Welcome to my Q3 2020 portfolio update.
2020 has been a wild ride. My portfolio greatly rebounded from the depths it reached in Q1 and Q2. I’ve learned if you want to be a microcap investor you need to be able to handle the volatility.
I don’t feel the need to calculate my year to date returns each quarter so you won’t see a year to date or quarterly return. I will calculate my returns at the end of the year.
In the quarter I exited my Datable (DAC.V) position and no longer have a position of any value in iAnthus (IAN.CN)
Q3 2020 Portfolio
Datable Technology Corp (DAC.V)
I have written previously about the mistake I made investing in Datable. I held on hoping to get back to even. The company forecasted a doubling of revenue with improving margins. I was waiting for this to occur and the share price to rebound.
Instead, they have raised money twice recently. The private placement that closed in July was mainly funded by the CEO and Executive Chairman. They sold shares below the PP price on the open market to then buy shares of the PP.
I lost 50% on this investment because I rushed into it without doing any research. Lesson learned.
iAnthus has been an absolute disaster. The assets of the company are being assigned to the debt holders. 2.75% of the company is being reserved for shareholders making this investment a 0 for me. Time to move on from this dumpster fire.
Positions I Added To
Kraken Robotics (PNG.V)
I added twice to Kraken at $0.63. In Q3 Kraken announced a $36 million contract with the Danish Navy and a contract with the Polish Navy. The company also announced a positive development on the $40 million contract with the Danish Navy.
A surprise that happened on October 1st was the announcement of a $10 million bought deal financing. The news release indicates that the $10 million will be used to accelerate their Robotics as a Service (RaaS) business.
I was not impressed with the financing. All comments from the company were that they would not need additional financing. If Kraken can accelerate its RaaS business to become a more substantial part of their business we could see a positive valuation rerate and the bought deal will be a good decision. Also important to note is that no warrants are involved in the financing.
Crescita Therapeutics (CTX.TO)
I’ve written a couple posts recently on Crescita and how cheap I think it is.
The company announced they are receiving a one-time payment of $5 million from Taro Pharmaceuticals for an adjustment to royalty payments. When including this payment Crescita has approximately $14 million in cash for a $10 million market cap company.
The risk is a potential cash burn if revenue does not rebound as the company returns to full staffing levels.
Pinetree Capital Ltd (PNP.TO)
Pinetree is a bit of a mystery. Pinetree is an investment company that invests in micro and small-cap technology companies. The company transitioned away from investing in resources companies and is now lead by Damien Leonard. Leonard is the son of Canadian business icon Mark Leonard of Constellation Software.
Here is a post with lessons learned from the Constellation Software shareholder letters. Now, I’m not saying that Damien will be as successful as his father but it can’t be a bad thing to have Mark Leonard a phone call away for advice.
Pinetree is interesting because it is trading for less than book value. It is difficult however to try and assess the true value of Pinetree’s investments because investors don’t know what they are. Pinetree does not disclose its investments.
BeWhere Holdings (BEW.V)
BeWhere is an Internet of Things company that sells small asset tracking sensors. Their sensors have the ability to track moveable assets but can also collect valuable data and relay that back to the client. BeWhere generates revenue on the sale of the tracking device and recurring revenue to maintain the connectivity of the device.
I have previously owned BeWhere but sold it when I felt like there wasn’t a clear path for the company. More recently BeWhere has been able to increase its recurring revenue by a significant amount however they haven’t been profitable in the actual device selling.
The company is also launching some new technology that is a smaller device with greater connectivity to 5G. The adaptability/flexibility of BeWhere’s beacons is very interesting and has numerous use cases.
In case you haven’t seen the videos being put out by Small Cap Discovery I suggest giving them a watch. Here is the video with BeWhere CEO Owen Moore:
One Soft Solutions (OSS.V)
OSS is a very interesting company but I have opportunities to buy but haven’t. One Soft’s technology increases the accuracy and efficiency of pipeline integrity management using machine learning. One Soft’s software ingests pipeline integrity data and identifies potential failure points in the pipeline before a spill occurs.
The share price of OSS has been volatile this year touching as low as $0.19 in March. I wasn’t prepared to buy at that time and the price quickly rebounded and now sits in the $0.40 to $0.50 range.
One Soft just recently announced that they signed up a new client which is great news. What really interests me about the company is its efforts to expand its machine learning capabilities into other infrastructure segments like sewers and smaller diameters pipelines.
Q3 2020 Portfolio Update: Conclusion
It continues to be a wild year and my Q3 2020 portfolio reflects this. The world has been turned upside down by COVID-19. The stock market, and my investments, have been very volatile and some of my holdings have yet to recover.
I am hopeful that the world can return to some form of normalcy, but when will that happen? I am heartened knowing that the smartest people in the world are working on a vaccine or treatment for COVID. Someone will surely come up with a viable treatment. Until then be careful and look after your families.
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I swear I proof read all of my posts multiple times but always seem to miss errors. Apologies in advance.