This will be a short discussion of the 2019 performance. I’m super busy from now till mid-April, so I won’t have much time to write a detailed review of 2019 till after April. I didn’t want to wait that long to write a review, so I’m going to write a short one now.
2019 was a really good year. I returned 130% for the year, compared to 31.5% for the S&P 500. Since inception, 2009, I have performed 29.98% annualized, compared to 14.47% annualized for S&P 500.
2019 was not a typical year. Anytime you get returns like these it has to be an outlier year. Although our holding of Oroco Resources makes me a firm believer that 2020 will be similar or better year than 2019.
2019 returns were positively impacted by Oroco Resources. Although I did have 2 other trades I made in 2019 that had some impact on our results. I sold out of Techprecision in July for a 53% return in 6 months. I really like Techprecision and expect really strong numbers for them for the coming 5-7 years, I just like Oroco too much and decided to move the capital to Oroco. The other trade I made was for Valuera Energy. This was a small speculative play I made on the expectation that the drilling results would be good from the deep drilling in Turkey. The results were not as good as we expected and I sold out of it for a loss of 56%. This Valuera Energy position was less than 2% of our portfolio, so the impact was very minimal.
I enter 2020 with all our capital invested in Oroco Resource. I’ve discussed the story for Oroco in the past. In 2019 the company took care of the legal issues and almost got the registration done. Registration was finally completed in early 2020. 2019 was the year that Oroco put the old legal battle to rest. 2020 is going to be the story of Oroco drilling and proving the resource and showing the potential upside from exploration.
Even though Oroco has goes from 7 cents in 2017 (when we started to buy) to 45 cents at end of 2019, I think the story is just beginning. I think there is a huge upside to be had from Oroco proving the resource. Oroco has stated they need to do a small (11-14 holes) drilling program to prove the old resource. After that Oroco will start a more large scale drill program to show the resource is much larger than the old resource report. I think we will definitely see the results from the small drill program in 2020 and likely see some of the initial drill results from the larger program in late 2020. These two drill plans have a potential to drastically impact the Oroco stock price and make it a more prominent M&A candidate.
Also the copper market is primed for a huge run due to supply constrains. The copper spot price started 2020 on a nice bull run. Although the virus news from China has put a damper on the global copper price, I think this is a short-term issue that will resolve itself in 2020. The long term trend for copper is going to call for lot more demand on copper and there aren’t many new copper projects coming online or on sale in the M&A market. This bodes really well for Oroco.
19 responses to “2019 Performance”
Congratulations on the great returns over a long period! Aren’t you concerned about uncontrollable factors with 100% portfolio being in one stock?
Yes it is something you have to be more concerned about. But when you have done you research, you consider the factors that could severely impact the company. With Oroco these risks are very minimal. The biggest risk I see is delays in getting the capital, drilling results, or permits. I feel comfortable with these issues.
thanks Paras, all the best for 2020!
hi Paras, do you find any other microcap interesting?
i own a very big position in Mitcham Industries. also there are 2 other small caps that i have a position in. 1 is good sized and will only increase in the next 1-2 months. the other is a tiny position that i’m using to keep an eye on the company.
by far Oroco is the biggest position. Mitcham is very large. Unnammed A is small but will likely grow 2-3x in position in the next 1-2 months. Unnamed is tiny and likely stay that way until I see some developments that I’m expecting to happen in the next 1-2 qtrs.
thanks Paras for sharing, I will look into Mitcham more closely.. Looking forward to you sharing more details on the unnamed ones when you are ready 🙂
Hi Paras, will you be able to share the unnamed microcaps? thanks!
The other positions are RiceBran Tech and TechPrecision. Both are really really small positions. RiceBran is something to just watch for now. Potential is huge but mgmt has failed to execute. TechPrecision, the potential is huge and orders from US Navy will likely start in 2021.
are u still in RiceBran Tech?
I don’t own any RiceBran Tech. I keep an eye on it but I sold out earlier in 2021.
thanks Paras, will check them out
Happy New year Paras, you likely smoked it this year too with $OCO..
Yes it was a very good year. I will post the results and holding hopefully by end of January.
Paras, thanks for this blog. It helps me with my investing process.
Qn for you: which trading platform/brokerage do you use? And, what do you like/dislike about it?
I use Interactive Brokers.
Hi Paras, When will you share 2020 restyles and holding ? Thank you for sharing your wisdom, learned a lot from your writing.
Planning on writing it up soon.
Do you have update on Mitcham Industries ?
Thanks for the blog – very intresting
Mitcham has 2 business segments and 2 different stories. The Seamap biz is doing very well. Their products are in demand and the orders keep coming. It is a good cash cow for them for now and will keep growing market share. The Klein biz is at the mercy of the Navy. Their products are going to be used by the Navy and the revenue is going to come. It doesn’t look like anything material is going to happen with Klein in 2021. The only major event for Klein in 2021 is the release of the SAS product. Although 2022 will be completely different. They have announced many new products in 2021. The sales for Klein will materially take off in 2022 and they will definitely get the Navy contract, we just don’t know when it is coming.
I’m super bullish on Mitcham. It has taken much longer than expected but I think the upside is still there.