A Speculative Bet I'm Seriously Considering
A Canadian microcap is being rebuilt in plain sight. Speculative, asymmetric, and possibly heading into the portfolio.
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Every once in a while you come across a company where the screen and the human read the same filing and come away with two completely different pictures.
A screen looks at it and sees a small profitable Canadian microcap with a going-concern footnote and a thin cash balance.
Skip.
A human, looking at what is actually being built, sees the early stages of something else entirely:
A capital-allocation vehicle.
Run by an operator with a documented 200-bagger to his name.
Sitting on top of a recurring, cash-generative core business that funds its own working capital.
Acquiring small profitable operators at a pace that has now produced two outright control deals inside six months, plus a quietly-growing book of convertible-debt positions in other operators on the side.
If he keeps doing this for the next seven to ten years, the market should eventually stop valuing this as its boring core business and starts valuing it as a holding company.
That is the entire setup.
This is a speculative idea. It is small, illiquid, carries a going-concern footnote, and the entire thesis depends on one person continuing to allocate capital well.
None of that disqualifies it. It does mean it sits in the speculative bucket - high asymmetry, real risk of permanent capital loss, sized accordingly.
It is also a name I am seriously considering adding to the portfolio.
You don’t want to miss this one. Let’s dig in…