Wednesday, April 18, 2018

NoName Annual Performance 2017-2018

Another amazing year! I'm up 75.7% and that pushes my CAGR up to 41.3% since I started investing 5 years ago. I don't know how long this will last.

My fiscal year begins on Apr 18 as that's the day I bought my first stock. Below are my performance numbers:



I have two goals in my investing: to make a 12% annual return and beat the market. I measure "the market" by the S&P 500 ETF SPY.

The performance I quote here is my real portfolio performance and this is my entire investable portfolio. I manage the retirement funds for myself and my wife which we have spread over a few IRAs and a 401k. I also manage some after tax money we used to have sitting in a bank. Luckily I am allowed to buy individual stocks with most of my 401k. So when I talk about "my portfolio" I am talking about the 98% of my retirement funds which I'm allowed to buy stocks with plus the 85% of my savings I don't have sitting in a bank. I don't buy any bonds, mutual funds, or ETFs, just the cheap tiny companies I blog about.

I have had really incredible performance the past two years.  Much of that is due to a single stock, HEMA, so part of me is skeptical it will continue.  But at the same time the potential for a huge payoff is a cornerstone of my strategy.  The thing that is not part of my strategy is going so big on a stock.  I bought HEMA up to 30% of my portfolio and I don't know if I'll ever do that again because I haven't felt that way with any stock since.  For sure my strategy made a big change after starting my blog due to meeting my friend and mentor.  If you've read my interview with Jan Svenda then you know I have this person who both teaches me a lot and feeds me a lot of ideas.  In the summer and fall of 2015 I changed up much of my portfolio and moved from a concentration strategy to diversification.  I pushed much further into the tiny, illiquid, and dark corner of the market and keep a long term view on super high potential reward type stocks.  You can see the change in results so maybe I should update my goals.  

Portfolio:
Below is my portfolio allocation.  As you can see I am still incredibly heavy on HEMA and I don't know when that will end.  I did sell some HEMA this year because it got up to something like 60% of my portfolio but I have no plans to sell any more, it's just going too well.  

The huge position is out of the norm for me.  My desire is to have an evenly spread allocation because for most of them I have no idea which will go up.  At the moment I buy each stock I believe it to be a great buy and for most of them I don't feel relative strength or weakness.  I own 45 stocks at the moment.  If I had to guess I'd say I'll own more next year but who knows.  


Charts!
I love looking at charts so let's see some winners and losers of the past year.  Most of my stocks don't move much.  What I end up with is some that go up or down dramatically with the rest being relatively flat.  

Let's start with the ugly and that has to be SOFT.  Probably the worst situation as I don't know if the company even exists anymore.  My guess is they don't but I hope to be proven wrong some day.  The stock is down 80% over the past year.   


DCAR/WPCS is down around 60%.  I've been thinking about buying more lately.  Looking at this chart reminds me that I screwed up by not selling some in October. 


Another horrid performance comes from GIGA.  Down 58%.  This one I think is cheap so I've bought  more recently.  I hold out hope the company will bring it in, survive, and come back.  Time will tell.  


I sold out of TCCO when the stock doubled in July/August and filings showed no business improvement.  The chart below shows why it can be good to keep an optimistic view and watch charts in addition to fundamentals.  


My most exciting stock at the moment is BDR, up 117% on the year.  I don't know why the stock has been moving recently but from a charting point of view it looks to me like it'll continue.  About a month ago the company announced they sold and will lease back their building so the balance sheet will be looking pretty.  The chart didn't move for a week then started going.  There have been a couple of really high volume spike days on no news since then.  The stock has broken through resistance at $1 and for every day it holds this high ground it builds the case that ceiling will be turning into a floor.  I sold into a couple of big spikes in the summer and fall.  Sometimes these low priced stocks will double in a day then fall straight back down.  It's why I check all my stock prices 50 times a day.  I have walked back to my desk between meetings and been surprised by a big spike to sell into.  Sometimes these spikes last as little as a few minutes and I have bought back the same day.  Usually what happens is I see a big spike of say 80% and I search frantically for news.  If there's no news or the news isn't good enough to warrant the new price then I'll sell some and immediately enter a buy order to get it back.



MRCR is up 122% as they have come back to filing reports in the public eye.  Recently the long time president stepped aside and I'm hopeful the new guy will push forward.  One thing that does not encourage me is his non-response to my recent email...


I never miss the chance to look at a HEMA chart so here it is.  My biggest position by far was up another 125%.  I think it'll continue.  I don't know if I'd be a buyer on any stock that has come up as much as HEMA the past few years but I plan on holding until the market goes so high I can't say no.  


I sold FORD for somewhere around a 170% gain as it spiked into an acquisition.  It has dropped back down and I plan to buy back in.  




EKCS is up 217% and it was actually much higher than that earlier in the year.  This one is turning around and surviving and coming back to the light.  A good combination.  I hope it keeps moving.  

I made about 400% selling DPW in November.  I sold in the first big spike you see then watched Bitcoin mania push it much higher.  What this, along with TCCO, taught me is to hold onto some in case it keeps going.  It's not always a good idea to completely sell out into a spike.  As the stock fell back down to where it started a couple weeks ago I was thinking of buying back in but then it moved again.  I'm watching.  



--Dan
disclosure: long everything except TCCO, DPW, FORD

34 comments:

  1. Congratulations to this fantastic performance!

    I still have a small position in DPW and recently bought more/will again buy more.
    I think their new CEO has promising plans and seems like a good capital allocator to me. He also has skin in the game himself. They are aktive like crazy, buying stakes in other companies building this new holding co. My guess is, once the numbers show all that we can see a share price similar to what we saw in the beginning of the year.

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  2. Also thanks for your blog, again!
    It is really an inspiration.

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  3. Thank you.

    I'm glad you like the blog. It's a lot of fun and I'm excited to see what this next year brings

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  4. You are really trading "penny stocks" here. I used to think you are a value investor, and followed Buffett style of holding these hidden gems for the long haul, but checking stocks 50x a day and selling and buying back etc. is more of a "trader" not a "business owner".

    Congrats on your returns though.

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    1. I am definitely not a business owner. Call it whatever you like, I'm just here to make money. I have no interest in owning or operating a business. I am not trying to find excellent businesses to buy a reasonable prices and I usually don't spend more than an hour on a stock before buying. My ideal holding period is not forever.

      I consider myself to be a chart guided penny stock value investor. I am looking for maximum stock price movement. To me the easiest place to make money is tiny, cheap, low priced, low share count stocks. This is where there's the least competition and the most opportunity.

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    2. all of my stocks are for sale at the right price. If I think I can sell for a good price and buy back later I'll do that

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    3. I have to defend Dan. There is no real definition of a value investor anyway. And the "business owner" mentality is really only one particular method to pick the right stocks (which is actually exactly what Dan does with HEMA) and overrated anyway. You buy low and sell high, that's it. And Warren Buffett himself has made most of his (relative) returns in the beginning, when he actually bought and sold. How did he do the last ten years? Worse than the S&P500. And that says a Buffett fan.
      Also Dan is trading around his positions. That's what many "value investors" do. If a stock crosses your anticipated value, you sell. And that's even more pronounced in these microcaps. Call it illiquidity premium.

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    4. My intro to Buffett was reading a few Mary Buffett books years ago. They were great for a newbie like myself and taught me a lot. She went through his buy decisions on a number of stocks and I loved it. But she never talked about his sell decisions and then I read all this absolute crap about his ideal holding period being forever. What a load. Stocks are not a currency I can use for anything other than selling. Right there I knew Buffett's model was not for me. I'd say I learned about buying and patience from Buffett but he's useless on selling.

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    5. German reader, can you please send me an email?

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    6. One example of my trading is a spike on UUU this morning. I noticed volume picked up late yesterday with the stock rising from $1.60 up to $1.85. I always check my stocks in the morning before the open and there was movement premarket so I watched as I was getting dressed. Volume went crazy with the stock going up as high as $3.50. I don't know why. I sold some at $3.22 and now it's down to $2. I'll buy my shares back when it drops lower.

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  5. Dan,
    Just checking. What happened to FORD? I see you are not holding.

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    1. When the acquisition was announced recently the stock spiked way up. I sold into that spike. I plan to buy back in now that it has come down

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    2. OK I’m back in. Now I don’t know what to do on my Blog Performance page that shows I sold out. Life is so hard

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  6. Hi Dan,
    Congrats on a terrific year.
    Just to get a sense of your overall performance with the "other" stocks, can you share what was your return last year excluding HEMA?

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    1. Right now HEMA is 43% of my portfolio which constitutes X number of shares. If we pretend those X shares have never existed then I would be up 48.1% this year.

      This theoretical 48.1% performance does include the Y number of HEMA shares I owned at the beginning of the year and sold halfway through. Beginning of the year HEMA was at 2.50 and I sold these around 3.15 for a 26% gain. I think it's reasonable to think I could've got that performance from another stock and anyhow I don't know how to take these out of the equation since I bought other stocks with the money halfway through the year and I'm not going to backtrack all that.

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    2. Hema still seems cheap even after the hugh run considering growth. With all publications anouncing partnering with world leads and having uniqe products and largest donors portdolio that is sellng well. It can still double within couple of years. It is not that obscure even if Growth will be only 20% and not 50 %

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  7. Hema look like a stock that is on the track to be a non obscure company as in all publications you see they are partnering with world leads and they have also uniqe product that is uniqe + largest doners portfolio... So even after all the increase they still seem as cheep as before. So it can still double within couple of years

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  8. Hi Dan, any new thoughts on POLXF, I see you still own it but it looks like very small position. I feel like they are on the cusp of an earnings rebound, any thoughts? Thanks

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    1. I need to look at that one. Often times I will buy some stock after looking quickly at it with the intention of coming back later. I start with a small position then buy in bigger once I read up on it

      POLXF is one I bought at some point with a very quick look and then I've never followed up with the deeper dive. I haven't followed the company

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    2. Got it, would love to hear your thoughts if you do look into it. Have you ever heard of or looked into PDRX? They are about to pay a $0.66 dividend on Friday (10% yield). In business for 30 years, consistently profitable and have almost $5 per share in cash and own their own real estate. The stop sign on otcmarkets is just up your alley!

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    3. POLXF looks good. I bought some more

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    4. I've bought more a couple times with the recent price drop. Seems cheap

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  9. They haven't done that well lately because their Partner Sparhawk doesn't yet have approval to sell the 20% Dextran. I think there has been some predatory sales practices in the industry where a competitor who has approval for the 20% is making people buy the 10% from them as well so Sparhawk/POLXF are losing 10% product sales. 20% approval from the FDA should come soon (easy since its a piggyback) which will allow for a new sales of 20%, a rebound in sales for the 10% and the $250k milestone payment... POLXF owns its own real estate, PP&E of $3mln cash of $1mln... that's more than the market cap so the business (one that has generated $1.8mmln in Free Cash Flow over the last 5 years) is valued at nothing!... what am I missing?

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    1. any idea what specific real estate they own, what they paid for it and when, or what it's worth?

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    2. They own their production facility and office building which is located about 10 miles outside of downtown Toronto. On the balance sheet it shows cost of Land and Buildings of $4.6mln with depreciation of $1.6mln for a net value of $3mln. They have owned the building for decades so I highly doubt its worth any less than the $4.6mln they paid for it but lets split the difference and call it $3.5mln, which pretty much gets us to $1 per share. They have spent almost $10mln on Machinery and Equipment over the years but that has been depreciated down to $1.7mln. To be safe I would give all that a value of $0 maybe 10% of the depreciated value which adds another $170k. So Maybe a $1.0-$1.10 and net cash of about $0.20 gets you to $1.20-$1.30 which at the current price values the business at nothing. In addition the company has $2.2mln in NOL's that could also be worth something.

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  10. Hi Dan,

    I just stumbled upon your site and I'm really enjoying reading through your posts. I was wondering how you go about finding these sorts of companies in the first place?. I'd like to have a go at finding these sorts of companies myself to improve my research/valuation abilities rather than just relying on the good work of people like yourself.

    Also, have you looked at Pendrell?, last I checked it was trading below net cash and has a one off tax loss carry forward of something like $2.5 Billion, management says they can probably carry it for the next 20-30 years. I came across it after reading some blog posts by valuestockgeek and Geoff Gannon of Focused Compounding.

    Fantastic site and excellent work, you gained a sub!

    Regards,

    David

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    1. Good to meet you David and I'm glad you like the blog. Unfortunately I don't have any great tips on finding these companies as people give me my ideas. I have a friend who spends his days reading filings and press releases and he tells me about what he finds interesting. Most of the dark stocks I own are ideas from him and he knew them from before they went dark. One thing you could do is go one by one through all the companies that have deregistered

      Thanks for the idea on Pendrell. Might be cheap relative to intrinsic value but the price is way too high for me

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  11. Hi Dan,

    Thanks for the response. I'll see if I can dig up a list of deregistered companies to scour through. Looking forward to your next post and have a good weekend.

    Regards,

    David

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  12. I've used blonder tongue products for years and had been watching the stock before it took off. Congrats on the win there.

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  13. Great Call on HEMA... and way to stick with it!

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  14. Hema has a Market cap of 143 Mio. Net income 2017 was 4.4 Mio (P/E of 33) and book value amounts to 14.7 Mio. Revenue is 20 Mio (P/S of 7). Growth is remarkable but whether it is sustainable remains open.

    Overall this stock does not look cheap.

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    1. HEMA recently reported bi-annual results and again they came out with great numbers. Even at $12 I think it's hard to call the stock expensive. I would not buy it here because it's also hard to call it cheap. But if the growth continues then in a couple years we'll say $12 was cheap.

      so yeah, big question is how long can the growth continue

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