Wednesday, April 17, 2019

NoName Annual Performance 2018-2019

What a great year!  I'm up 74.3%, giving me a CAGR of 46.4% since I started investing 6 years ago.  What an amazing run it has been.

You can read more on my performance in past annual posts here.






Below is my portfolio.  You can compare back to last year to see what's new.  A lot of these are tiny positions just because that's all I could get or that's all the cash I had available.  I wish I had larger positions in many of these.



Charts
You know I love charts so let's look at what some of my stocks have done over the past year.  This will show you the huge price changes in this arena.

HEMA
Might as well start with my largest holding.  I'm still super heavy on HEMA.  I sold some a month ago to buy a truck and camping trailer but otherwise I'm just watching and waiting.  HEMA is up 133% this year and 4413% since I first bought almost 4 years ago.  It just keeps going.  For sure HEMA contributes a lot to my performance so you are probably wondering what if I didn't own any.  If we pretend I didn't own any HEMA at the start of the year I'd be up 45.3% so still really good.


UUU
UUU is a fun one I've never blogged about.  They are tiny and cheap like all the rest.  Over the past year the stock is down 12% but the excitement is in the spikes.  I've made two or three times my money on this one by selling into spikes then buying back when it falls.  I've done this in the past with VII and FORD and others.  It keeps happening and I'm not complaining.  


You can see the spikes.  Here's one from May that lasted one day.  I bought back the next day.  


AETI
Another I've never blogged about.  Same story as UUU with the spikes.  Check those out!  It's about flat from last year but I more than doubled my money in June with one spike.  I think I missed the Dec one.  



VCON
Now to a loser.  VCON changed names and de-registered.  They now have the dreaded stop sign at otcmarkets.  Down 89% in the past year...YUCK.  I think I first bought around a dollar or two.  They can't all be winners.  Still I think VCON is cheap and will rise again so I've been buying down here.  I might pick up some more.  


ZMTP
ZMTP is almost all the way down to where it was when I first came to know it years ago.  Down 64% this year.  I started buying around 2 over a year ago and so far it's been a money loser.


TCCO
Back to a happy one.  If you remember I owned TCCO a couple years ago and sold into huge rise.  The stock went from the low 2's to the low teens and has since drifted back.  I sold out in the beginnings of that rise.  As it dropped this past year I put in a buy order at 2.5 and just let it sit.  As luck would have it I got filled and then the stock started moving.  It's now over 5 on nothing.  My guess is there's some good news coming that leaked out but who knows.  Could be nothing.  I'm watching and waiting and hoping for a spike...


AIFS
This is my kind of stock for sure.  It sits at $1.40, up 75% in the past year.  I first heard of AIFS about 4 years ago when they were dark with a stop sign at otcmarkets.  The company is tiny and stopped filing to survive.  The stock was in the 0.20's and 0.30's.  Along the way they came back to reporting and are growing like a weed.  They are in the exciting field of library book management software!  I think this business has a strong network affect and is very sticky so I'm hopeful the growth continues.  Been around a long time and just doing their thing.  Their most recent annual shows 80% income growth...  There's no volume.  I wish I owned more.


DEWY
DEWY is the story of a company that de-registered for the right reasons and has performed.  Read my old blog post for the history.  The stock has doubled in the past year as earnings have risen.  The most recent Q showed EPS of $0.15 vs $0.04 last year.  Some of that is savings from not filing with the SEC.  But I think the main reason behind the rise is this line in the past few reports:
The Company has been pursuing monetization of its real estate and believes, as of this writing; the sale of the building and land is probable, though not assured, within the next 12 months.


And with that I wrap up a great year.  Here's to many more

--Dan
disclosure: long everything mentioned except AETI

32 comments:

  1. Thanks, and congrats on the amazing performance. Can you give us a sense for how much you have invested in this strategy (ballpark)? 10k / 100k / 1m?

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    1. I am not comfortable giving out that number. I can tell you it's more than 100k. I am 38 years old and started contributing to a 401k when I was 24 or 25. I am an engineer in silicon valley. This portfolio you see here is 99% of my retirement and all of my savings other than some in the bank.

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  2. Congrats any update on CVV?

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  3. Not really. I bought more recently. I think it's cheap. Same as it was last time I wrote it up.

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  4. The challenge here Dan is replicating your performance. You may have already noticed but those illiquid microcap shares move after you post.

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    1. Yes I know they move and I understand your issue.

      I think there's opportunity if you are patient and follow the names. HEMA I did most of my buying after posting. Same with MRCR, HYDI, GIGA, and others. IEHC was around my post price for years. You can also see names in my portfolio here that I have not posted about

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  5. Your performance was great.

    However, after a bull market of 8 years+ U.S. stock appear expensive (although this could be driven by tech stocks). Are there still enough cheap value, nano stocks in U.S. with adequate quality that can be found?
    It is easy to find these stocks e.g. in Japan (see Nix Inc, Buffalo Co or Takasago Tekko) but I think it is quite hard in U.S.

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    1. There's always stocks to buy. Some of my recent purchases: DYSL, CVV, RDVA, ASNB, QDLC, VCON

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  6. Congratulations on your fantastic performance Dan, long may it continue!

    To those who question whether there are still cheap stocks to be found, they are always there, you just have to dig for them. Dig into pink-sheets and grey market stocks, bankruptcies, post reorg's, rights offerings,spin-offs, tax liens and other special situations. If you keep digging you will find value.

    “You have to turn over a lot of rocks to find those little anomalies. You have to find the companies that are off the map – way off the map. You may find local companies that have nothing wrong with them at all. A company that I found, Western Insurance Securities, was trading for $3/share when it was earning $20/share!! I tried to buy up as much of it as possible. No one will tell you about these businesses. You have to find them.

    Other examples: Genesee Valley Gas, public utility trading at a P/E of 2, GEICO, Union Street Railway of New Bedford selling at $30 when $100/share is sitting in cash, high yield position in 2002. No one will tell you about these ideas, you have to find them.” – Warren Buffett



    Thanks for the blog Dan, it has been a real inspiration to me.

    Regards,

    David

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    1. Thanks for the kind words, David

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    2. Yes, probably there are still good stocks available in US. It really depends on your strategy.

      However, some global markets have another advanatage: Cheap stocks and cheap currencies at the same time, e.g. according to the Purchasing Power Parity, Turkish Lira is almost 80% undervalued and Russian ruble over 60%. On the other hand, U.S. Dollars are not cheap.

      Deviations from PPP damp out but only very slowly, at roughly fifteen percent per year. see also here. This could result in high extra Returns.
      http://fx.sauder.ubc.ca/PPP.html

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  7. Hi Dan,
    Congrats on a great result!

    Do you have any pointers to articles / studies / blogs I could read to learn about the causes for the spikes you are seeing in some small stocks? e.g. UUU & AETI. Or could you comment on what you think causes these in general? Are they normally news based, or someone ramping the stock, or ? I appreciate they are illiquid small caps, but it seems crazy they move say 1-200% over a few days and then just drop back down... why would someone buy in at those prices unless the situations fundamentally changed, and if it has why doesn't the price stay up.

    Also, on the spikes, is this something you look for prior to buying in, or just something you have been able to benefit from so look out for? If it's something you look for, how do you find them?

    Thanks
    Alan

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    1. Sometimes it's news and sometimes it's nothing. It happens fairly often though. Probably a couple times a year I sell into a 100% gain or so with one of my stocks. It's happened with TCCO, VII/VCON, AETI, UUU, FORD. Maybe others. In FORD the last time I sold out there was a huge jump when an acquisition was announced. With UUU this past year I don't think there's been any news, one day it just has a ton of volume and shoots up. I would guess that's the work on some pump & dump but who knows. In the past on TCCO I've sold into contract news and then also there were some jumps of say 80% or 50% on no news at all.

      I am looking for maximum price movement so I go for low priced low float stocks. When news comes, or for whatever reason demand rises, I want the lowest supply so the stocks moves as much as possible. I specifically target low float, low priced stocks so in that way I guess I'm looking for these types of stocks. But I have no idea what stocks a pumper targets. I think pumpers just happen to look for the same type of stocks so I end up benefiting sometimes. It's like icing on the cake

      Sorry I don't know of any blogs or articles on this stuff.

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    2. also these spikes are usually done in a matter of minutes. Usually it's right at the open. It'll peak and fall within a half hour then it's gone.

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  8. How do you look for low float? Do you check trading volume e.g. on average or per day?

    When do you sell a stock? (I think this is more difficult than a buy decision). I think Graham sold stocks when they were going up by 50% or 100%. However, I think there is little basis for this kind of approach.

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    1. Well the main thing I look at in that regard is low share count. I like a low float as well which I check just based on share count - inside ownership. I want share count of like a few million ideally.

      How I sell is a big question. I don't sell very often and I do way more buying than selling. I try to hold a stock until the market makes me sell. I don't sell after any set gain or when a stock gets within some percent of a "intrinsic value." The story is always changing so I'm always evaluating.

      Let's see, over the past year I have sold only a handful of times. I sold a few stocks a couple months ago to buy a truck and trailer so that was not really stock based. I sold AETI and UUU into spikes. I sold a few shares of CVV in one account because I accidentally dropped below 0 with a purchase.

      Over the past 4 years probably most of my selling has been either into a spike or when I'm trying to buy something I like better. Only a few times have I sold a slowly moving stock that I thought got too high. One was ESCC. I sold some BDR this past year because it just rose too high.

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    2. On the spikes I sell when it moves a lot because chances are it will drop back down. A spike of 100% or more I will almost surely sell into unless I think the stock is just amazing and I can't get rid of it. A spike of 20 or 30% is too small and I'm not confident I could get back in. So between there is the grey area. A spike of 70% I'm probably selling into but it all depends on the situation. 50% and I'm on the fence

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  9. Congratulations on your 2018 performance! Hope the good run continues.

    There is a micro-cap stock(ticker TAIT) that I added a small position in recently after reading an article on seeking-alpha. Fortunately, the stock appears to be doing well though I have no idea why. I was wondering if you'd looked into it and had anything more to add.

    Thanks,
    G

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    1. Congratulations on TAIT! I hadn't heard of that one. The latest annual came out a few weeks ago and numbers look great. I would guess that's driving the price increase

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  10. I noted that UUU made losses in the last years. Recently it recorded some positive op. cash flows and p/s and p/b are low. Do you hold this stock only because of the volatility (and because it is very small)? I think it could either recover or go slowly to cero if they can´t stop making losses. Difficult to evaluate.

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    1. No, not only because of the volatility. The spikes are icing on the cake.

      Price is low. It's a low point on the chart. Low share count. No long term debt. Cheap relative to BV and revenue. I know it's weird to look at because of their Hong Kong JV. Yes they are losing money and so are so many of my other stocks.

      With the small size, low share count, and low price it will move a lot with any news or when anyone wants in. That's for sure a positive and something I look for.

      Take a look at a chart back to the 70s. They have survived a long time and have bveen down like this a number of times. They have kept going and the stock has seen some big jumps.


      From 2001 to 2007 the stock ran from 0.50 to 35. That's what I'm trying to catch. What do you think sentiment was like when it was at 0.50?

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  11. BTW price to book is probably overrated by value investors. It seems that past earnings are more important than price / book value. However, it is possible that this is less relevant for these very tiny stocks. Further, this finding is based on one (but not more) recent studies.
    see here: http://review.chicagobooth.edu/accounting/2017/article/why-value-investing-buy-signal-out-date

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  12. Dan, have you seen that DYSL is planning on deregistering this summer?, share holders with less that 8000 shares will get cashed out at $1.15, current share price is $1.08 Seems like there is an arbitrage option there, buying 7999 shares would make around $560 after getting cashed out. Not sure what the annualized return is on that.

    https://www.otcmarkets.com/stock/DYSL/news/story?e&id=1346685

    I'm guessing the share price will drop once they deregister, I'll keep watching to see if it drifts down after the cash out and deregister process.

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    1. Yes I know about that. I still own all my DYSL and actually have bought a bit more. The spread was bigger but it has narrowed some. Still not bad for an arb.

      I emailed the company to warn them of the arb costs coming their way and they didn't care. I don't know if they'll follow through or not, seems like they plan to at least

      I think it's a good buy long term anyhow. My main concern is if they'll keep communicating and in their proxy they said they'd keep posting at least annuals in some form. I think not quarterlies and I can't remember if they said they'd post bi-annually

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    2. In the announcement they said:

      > If consummated, the proposed stock splits would apply directly only to record holders of the Company’s common stock. Persons who hold shares of common stock in “street name” are encouraged to contact their bank, broker or other nominee for information on how the proposed transaction may affect any shares of the Company’s common stock held for their account.

      As far as I know brokers usually keep their customer's shares in street name these days, so doesn't that mean that the cash-out won't apply to most small shareholders?

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    3. I think all people in street name will get cashed out but I don't know for sure. I remember HKFI threatening the same thing then they cancelled their reverse split because the costs got too high so I took that to mean they couldn't follow through with the threat. DYSL shows their cost coming up with the latest proxy so they are seeing the cost of the arbs.

      Either way I'm fine with holding my shares because I think it's cheap. I bought before news of this de-registration came out. De-registering will save them money and hopefully that'll improve operations.

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    4. So far I have not seen that a stock did go up after a delisting. Or have you? Less transparency, lower liquidity and visability generally result in a fall in the stock price.

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    5. My $1.15 payout from DYSL came through so I can confirm shareholders in street name did indeed get bought out. Their threat to treat all shares held in street name as one shareholder turned out to be BS.

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  13. OK thank you. The split actually has the same effect as a share buyback.
    Isn't there a risk that the stock can no longer be traded on OTC/grey market etc. after the delisting (like a fully private company)?

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    1. Yes it'll be a share buyback

      There is zero risk the stock will no longer be traded. The company is de-registering from the SEC so will no longer have to file with the SEC but the stock symbol will still be there. They'll still have a transfer agent. I don't know what tier they will be on at OTCmarkets but the stock will still exist.

      You can read some more here:

      http://www.nonamestocks.com/2016/06/the-sec-allows-companies-to-go-dark.html

      http://www.nonamestocks.com/2016/10/brokerage-firms-otc-markets-and-dark.html

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  14. A recent observation of me is that beside some very small companies also some extremely large companies are very favorably valued. Gazprom (MW of 87 BN!), for example, has a p/e of 3, p/b of 0.4, p/s of 0.7, yield >6%. This is cheaper than most nano stocks that you can find on OTC. The price has doubled recently but the stock is still extremly cheap.

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