It's been a great year in NoNameStocks land. I'm up 35.7%, giving me a 50.3% CAGR since I bought my first stock 8 years ago.
You can read my past annual performance posts here.
Below is my portfolio allocation. You can compare back to last year to see what's new.
Today I'm filled with gratitude and pride. Getting laid off in Jan 2013 pushed me into the financial world.
Growing up I had done what I thought required: I did well in school and got a good job. My performance reviews exceeded expectations. I was supposed to be all set, but missing in that singular vision was diversification and financial independence. My family and I were locked up by the golden handcuffs. As I started a new 9-5 engineering job I also began a financial path with no clarity but full of hope. My heart driving towards a light at the end of the tunnel. With much help I am almost there.
My biggest win from the past year is buying a house. 100% of the down payment paid for with stock gains!! My engineering career has afforded us a very comfortable life but that life comes with a price. It's a 40 year savings plan you can't draw from until your kids are long gone and your body is tired. You're constantly on the edge of a downsizing or company change in direction. I'm proud to say my stock gains have outpaced my engineering compensation in each of the past 4 years.
Thank you to all of you for helping me along my path. Thank you for reading, thank you for the comments and the ideas. Huge thank you to my mentor for the education and patience, thanks for always responding. And thank you to HEMA and BMRA for the down payment.
Ok enough with the sappy stuff, let's see some charts!!
We can file this one under winner and loser. You may have heard me talk about UUU before. It was small and cheap but losing money (sound familiar?...). Over the years I've sold into those spikes a few times as the stock moved sideways and down. Over the summer I sold into this wonderful rise near $4. Not bad, right?
Well not so fast. What has happened since is why I try to hold out.
That rise I sold into doesn't look so impressive anymore does it. UUU had made a fundamental change I underestimated. They sold off the money losing JV and put up a $0.31 quarter in September. Not bad for an ugly junk stock that was at $0.50 only 6 months prior. I made 4x and missed out on 4x more. On top of that I had let the position size get too small so my gain didn't have as big an impact as it should have.
One of my challenges of the past year, which I still have not sorted out, is how to devote enough time to stocks while working from home. I should have been on top of UUU.
This one could be called a missed chance. A year ago the stock ran up from $0.80 to $3.00 on covid sanitizer spray hopes and I did nothing. Now the stock is back in the $0.80s. HYDI was my largest holding during that peak and now it's middle of the pack. The company has fallen behind on filings and any stock drops in the void of darkness.
The main reason I didn't sell HYDI into that rise was the low volume. Even though the rise was only over a month it was still sort of slow and steady. When a stock is just walking up I have a hard time selling. If it would spike from $1 to $3 in a day I'd likely sell depending on the news but when it's moving a little bit every day it's hard to say when it'll end.
I always wonder what's next. What if more news was on the way? What if a big order was coming? What if a $0.30 Q was coming to HYDI as it did for UUU?
Here's another missed opportunity. I wrote up CEMI in Sept 2020 at $3.51 and immediately the stock started a rise. My thesis was a single press release would drive a big spike to sell into. With spikes it's the percent movement that matters, not the absolute dollar value. A high volume spike gives you a very high chance of a lower price tomorrow so you might as well sell today. With a slow rise you don't have that certainty so why sell.
As CEMI rose through $4 and to $5 I started licking my lips. Any day now the FDA news would come and I'd get a spike. I was sure of it, why else would it be moving? I'm expecting a 100% spike and this slow rise was just raising the floor. As the stock moved up through $7 and to $8 I could see double digits. If the press release would have come I would've sold in a heartbeat and realized a 4x gain. But alas it was not to be and the stock fell all the way back down.
A few weeks ago the stock was back down and the press release came. I got my spike and sold into it. I didn't catch the peak but not a bad gain and I was out at $5. Now the stock is back where it started and after things settle I may buy back in.
Funny how it worked out. I got my spike and made some money but missed out on a lot more because I didn't sell at the peak. Another stock seemingly held too long.
EKCS is one of my best performing stocks all time, percentage wise. I'm up around 4000%. Another stock I've held for years, and also another stock I've missed sales on before. Recently they announced a huge contract, shooting the stock up about 700% in a day and it has held up.
Take a look at this 5 year chart. What a beauty. If you ever hear me talk about how a single contract or press release can dramatically change the value of a tiny company, this is your example.
But there's more in this chart. That jump in early 2018 is the lesson of patience. Just look at how dramatic it was at the time.
I missed that spike but held onto my shares. I bought more as time went on. Patience and optimism paid off and now I'm way up on EKCS. You know, that EKCS 2018 spike doesn't look too different from what HYDI did this past year...
This is why I hang onto these tiny little stocks. This is why I didn't sell CEMI or HYDI at their peaks. I am trying to make life changing money and I see opportunities in my future. Hopefully I can grab them.
Now for the craziest stock movement ever. You may remember I wrote up IOMT when the market cap was $2 about 4 years ago. The stock is super illiquid, trading only a handful of times per year. I have only got shares 3 times over the past 5 years even though I've had an open order for probably a third of that. The stock has moved between a very small fraction of a penny (that's how you get a $2 market cap) up to about $0.10. Months would go by without any transactions.
Well about 2 months ago shares started trading. IOMT has seen more volume in the past couple months than the past 8 years. The stock has gone as high as $1.50! I wrote up the stock at $0.000001 (not a typo) and bought most of my shares at $0.01. Let that sink in.
Historically they file their annual in April so my optimistic side was running wild. Maybe there's good news coming that has leaked out. Maybe we have a buyout. I've always thought the stock might be worth a buck or two in a sale. I emailed the company and they didn't even know the stock had moved, lol. There's no reason the company knows of. No news to report and no idea why anyone would be buying. In fact their annual will be coming out in the fall due to Covid just like last year.
So here I am with another stock that has moved up and come back down. I haven't sold any IOMT and only time will tell if that's a mistake. Why would someone be buying a penny stock for $1.50?
disclosure: long all the stocks in my portfolio picture
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Any plans to start looking into stocks that are foreign listed? It's where I've found the best value in the past year or so.ReplyDelete
I don't know. I don't feel like I do a good enough job looking here in the US. MaybeDelete
Not saying you should start investing in Mongolian coal mines, but I think you could do some real damage on the TSX Venture exchange :)Delete
International markets look cheaper than U.S. However, to my knowledge, there is not much data to prove whether such a strategy (buying mostly very tiny value stocks) works internationally. If you have data, please send me a note. In the U.S., there is some data, e.g., see the paper "A Modified Price-Sales Ratio: A Useful Tool For Investors? " which found substantial returns for the smallest value stocks (below a MC of 25 Mio.) between 25% - 80% p.a for a 17-year period. The big question is: will this strategy continue to work in the future? Or is it just a cycle / trend. Who knows.Delete
Great to hear Dan, keep it up!ReplyDelete
Hi Dan. Excellen performance. didnt understand SPY Annual return in 2020 was 47.5%? wasn't it more around 16% in 2020?ReplyDelete
This is not 2020 calendar year performance. I bought my first stock on Apr 18, 2013 so this annual performance is from that date.Delete
Congrats on the performance Dan! I'm curious about your approach buying into the most illiquid stocks (IOMT for example). Do you have a minimum order size that takes into account the fee to trade?ReplyDelete
I read somewhere long ago to try trading in blocks such that fees would be 1% of the trade or less, so I've followed that. But my trades are free now at Schwab and Fidelity I think. they all went free last yearDelete
btw the way I buy those illiquid stocks is constant observation. I watch all the time what's available and what's happening. I also will put in a good till cancelled (GTC) limit order and just wait.Delete
Yeah I try to stick to the 1% rule when creating an order, but I've had commission charges on some really small partial order fills well beyond 1% of trade value. Here's to hoping TD adapts Schwab's zero commissions.Delete
Congratulations on another great year Dan!ReplyDelete
I'm so happy for you and your family. Finding your blog was like finding a door to another universe, it's no overstatement to say it completely changed my life.
I hope you keep destroying the market for many years to come.
Many thanks my friend.
Thanks for the kind words David. let's keep this train rollingDelete
Congratulations Dan, and thanks for sharing your time and ideas so generously. May your mind-boggling performance continue. After conducting some reasonably detailed research, I do have one comment.ReplyDelete
My multivariate analysis shows a disjunct leptokurtosis extrusion factor - monotonically across all variables studied. In other words, IOMT didn't earn you any alpha after controlling for the size, liquidity, and value factors. Further examination indicates more ominous overtones, primarily of dark chocolate. The efficient market hypothesis therefore demonstrates that many of the central tenets of your approach are flawed. This could have serious consequences for you and your family. That house you bought? It doesn't exist after adjusting for volatility. You should relocate and seek shelter immediately to avoid the risks of prolonged exposure to the elements. I hope you have derived some value from my research, which was conducted according to the highest standards of Modern Portfolio Theory.
So long - I will return to my grilled chicken sandwich. Sadly, I am unable to enjoy it. It tastes like an overcooked dirt road after adjusting for the chicken, lettuce, and condiments.
Your dedicated reader
Don´t miss any of your write-ups and enterviews. Like very much your stock picking process and even more your outstanding results.
I discovered your blog last year during the lock-down, so as it´s said " every cloud has a silver lining".
Thanks and keep enjoying!
:) Thanks DavidDelete
Hey Dan, congrats on another great year! Have you had a look at Timber Pharmaceuticals ($TMBR)? Seems like the kind of company you may be interested in.ReplyDelete
No I have not heard of that one. Thanks I'll check it outDelete
Dan, congratulations on your performance. I was wondering how come you no longer hold BMRA even though it is back down? Do you not think they will pass the trials and get the FDA approval? Just curious...ReplyDelete
thanks. If BMRA were sitting at the $3 area support I would own itDelete
another one would be Rocky Mountain Liquor Inc (RUM). Very small and very cheap. But it is probably too late to invest in this stock(?)Delete
Hi Dan. New to your site and strategy. Thank you from all of us here to learn. I heard you say in an interview that your portfolio has grown up to seven figures. Are you finding this strategy more difficult to implement as the portfolio has grown? Do you see it evolving or changing in any particular way? Thanks again!ReplyDelete
I talked about that a bit on this podcast: http://www.nonamestocks.com/2020/06/financially-free-podcast.htmlDelete
Overall I'm not really doing much different now than in the past. Main thing is I need bigger positions so I'm sort of always buying. When a stock is in the range I want to buy I have to take that opportunity and buy what I can and sort of keep going with that. I am doing the same stuff, just I type in larger numbers and have to get bigger dollar value positions.
I used to be get filled in say one or two transaction but now it takes many so it's also the case that super super illiquid names may not move the needle. For example I've got this big movement in IOMT currently but it's not impacting the portfolio as much as it could because my starting position was only like $1k total.
Over time I'd bet I just buy more and more names. Keep doing the same thing but end up with more stocks. we'll see
Awesome. I'll check out that podcast and read a couple of your recommended books. Thanks again.Delete
Congratulations for another good year, Dan! You're an inspiration to all of us!ReplyDelete
Hey Dan, my records show that IOMT recently changed from Grey Market to Expert Market. This could potentially explain the price increase.ReplyDelete
Certainly could be. I don't have a better theory. I emailed IOMT to see if they were involved in the otcmarkets change from Grey to Expert and they had no idea. So I guess otcmarkets did that themselfDelete
It would actually make sense to sell some of the winning stocks (or the entire position) and buy more of the losing stocks. However, I think that this should only be done every 2-3 years. The assumption is that stocks and earnings have a tendency to align with a mean. There is no ultimate proof but some evidence that "what goes up a lot must go down a lot again (and vice versa)". of course this will not work every time but more often than not.ReplyDelete
maybe it is a mistake to avoid small Chinese stocks listed in U.S. Just look at CGA which did go up from 2 to 15 usd. An incredible return. I think not much changed actually, the financials of CGA do not look better than in the past.ReplyDelete
You hold a relatively high proportion in the portfolio of 3-6 stocks. Is that out of conviction that these stocks have special potential or more by chance?ReplyDelete
It's all of the above. HRBR is a big position because it has come up about 10x since I bought. PGNT similarly is large becuase it's up about 3x from where I did most of my buying. CVV is large because I have kept buying it over the years as it has sat in the 3-5 range. MINM and ECIA are large because I have kept on buying over time. ECIA has also come up from where I bought most of my stock. SCIA is large because the stock is triple what it was when I did most of my buying.Delete
any thoughts on IONI? They sell data management and digital marketing software solutions. The fundamentals look interesting with a P/E of 4, P/B <1 and P/S of 0.64. MC is around 6.7 Mio. I also like that it is illiquid but still investable. In addition, their performance (earnings etc) is improving.ReplyDelete
Thanks. I feel like I've heard that name but can't remember. The chart looks crazy. What a drop at the end of 2018! I'll check it outDelete
just realized my CAGR calculation for the SP500 was incorrectly omitting last year's 45% return so I fixed that. Jumped it up from 11% to 15%. sorry for the errorReplyDelete
Finally some update on the international project.ReplyDelete
yeah that's good to see. now need some good numbers flowing into the financial statementsDelete