Skip to main content

The Globe and Mail

Financial analyst focuses on small cap stocks

Financial analyst Edward Vranic

Edward Vranic, 33

Occupation

Financial analyst at Telus Corp.

Story continues below advertisement

The portfolio

Grand Power Logistics Group Inc., Keek Inc., Stans Energy Corp., Mobio Technologies Inc., Peak Positioning Technologies Inc., and other stocks on the S&P/TSX Venture Exchange.

The investor

Edward Vranic started investing in 2003 and had "a lot of early luck with mining companies." With success came "a big ego" that was tested during the 2008 crash. But he held onto his stronger companies and his portfolio recovered within a year.

How he invests

"I have recently focused on Canadian small- and microcap stocks," says Mr. Vranic. "My experience has been that the market is not oversold until small caps are oversold [the S&P/TSX Venture composite index remains 70 per cent below its 2007 peak]."

His picks come from out-of-favour industries, as confirmed by metrics such as price-to-earnings and price-to-book-value ratios. There also has to be a "recent history of revenue growth or … [an] interesting speculative story."

Story continues below advertisement

Mr. Vranic's largest holding is Grand Power Logistics Group, a freight company. "I have been unable to find another company that has such cheap financial ratios and acceptable growth without the stigma of an [Ontario Securities Commission] investigation or excessive debt."

As a Canadian-listed company based in China, Grand Power has been tarnished by scandals such as Sino-Forest Corp. However, it does "most of its business in Hong Kong, so I believe the shares are unjustly discounted," Mr. Vranic notes. "Insiders have been buying shares for years."

Best move

He bought warrants in early 2009 on Mercator Minerals Ltd. (they gave him the right to buy the company's shares at a specified price until 2013). Several months after purchase he sold them for a gain of more than 1,000 per cent during a market upturn.

Worst move

He is down about 70 per cent on Mobio Technologies, an operator of social media websites. After talking to the CEO, he remains confident Mobio will get back on track.

Story continues below advertisement

Advice

To protect against a market crash, he recommends using put options (which give the buyer the right to sell a stock at a given price).

Want to share your strategies? E-mail mccolumn@yahoo.com

Report an error
Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨