Wooof. Q2 was rough. Below is a quick look at the rough performance of my portfolio and the indexes I track. It also shows what the value of $100 invested at the start of the last 4 years would have been worth. With some hindsight, I should have dumped everything at the start of 2023 and put it in the Nasdaq.
I am a believer that one quarter doesn’t mean much, but there is a fine line between having patience and being wrong. I fish in the small and micro cap pond and it’s easy to blame my performance on something macro or flow related, and maybe there is some of that at play, but I can go wherever I want so I really have no excuse.
Overall Market Thoughts
I don’t know what NVDA or AI will do for everyone. And I don’t think if I spent 100 hours researching it that I would be able to predict the future any better. FWIW I have been asked by three normies about NVDA.
Below are the companies in the portfolio by sizing, their YTD and Q2 performance and some quick thoughts. I also put a couple of valuation numbers down.
Cipher Pharmaceuticals - CPH.to
-11% in Q2, +52% YTD
7.3x FCF, 5.1x EV/FCF
It used to be cool to be a fungus baron, not so much this quarter. Not much to report here. The stock took a breather after a strong 2023 and Q1 2024. Such things are to be expected. I can’t time pullbacks, so I don’t bother. MOB-105 (Terclara) is performing well in Sweden and I expect the same here in Canada once it’s officially launched in H2 2026. That is essentially an eternity so I don’t think the market will give CPH much credit for the Canadian rights of MOB-015 until it’s passed phase 3 in Canada. In the meantime there is potential for them to deploy the cash via an SIB or M&A.
Viemed Healthcare - VMD
-29% in Q2, -18% YTD
5.1x EV/2024 EBITDA, 14-15x FCF (my estimate)
Steady as she goes here. I believe the market is concerned about GLP-1 drugs and potential competitive bidding for this business. So far GLP-1 drugs have proven to be a short and medium term tailwind. When someone seeks a prescription for GLP-1 drugs, they are likely placed on a comprehensive plan for their health which includes the drugs and potentially some sort of solution that VMD supplies.
OFS Basket (PHX.to, TOT.to, STEP.to, PSI.to, PSD.to, MCB.to)
+6-8% in Q2, +12-15% YTD
This is the basket of OFS cos that I have. Going into the year, I expected the rig count in the US to have bottomed by now. It seems to be stable here, but not quite at the level that I was hoping. Oil and nat gas are stable with reasonable demand expected here. Oil does have some potential supply side risks that I think are weighing on the price.
Sangoma Technologies - STC.to
+6% in Q2, +64% YTD
5.4x EV/EBITDA, 8x EV/EBITDA
STC has had a decent H1 of 2024. They were certainly due for a bounce after peaking in 2021. The company and the industry has shifted since 2021. They have essentially kept services flat while product revenue has dropped. I’m expecting that product revenue has bottomed (or close to bottoming) while services should see mid single digit growth from here. The FCF multiple on all the UCaaS names has come in dramatically since peaking in 2021. I am working on a reprofile of STC so stay tuned for that.
RediShred Capital - KUT.v
+11% in Q2, +11% YTD
5.3x EV/2024 EBITDA, 10x EV/2024 FCF
I recently did a reprofile of KUT in a collaboration post with some other Substack authors, so check it out here. Paper prices are flattening out (or trending down slightly). The effect on the business is muted at this prices given the growth in scheduled serives. They had a capex heavy Q1, but it looks to just be front end loading the year.
Foraco International - FAR.to
-20% in Q2, +10% YTD
3x EV/ttm EBITDA, 5.6x EV/ttm FCF
Q1 2024 revenue was down in their seasonally weakest quarter. I didn’t read too much into it. The outlook was positive on the call and gold and copper prices have held up well which gives me conviction.
Geodrill - GEO.to
+6% in Q2, +11% YTD
3.6x EV/2024 EBITDA
GEO closed out the quarter with a bang being up 16% on the last day of trading in Q2. I still own some of this. I think GEO comps start to look better moving forward. The business had some transitory issues in the last couple of quarters. receivables issues due to junior miners being capital constrained (which is weird given the price of gold), frictional costs due to them exiting Burkina Faso and increased capex to support their fleet. I think they are all temporary issues. Time will tell.
OneSoft Solutions - $OSS.v
-15% in Q2, -5% YTD
5.2x EV/2024 Rev, 3.8EV/2025 Rev
I just posted a reprofile of OSS and it covers my thoughts. I encourage you to check it out here.
Nephros Inc - NEPH
-5% in Q2, -40% YTD
1.2x EV/2024 Rev
Top line was down 5% yoy due to a large emergency order last year. They were just below EBITDA breakeven. I like the business, but am keeping my position sizing small at this point.
Quipt Home Medical - QIPT.to
-27% in Q2, -37% YTD, essentially unchanged since being profiled
3.1x EV/2024 EBITDA, 5.8x EV/2024 FCF
I have recently started a position in QIPT. It is still a small, but I am looking to add at these levels. I did a profile barely over a month ago. This story is similar to VMD, though more exposed to sleep apnea. There are some low expectations from the market which I think are overblown. As long as articles like this continue to show up, I think it’s extremely hard for institutions to own QIPT. Time will tell. Check out the write-up here.
Closing Thoughts
Not mentioned was my arb play HWO.to. They should be returning essentially half the current share price to investors at the end of July. It has taken much long than I expected to resolve. The position has outperformed the TSX, although it has underperformed the SPY and QQQ.
I am comfortable with my portfolio here. The combination of reasonable valuation and growth allow me to weather the quarter’s underperformance. Generally the businesses themselves are executing better than the share price performance would have you think.
How did you do in Q2?
Thanks for reading.
I vote this post for the "Post With The Most Apt Picture" award!!!!!
Thanks for sharing!
Entertaining read and performance looks pretty good to me. It’s always easy to pick the index you wish you’d bought into in hindsight!