying back stock at a solid rate. In May they purchased 616,500 shares around the $0.80 range. Management believes that their shares are undervalued so they are buying them. The share price hasn’t moved since I started my position. I am happy with the share price staying low while management continues to buy back shares.
Datable Technology Corp (DAC.V, TTMZF) 5.25% of portfolio | -20.47%
Datable Technology Corporation, a technology company, provides consumer digital and social media engagement, data mining, and loyalty solutions primarily in Canada and the United States. The company offers Platform³, a Software as a Service mobile shopper marketing and messaging platform for consumer packaged goods companies and consumer brands.
Datable had a busy month. They closed their private placement and announced some new partnerships. These partnerships include integrating with uBuck, integrating their flexxiNVEST platform with The Cannabis Investor, and plans to develop a loyalty payments solution for esports.
Datable is working on integrating their technology into some new emerging industries (cannabis and esports). If either of these integrations is successful Datable should see some positive gains.
RIWI Corp (RIW.C, RWCRF) 5.09% of portfolio | Return: -11.94%
RIWI Corp. operates as a trend-tracking and prediction technology firm in the United States, Canada, Europe, and internationally. The company operates through Global Private Enterprise, Global Security, and Global Citizen Engagement business lines. Its patented cloud-based software solution provides global digital intelligence platform to clients seeking real-time citizen sentiment data. The company offers real-time applied analytics, forecasts, data aggregation, tracking surveys, risk monitoring, predictive analytics, ad effectiveness tests, and message testing services.
RIWI is my most recent addition to my portfolio and one I am very excited about owning. I recently did a write up on RIWI and provided some commentary on their newest investor deck. RIWI’s stock has pulled back recently into the $2.40-$2.80 range and as a result, I have added another block of shares. I am very impressed with everything I’ve read and watched regarding CEO Neil Seeman. I especially appreciate his 2019 letter to shareholders:
Tencent Holdings Limited (TCEHY) 4.29% of portfolio | Return: 4.52%
Tencent Holdings Limited, an investment holding company, provides Internet value-added services (VAS) and online advertising services in Mainland China, Hong Kong, North America, Europe, other Asian countries, and internationally. The company operates through VAS, Online Advertising, and Others segments. It offers online games and social networks across various online platforms; online advertising services, such as media, social, and display-based advertising services; and FinTech, cloud, television series and film production, and other services for individual and corporate users.
Tencent has been under pressure in 2018 and 2019 due to Chinese regulations on gaming. This lead to delays of video game releases that investors were expecting. Tencent has responded to these set backs by working more closely with regulators to get their games approved. They recently conducted a major restructuring of the company to try and ramp up growth again. Unfortunately, the recent approval of new games and the restructuring has had little effect on the stock price and Tencent is essentially flat from when I bought it.
MPX International (MPXI.C) 0.73% of portfolio | Return: -15%
MPX International Corporation, a cannabis company, focuses on the medical and adult-use cannabis markets. It focuses on producing and distributing three principal types of products, such as cannabis flowers, and cannabis oil concentrates and related products, as well as cannabis derivatives under the brand name of MPX.
I received the MPXI shares when the international assets of MPX were spun out when MPX was acquired by iAnthus. MPXI has been very busy in 2019. They have acquired a Swiss cannabis company, a GMP ready grow facility in Malta and a joint venture in South Africa. I look forward to watching MPXI grow and continue to penetrate the international market.
Sells and Watchlist
Brookfield Asset Management (BAM.A.TO) Sold at $63.26. Return: 13.87%
This month I removed Brookfield Asset Management (BAM) from my account. However, I don’t really look at this as selling the shares but more of a transfer of accounts. Instead, I purchased shares inside my non-registered account so I am still a shareholder just not in my TFSA.
BeWhere Holdings (BEW.V) Sold at $0.21. Return: 9.52%
I sold out of BeWhere simply because I liked my other options more, mainly CO2 Gro, Namesilo and Riwi. As a result, I redeployed the BeWhere money into these other holdings.
Boardwalktech is a spreadsheet management company. They have developed a patented digital ledger technology that solves many of the problems that are associated with Excel spreadsheets. Boardwalktech was able to integrate blockchain technology into existing Excel functions. This integration allows companies to save time and money while providing more security to their spreadsheet operations.
BWLK is a SAAS company with recurring revenues. They already have massive clients on board like Coca-Cola, Levi’s and Heineken. BWLK are in the midst of rolling out their new business model and expanding their sales force. They project profitability for their year-end which should be reported in the coming weeks.
Atlas Engineered Products (AEP.V, APEUF)
Atlas Engineered Products is a roof truss and engineered wood manufacturer. They have acquired other roof truss manufacturers across Canada and are deploying new technologies into these facilities. CEO Dirk Maritz shows a genuine passion for the business. The recent news reports are all about making their business more efficient and profitable.
Their business plan appears solid but strategic rollups are prone to failure. Their plan to date appears to be working and I will continue to watch as they integrate all their acquisitions. Efficient integration of procedures and personnel is key to roll-up strategies.
Here are a couple articles I read in regards to strategic roll up business models:
ImmunoPrecise Antibodies (IPA.V) (Removal)
Immunoprice Antibodies is a Vancouver based custom antibody development company. Drug developers hire IPA to assist with their research. Developing and bringing a new drug to market is extremely risky. I have removed IPA and placed it in the “too hard” pile. I’ve read through their investor deck and news releases. They all paint a very good picture. I, however, have no background in the science they use and don’t know if this is a good business or not. A lot of experienced investors on Twitter are big fans but this is one I will pass on.
Q2 2019 Portfolio Update
While Q2 wasn’t a great quarter share price-wise the companies I own are marking progress and results should come. CO2 Gro is executing and has the potential to announce new contracts any day. Well Health is continuing to expand their reach in electronic medical records and Namesilo surpassed 3 million domain names.
The big loser is iAnthus however there are numerous catalysts for the US cannabis market on the horizon. With patience and execution, I hope iAnthus can win back investor trust.
Good Life Networks has also been a disappointment and one I am watching closely. Their revenue increases each quarter of the calendar year. I am hoping they show positive cash flow in the coming quarters. Being cash flow positive for consecutive quarters should ease some investors concerns.
Datable Technologies has also been a significant loser to date but I have only held it for a short time. They are expanding into a few high growth industries. It may take some time for revenues to be recognized from these new partnerships however when they do the company should be in a very solid position.
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