A Brief Portfolio Review and Update

There were several news-worthy events during the week relating to some of my portfolio companies, so I thought I would do one post summarizing some of the events from the week and making some general comments on each of my positions. Before doing so, just a reminder to everyone how important it is to do your own due diligence and not to follow me into (or out of) a position. We all have different investing styles with different tolerances for volatility. It is important that you find what works for you and stick to that process. If you struggle with the concept of potentially holding a position for 2+ years, I would suggest that microcap investing may not be best for you.

Below are some comments on my positions (ordered from largest position to smallest):

Ackroo (AKR.V)
Cost basis: $.21
Current share price: $.26
Percentage of My Portfolio: 30%

I have written plenty on Ackroo recently, but it is worth re-iterating that with the Private Placement behind the company and the recent announcement of the First Data Canada partnership, the stage is set for Ackroo to ramp up its organic growth execution. I cannot emphasize enough how significant I believe the First Data deal is, both short-term and long-term, to the company. Q3 and Q4 of this year should be pretty exciting, and the road has certainly been paved for 2017 to perhaps be a more than stellar year for Ackroo. 

Also, I just wanted to welcome Michael Bigger as a shareholder of Ackroo. Michael participated in the recent private placement and it is great to have him onboard. You can read more about Michael here

Ivrnet (IVI.V)
Cost basis: $.045
Current share price: $.045
Percentage of My Portfolio: 25%

Ivrnet announced this week that it has officially begun recognizing revenues from the launch of its NEXTEXT product. While we don't know what the "revenues" recognized are yet, this marks a milestone that has been many years in the making for the company and we should see momentum starting to build for NEXTEXT. It is amazing technology and the fact that it turns a cost-center into a profit-center for transit authorities should allow the company to quickly get significant traction as its sales team is talking to transit authorities around North America. Of course, the exciting thing to me about Ivrnet is that they have legacy products that provide significant recurring revenue to the company, so while they work hard on pushing NEXTEXT and other new technologies of they have a legacy business that allows them time to execute.

This is such a perfect time to be building a position in a company like Ivrnet, in my opinion. New revenue generation is now confirmed to be coming into the company but will not be reflected in the financials until the company files its future quarterly reports. I continue to periodically add to my position.

Note: Hat tip to Tom Shaughnessy of SecretCaps for alerting me to a potential area of concern regarding incentive bonus structure as highlighted in the recently filed management circular. As written, this allowed the board of directors, at its discretion, to provide 50% of all net income above a certain threshold to executives as bonus compensation. The company has confirmed that this is an error and they are working to update the filing. 

ProMIS Neurosciences (PMN.TO)
Cost basis: $.045
Current share price: $.095
Percentage of My Portfolio: 25%

I expect the newsflow for ProMIS to be pretty significant over the next month or two as there are many catalysts right around the corner.  It seems as if momentum is building around the science and approach behind what ProMIS is doing, and I am incredibly excited about the possibilities of what may happen to the share price as the company continues to execute and deliver on stated objectives and upcoming milestones. The company is very excited about the Alzheimer's Association International Conference (AAIC) at the end of July in Toronto, another potential catalyst for the company as many good discussions and interactions occur at these conferences, and further insights are provided to the science behind ProMIS's approach. The stars seem to be aligning for ProMIS and if they can deliver positive in-vitro validation testing results in the coming months, there is no telling where the stock may be trading at that time.

Jernigan Capital (JCAP)
Cost basis: $11.26
Current share price: $14.11
Percentage of My Portfolio: 10%

The news that sent JCAP lower this week was that the company filed a universal shelf registration statement. Every REIT generally files shelf registration statement as soon as they pass the one year mark in order to set themselves up to quickly access the public markets if the opportunity presents itself.  The filing is what is called a "universal shelf" in that it accommodates virtually every type of security that the company would conceivably issue to the public.  So, despite this being a common REIT practice, it appears to have led some to believe that the company may look to dilute shareholders in the future via a secondary offering of stock. Personally, I do not see this happening but it is something that is now a possibility given this filing. 

I sold a very small amount (about 20%) of my position around $15/share recently as I believe upside from here is slower to happen than it was from $10/share recently. JCAP still remains a decent sized position for me, but not nearly as large as the companies listed above. 

Respect Your Universe (RYU.V)
Cost basis: $0.18
Current share price: $.17
Percentage of My Portfolio: 5%

This week RYU announced that is has identified a location for its 3rd retail store. The location is another high-profile retail location that will provide the brand great visibility as it continues to grow within Vancouver. For those of you frustrated that the RYU stock hasn't done much over the past few months, let me offer a few words of advice:

  • The 'churning' of shares in this tight trading range is absolutely a positive thing for the stock. Selling is being met by buying, and generally the longer this type of 'churning' happens for the more violent the upward move can be once the selling pressure eases. 
  • When investing in tiny microcaps like RYU you have to have vision. Building a brand as massive as Marcello Leone is looking to build RYU takes time. If you don't consider yourself as having the ability to remain patient over a number of years, or being able to tolerate extreme volatility, perhaps microcap investing isn't right for you. 

So, remain patient as the brand is being built and focus on the long-term vision and progress of the company, not the day-to-day trading of the stock. I will add to my relatively small position when the numbers start to tell us that the company is making significant progress in building the business.

Kraken Sonar (PNG.V)
Cost basis: $.15
Current share price: $.20
Percentage of My Portfolio: 5%

There was an interesting partnership announcement last week announcing a deal with a company called Square Robot. I'd encourage you to read a bit more about the parntership and Square Robot. An immediate positive from the deal is that Kraken expects to be awarded an initial contract for sensors, software and systems development within 60 days and will also become a minority shareholder in Square Robot. Longer term, Kraken will be the exclusive manufacturing and product support partner to Square Robot and expects to work with Square Robot on the development of additional robotic systems for other inspection applications.

Kraken still remains a very fascinating little company to me that is continuing to position itself as a major player in the underwater unmanned vehicle and sensor market and I look forward to continue watching them progress and scale their business.

Any additional comments on these companies you wish to point out? If so, please use the comments section below to interact with myself and others.