Introducing my Canadian small cap growth stocks portfolio

As I mentioned in my last portfolio update post, I have created a small cap growth portfolio with little known small cap Canadian stocks.

Experiment

It is an experiment with a tiny percentage of my investment assets.

Dividend growth is my core investment strategy. I will be keep building financial freedom portfolio with high quality dividend growth stocks. I am fully satisfied with my investments and their performance.

This portfolio is just an experiment with real money.

After read two best investment books, “One Up on Wall Street” by Peter Lynch and “The Little Book That Still Beats the Market” by Joel Greenblatt, I decided to give a try with little known small cap growth stocks with a small percentage of my net worth; around 1.25% of my net worth.

Both authors were portfolio managers and hand fully beat the markets by wide margins for many years, and they put their ideas, secrets and stock picking strategies in those books.

When you read those books you will get full experience from the authors and you can become an investment expert too.

I did not completely follow their advises, and built this portfolio with few advises from both authors and added few more selection criteria to spice it up 🙂

I just invested a small amount, so I couldn’t pick those stocks which trading at high price. Therefore, I’ve selected small cap stocks with less pricey stocks.

Also, I wanted to diversify to avoid risk. So, I selected 10 different stocks. I expect one or two may fly higher and few others go bust, while others stay without any bigger move.

This is a new avenue for me. I am not sure how this portfolio will perform in bear market.

I decided to use InteractiveBroker (IB) for this portfolio because of their low commission fee. IB may not suitable for new investors because of their high initial investment ($10 000 USD or equal amount of CAD to open an account).

Selection criteria

The following selection criteria are used to select the stocks (not limited); this will evolve in the future based on results.

• high Return on Invested Capital (ROIC) and high earning yield
• low or no debts
• avoid cyclical, bio tech and financial stocks
• post positive earning for last couple of years
• small market cap
• increase book value and revenue overtime or trading less than book value
• little or no analyst coverage (hidden treasures)

I use Google Finance, Yahoo Finance, Morningstar.ca, MSN money, and etc. for research and screenings.

Also, all the stocks are trading in Canadian exchanges. Right now, I am not too comfortable in converting CAD to USD at this unfavourable exchange rate (I USD = 1.285 CAD as of this writting). If this experiment works well, then I will consider try this in US market with a small capital.

Here is the list of stocks I selected for my small cap growth portfolio.

Please understand that this not a recommendation or advice or any other sort of things. I am not a licensed/professional financial advisor. As I always say, please do your own research or discuss with a qualified financial advisor before make any financial decision.

Small cap picks

November 27, 2017

• Sylogist Ltd. (CVE: SYZ) – bought 25 shares at $10.00
• High Liner Foods Inc (TSE: HLF) – bought 25 shares at $13.86
• TECSYS Inc. (TSE: TCS) – bought 25 shares at $16.65
• Photon Control Inc (CVE: PHO) – bought 100 shares at 1.90
• Biosyent Inc. (CVE: RX) – bought 25 shares at $10.27

December 14, 2017

• Madison Pacific Properties Inc. (TSE: MPC) – bought 50 shares at $3.59
• Urbana Corp (TSE: URB) – bought 50 shares at $3.72
• Gendis Inc (TSE: GDS) – bought 45 shares at $4.60

In addition, I added two stocks in emerging new technology of Block chain. I am not a big fan of BitCoin, but I like the power of Blockchain technology.

December 14, 2017

• BTL Group Ltd (CVE: BTL) – bought 15 shares at $12.21
• HIVE Blockchain Technologies Ltd (CVE: HIVE) – bought 75 shares at $3.60

As expected, some stocks already went up and few are down and rest of them stay where they were.

There are few stocks pay dividend, and the estimated yearly dividend income from this portfolio is $42.75.

Peter Lynch and Joel Greenblatt’s investment strategies are absolutely great and I have no doubt about it. Both of them have proven that they can beat the market. Due to the small investment capital of $2500, I am not exactly following their strategies.

When I compare to my other dividend portfolios, this is extremely risky investments. And, I am ready to lose all the money I invested.

If all these picks go to zero, I will lose $2500. But, if they perform well, then the gains are not limited.

Time will tell!. Again, this is just an experiment with real money, and I will update its performance in the coming months.

Thank you for reading and happy investing!

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