2022 Review - $OSS.v, $PSD.to, $STC.to & $SANG, $VMD.to & $VMD, $MCB.to, $KUT.v, $CPH.to, $GEO.to, $QST.v, $HWO.to, $XPEL

What worked and what didn't

2022 was certainly eventful. I don’t know what will happen in 2023, but I expect we will again look back and say “wow, didn’t see that coming”.

I thought I would take the time to go through my holdings (some haven’t been mentioned before) and talk about how they performed in 2022 and how I’m looking at them now. I think this will be interesting to look back on and laugh at how wrong I am. Please feel free to comment or message me with your thoughts.

Overall I am ok with my performance. I had some big misses, but also kept some big positions on that supported the outperformance. I ended 2022 up about 8% after a terrible year compared the market last year (+7%). While my 3 year and 5 year performance is ahead of the markets.

In order of largest to smallest at end of year 2022.

1. Cipher Pharmaceuticals ($CPH.to)

   1. Up 120% in 2022. This was a large holding starting the year and I haven’t added or sold a share. This position really carried my portfolio in 2022.

   2. I think CPH still has room for multiple expansion. The slowly declining sales of Absortica do not have the same material effect that they did in 2021. Epuris maintains a strong market share and there is upside in BC and Quebec approve some coverage from their respective drug insurance coverage programs to make this even more competitive in the marketplace. They also have several other avenues for growth in the pipeline. I am hoping that they use the large cash pile this year and find a product that fits in their portfolio. This would diversify the revenue base and (I think) should lead to a higher multiple.

2. Viemed Healthcare ($VMD & $VMD.to)

   1. Up around 45% in 2022. I significantly added to this in Q2 2022. They are still well below the covid highs so despite the strong performance in 2022, I should have taken more off the table in 2020.

   2. They had such tough comps from covid that it took time for the financials to demonstrate their base business and it’s organic growth. They also invested heavily via the income statement and the market wasn’t as trusting with this as it had been in the past. 2023 should continue to see organic growth north of 20% with steadily increasing margins.

3. OFS basket - $PSD.to, $MCB.to, $TOT.to, $ESN.to, $HWO.to and $QST.v

   1. Mixed performance in 2022. I have outperformed the TSX with these picks, but I’m pretty much inline with the ETF $XEG.to.

   2. I look to add another name or two to the mix and see 2023 as a year of increased activity. I am hesitant on the margin profile as these companies can be a major victim to rising costs.

4. RediShred Capital ($KUT.v)

   1. Down about 16% in 2022. I have maintained my position throughout the year.

   2. KUT has executed several acquisitions this year and should see higher revenue and EBITDA in 2023 on a per share basis. They are facing some margin headwinds with labour and supply chain issues affecting truck utilization. Much of this is temporary so I don’t see the thesis changing from here.

5. Sangoma Technologies ($STC.to)

   1. down 71% in 2022. Yes 75%. It’s painful to say but part of the healing process amirite. This is by far the biggest detractor from my portfolio performance. I was caught up in the tech/software bubble and thought they would be spared somewhat given they are operating with positive EBITDA. I was horribly wrong. I will do my very best to learn from this.

   2. The business itself has performed well. Although they have lots of work to do if they want to be taken seriously by the market in the aftermath of the tech carnage. Their capital market presence and chairman continuing to sell his holdings relentlessly do not really bode well for the near term. Although if they hit guidance they stock is trading cheaper than it has in as long as I can remember.

6. Geodrill ($GEO.to)

   1. Up 20% in 2022.

   2. Still really cheap based on whatever metric you want to use. Dependent on drilling for gold and the underlying gold price as well as the ability for juniors to raise money in the public markets. I feel that this is run by a strong operator. 2023 should be another strong year.

7. OneSoft Solutions ($OSS.v)

   1. Down 23% in 2022. This is my only “disruptor” in the mix. Though they have not performed as poorly as most of the other software companies, they are still down 40% from the peak in late 2020 and 53% since the peak in 2019. And yes, I have held through both periods. I did add a wee bit this year in the 0.30s.

   2. They have signed new customers recently and have the highest ARR in history. They are fairly close to break even. I still see this as a strategic asset to a larger player.

8. Xpel Inc

   1. Down about 16% in 2022. I picked up some shares in the early summer so I am still positive on the position after selling a larger long term position throughout 2020 and 2021.

   2. You can find a ton about the company on Twitter. It’s a favorite. I don’t really know how much they will be affected by a potential recession and who really knows how China does this year. Lots of unknowns. Having said that, this is the strongest CEO & CFO team I have ever come across. Every time I get anxious about the future of this company I just put on a conference call and it puts my mind at ease.

There are a couple small positions less than 1% that I am looking to build so I’ll keep it hush hush until the initial position in built.

I didn’t mention cash. I usually do not run at more than 10% cash at any given time. I am running at 5-6% cash now.

Feel free to comment.

Thanks,

Dean