Average of high-point return for Investorfile’s 26 Top Ideas to date is 384%.

No doubt, 2022 ranks as the most difficult year to produce positive investment results as a small and microcap stock picker in non-resource sectors since the Investorfile blog commenced publication of its very first small cap value stock pick back in December of 2011.

While we feel our stock picking methodology remains sound, given the financial performance for the majority of our Top Ideas, unfortunately, very low valuations and little liquidity were the dominant trends for small and microcap stocks in 2022. This led to the significant stock price erosion throughout the year.

As a bottom-up stock pickers’ blog, Investorfile is not about to predict the direction of the market for 2023 (we are of the view that no one can predict the market’s direction consistently anyway). But this blog is of the belief that the current ultra-low valuations for small and micro-cap stocks will not continue for much longer, and such stocks may, in fact, lead with investment returns when the market sentiment turns positive.

In 2022, Investorfile added three new small cap value stock pick to its list of Top Ideas. Early in the year, we added Redline Communications Group, which was subject to takeover a few months later at a 29% premium to our coverage initiation price. More recently, Pluribus Technologies (TSXV: PLRB) and iFabric (TSX: IFA) were added as new Top Ideas by Investorfile.

We must acknowledge that three of Investorfile Top Ideas produced positive returns year-over-year in 2022, namely Noble Iron (TSXV: NIR.H), Boardwalktech Software (TSXV: BWLK) and Titan Logix (TSXV: TLA).

Investorfile has documented 26 picks that, to date, comprise our list of Top Ideas – Small Cap Value stocks. This summarizes the performances of our Top Ideas since inception. Note that high-point returns are based on the highest closing stock price and exclude investment return benefits from dividends, with the exception of final return calculations due to takeovers. Dividends and return of capital distributions are deducted from share price cost-base for the calculation of final returns.

• Average high-point returns based on highest closing stock price: 384%
• To date, 10 takeovers/privatizations at a premium-to-stock price
• Paid out a combined total of $1.95 per share of dividends/return of capital.

A list of Top Ideas which set a new high-point return during the 12 months of 2022:

1. Noble Iron (TSXV: NIR.H) - C$1.23, +392%
2. EcoSynthetix (TSX: ECO) - C$6.95, +309%
3. Caldwell Partners International (TSX: CWL) - C$2.79, +277%
4. iFabric (TSX: IFA) – C$0.77, +40%
5. Redline Communication Group (Takeover) - C$0.90, +29%
6. Pluribus Technologies (TSXV: PLRB) – C$1.92, +15%

All-time top 5 rankings of Top Ideas for high-point returns as December 30, 2022:

1. Sangoma Technologies Corp., (TSX: STC), +2377%
   
2. Questor Technology Inc., (TSXV: QST), +1374%
3. Gatekeeper Systems Inc. (TSXV: GSI), +783%
4. Quorum Information Technologies Inc., (TSXV: QIS), +725%
5. RDM Corporation, (Takeover), +708% (includes dividends)

Author's ownership disclosure: YES: CWL, STC, ECO, QIS, QST, GSI, NIR.H, PLRB, IFA

Read Disclaimer:

This article is for informational purposes only. This article is based on the author's independent analysis and judgment and does not guarantee the information's accuracy or completeness. The information contained in this article is subject to change without notice, and the author assumes no responsibility to update the information contained in this article. The information contained within this article should not be construed as offering of investment advice. Those seeking direct investment advice, should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock.

Investorfile is not engaged in an investor relations agreement with Questor Technology Inc., Caldwell Partners International Inc., Sangoma Technologies Corp., Quorum Information Technologies Inc., Gatekeeper Systems Inc., EcoSynthetix Inc., Noble Iron Inc., Pluribus Technologies Corp. and iFabric Corp. nor has it received any compensation from Questor Technology Inc., Caldwell Partners International Inc., Sangoma Technologies Corp., Quorum Information Technologies Inc., Gatekeeper Systems Inc., EcoSynthetix Inc., Noble Iron Inc., Pluribus Technologies Corp. and iFabric Corp. for the preparation or distribution of this article.

The author of this article has acquired and may trade shares of Questor Technology Inc., Caldwell Partners International Inc., Sangoma Technologies Corp., Quorum Information Technologies Inc., Gatekeeper Systems Inc., EcoSynthetix Inc., Noble Iron Inc., Pluribus Technologies Corp. and iFabric Corp. through open market transactions and for investment purposes only.