Wednesday, November 2, 2011

Adventures in Small Caps 2

I had read an article in 1997 about buying small cap stocks. It said you should be a basket of them, of at least 5 stocks. If 2 of the 5 when successful you then would be a winner. Theory is that you can only lose what you have invested, but what you can gain is, potentially, enormous.

My next attempts into Small Caps went a little better. The real problem was that any small caps that were successful were bought out, so I really did not reap much in the way of benefit. Also, in 2009, I started to try out Small Caps with dividends. I guess the other problem is that I really do not invest enough money to win on the ones that do go up a lot. Also, I was looking for capital gains of 500% plus.

I bought Wescam (TSX-WSC) in 2000 for $7.24 a share and sold for $9.44 a share in 2002. I had to sell this in 2002 because it was bought out. I made an 11.6% per year total return or a capital gain of 30%.

Cinram Intl Inc. (TSXCRW.UN). I bought this for $8.50 share in 2000 and sold it in 2007 for $26 a share. I made a capital gain on this stock (when commission is included) of 203%. The total return was 19.24% per year.

I had tracked this company for some time. It had made money by on VHS tapes, but then turned south when they were no longer popular. I bought it when it started to make money on DVD Disks and sold when DVDs seemed no longer profitable. (I was watching out for this as I knew what happened to the company when VHS tapes were no longer profitable.) I still track this stock, but stock price is down to $.06 a share.

Silent Witness Enterprise (TSX-SWE). I bought this in 2002 and sold in 2004. Capital Gain was 13% per year or 21%. This was a tech stock. I had to sell this stock as it was bought out by Honeywell.

Matrikon Inc (TSX-MTK) I bought in 2009 and 2010 at an average price of $2.62 a share and sold for $4.47 a share. My capital gain was 70%. My total return was 80.8% a year. I had to sell in 2010 as it was bought out. This was also bought by Honeywell. I sold a bit earlier a little less than acquiring price $4.50 to buy Pareto.

The interesting thing about this stock was that it paid a dividend. The average yield was 2.46%. They also paid out some special dividends. I bought this to soak up excess money in my TFSA after purchasing Shoppers Drug Mart (TSX-SC) for this account.

Pareto Corp (TSX-PTO). I bought in 2010 and 2011 for an average price of $1.63 and sold for an average price of $2.70. My capital gain was 66% and my total return was 134.4% per year, including dividends. This was also a dividend paying stock, with median dividend yield of 5.8% and growth around 44% per year. This was bought to replace Matrikon.

I also had to sell because it was bought out. I sold this early also to buy another small cap. I had some of this in my TFSA and some in my Trading Account. What I sold from TFSA, I got McCoy (TSX-MCB) and Davis and Henderson (TSX-DH). I put some of the money I made in my Trading Account to TECSYS (TSX-TCS). Both McCoy and D & H have some capital loss and TECSYS has some capital gain. I have blogged about all of these stocks.

ATI Tech (TSX-ATY). I bought this in 1999 and sold in 2006 and make capital gain of 11% or 1.5% per year. I bought it for $20.25 a share and sold it for $22.74 a share. It was acquired by Advanced Micro Devices (AMD) in 2006.

This stock started to have earnings in 1995. It did well until 2000. Because of the bear market the stock price fell about 85%. 2001 was a bad year for the company, but it was slowly recovering. However, it was bought out before it could completely recover. I have had a number of tech companies I invested in bought out just when they start to be worthwhile investments.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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