What I am writing is for educational purposes and is not intended as guidance. I don’t know your personal situation, and I am not your financial advisor. But what follows is an approach to get started with some background information to help get started.

The first thing that I would read is the first approximately 70 pages of The Little Book that Still Beats the Market by Joel Greenblatt. Joel Greenblatt is an extremely successful

investor who, after extremely successful investing results, taught at Columbia Business School. Mr. Greenblatt wrote the book as an introduction to investing for his middle school children, so it really is for beginners. And it’s a light, entertaining read, which could be read in about two hours. And it is very solid advice.

After that, there are a couple of different books that could be read. For a systematic approach applicable to many investing opportunities, one could read The Little Book That Builds Wealth by Pat Dorsey. While Mr. Dorsey hasn’t had the exceptional success of Joel Greenblatt, and the book is drier, it is a systematic approach in a fairly condensed book. Mr. Dorsey headed up the investment research department at Morningstar and runs his own fund now, and the book is very solid. The approach applies to companies large and small, but is more applicable to medium-sized and larger companies. Another option for a second book to read would be Peter Lynch’s One Up on Wall Street. Peter Lynch was an extremely successful fund manager, and the book is less dry. It is very solid advice. Peter Lynch’s approach works well for small companies as well as larger ones. Unfortunately, there are fewer opportunities in the US than when Mr. Lynch was a fund manager, but there still are some, and the smaller-company opportunities are more abundant in other countries, such as Canada and Poland. Personally, I would read One Up on Wall Street, since it more closely aligns with my preference for smaller stocks, where I think there are better opportunities, but that might require more time and risk than many less active individual investors might want. Another option would be the approximately two hour abridged audiobook read by Peter Lynch himself.

After that, a third book to consider reading is the inspiring and beautifully written book by Chris Mayer entitled 100 Baggers: Stocks That Return 100-to-1 and How to Find Them. (A “100 Bagger” is a stock that goes up 100 fold from the initial purchase price!)

The book looks at US stocks that went up in price at least 100 times the initial purchase price from around the early 1960s to the early 2010s.

At some point you’ll need to get started in actually investing! I think that Fidelity Investments makes a lot of sense for US investors who are mostly going to invest in United States stocks with some Canadian companies, and the very occasional company outside of North America. If someone thinks that they will invest in companies around the world, or is based outside the United States, Interactive Brokers is the low cost leader. Fidelity is easier to get started with, and offers great everyday products like a checking alternative, a “Cash Management Account” that pays interest and can be used for bill paying and a great ATM card, plus an optional credit card that pays 2% interest on all purchases around the world (without the common 3% surcharge on those purchases since “you might not notice the surcharge on foreign purchases). Good luck, and happy investing!

Note: Start small and test out your ideas. Even the very best investors tend to have as many losers as winners! They usually get to be among the best by limiting the losses on their losers and by having their winners drive the returns. The famous investor and writer Benjamin Graham called the “margin of safety” the most important concept in investing; make sure it’s hard to lose a lot of money. There are many ways to invest one’s savings. I tend to look for: (1) good companies that have a way to make money and have a way to re-invest the money they make back into the business; (2) companies run by competent people I trust and who are aligned with my interests; and (3) stocks of companies that are not expensive for what I’m buying.

NameSilo Technologies is a Canadian-domiciled holding company which primarily reinvests the free cash flow from its 81.5%-owned operating company, NameSilo LLC, one of the world’s 10 largest web domain hosts. NameSilo LLC does not require a lot of reinvestment to maintain the business, and there isn’t much opportunity to reinvest the cash flow profitably into growing the web domain business. Therefore, the parent company is structured to reinvest the cash flow into other opportunities. Fortunately, the NameSilo Technologies’ CEO is an excellent capital allocator as an outstanding investor in Canadian microcap stocks.

The primary components of the parent company NameSilo Technologies’ value are:

1. The web domain operating business, NameSilo LLC, 81.5% owned by the parent company, which provides steady free cash flow for other investments;

2. The reinvestment runway provided by a seasoned team of microcap investors, including CEO Paul Andreola and Board member Colin Bowkett, allocating free cash flow from the web domain business into promising microcap companies, especially those planning to go from small, high-growth private company status into publicly-traded companies (particularly those needing growth capital investment);

3. SewerVUE, a wholly-owned company providing a multi-technology scan of sewer systems to assess their condition for maintenance prioritization; and

4. A variety of smaller, attractive positions in private and public companies, including an approximately 7% ownership position1 in Alchemy, a now-private company offering the highest quality windshield protection (with a defense technology division as well).

The company’s shares trade on the Canadian Securities Exchange with the ticker URL, and also on the US Over the Counter Market with the ticker URLOF.2 As of September 30, 2025, the total number of issued and outstanding shares were 87,916,109; there were also 6,950,000 outstanding options and 750,000 restricted share units. Appendix A includes the breakdown of those options and RSUs. The remainder of this document will summarize each of the above components and provide some relevant considerations for those considering an investment in the company’s shares. Nothing in this document is investment advice.

1. The web domain business, NameSilo LLC

The operating company, NameSilo LLC, is 81.5% owned by the parent company NameSilo Technologies. The web domain hosting business is headed by Kristaps Ronka and hosts approximately 5.7 million web domains.3 The holding company announced the acquisition of its 81.5% position in NameSilo LLC on August 7, 2018, when the operating company hosted ~1.85 million domains.4 The web domain industry is fairly mature, growing at low single-digit percentages annually in recent years. My understanding is that NameSilo is slowly taking market share by offering top quality service at low prices.5 Over the past five years, while the number of shares outstanding has been similar, NameSilo LLC has increased the number of domains hosted by an annualized growth rate of 10.4%, as shown in the figure below.

In addition, NameSilo has added a number of profitable add-on optional services, such as email and security. There aren’t a lot of profitable avenues to reinvest cash flow back into the web domain business, but due to low maintenance capital expenditure needs, free cash flow regularly is dividended up to the parent company, now approximately C$8 million/year,6 where it can be profitably invested in opportunities with a higher expected return. Despite minimal reinvestment opportunities in the web domain business, there have been two recent accretive acquisitions by the operating company, ShortURL in August 2025,7 and a simple web site builder and e-commerce capability in September 2025.8 Appendix B describes my understanding of the trends in the web domain business. Although I am primarily valuing the 81.5% position in NameSilo LLC on its free cash flow generating ability, it’s worth noting that a competitor, NameCheap, was recently bought at a value which values the company at US$1.5 billion; NameCheap currently hosts approximately 11 million domains. While my understanding is that NameCheap generates, on average, around twice as much revenue per domain hosted as NameSilo LLC, and a larger web domain business is likely to generate a higher value per domain, on a per domain basis, 5.7 million domains is approximately half the number of domains of NameCheap. Note that NameSilo Technologies owns 81.5% of the web domain subsidiary NameSilo LLC and currently has a market cap of ~C$133 million (~US$97 million).

2. The Reinvestment Runway

The key to how well the parent company performs over the next several years is how well the parent company reinvests the free cash flow from the web domain subsidiary. In my opinion, the investment process of Paul Andreola is outstanding and promising for the future. He and his colleagues see a great number of investment opportunities. While I believe that process is the most important predictor of future performance, I’ll attach the latest ranking of microcap investors on MicroCapClub.com for another perspective.

While it appears that the many of management’s shares have been acquired through share options and RSUs, as shown in Appendix A, there have been open market purchases in the past two years:

Thus, it appears that management of the company is aligned with the shareholders at large, although there will be a variety of opinions on whether the extent of share options and RSUs is optimal. Given the excellent investment team and process, and the markets in which they operate, my opinion is that they will be able to achieve at least 20% gross annual investment returns on average.

With the current C$8 million per year of free cash flow sent to the holding company, an analysis needs to consider the costs of operating the holding company. We can look at this two ways: (A) Looking at expenses over the past quarters and comparing that to the incoming estimated C$8 million per year; and (B) Looking at the actual cash coming into the business and subtracting off investments made and change in cash on the balance sheet at the beginning and end of each quarter. Changes in outstanding options and RSUs at the beginning and end of each quarter need to be included.

3. SewerVUE

Most inspections of sanitary sewer condition assessments worldwide are performed by floating a closed-circuit television (CCTV) camera through the sewer. SewerVUE provides the same CCTV camera on the same type of flotation device but also provides Lidar and other technologies to “see” under the water surface and estimate the amount of degeneration of the entire sewer line through acidic gas over the years. SewerVUE is one of the two primary competitors in this space, and NameSilo has the capital to invest in growing this 100%-owned subsidiary worldwide. Two photos of the device are shown, with the device being the one on the left of the poster board; a top view is shown in the photo on the right side. Although the business is currently small, the number of sanitary sewers in the world is large, so there is theoretically potential.

4. Other investments (not operated by NameSilo)

In my opinion, the majority of the NameSilo Technologies investments of free cash flow from the domain business have been very good, especially looking at the “slugging percentage,” that is the returns weighted by the dollar value invested.

For example, Alchemy has what appears to be the world’s best windshield protection product, using nanoparticles to protect the windshield while allowing for visibility and a durable (3+ year) protection. Given the sensors now going through vehicle windshields, the value of this product application could be enormous. The company also has military-defense-related products, but the windshield protection product is likely to be more profitable in a shorter amount of time. NameSilo is likely to have a high-single-digit ownership stake in this private company when it goes public in December 2025 or the first quarter of 2026. The Alchemy stake as well as SewerVUE and the web domain business are likely to be the most profitable parts of NameSilo Technologies in the foreseeable future.

I’m only aggregating the non-SewerVUE, non-web domain hosting investments here since these are likely to be less material to the overall value of the business and share price going forward. Cheelcare (ticker CHER.V and OTC CHCRF) produces a state-of-the-art wheelchair for people with exceptional needs in a growing, global market. Besides having what appears to be the best product on the market, the sales team seems to have strong experience in selling products in their market, and the founders lead an excellent team. Atlas Engineered Products (ticker AEP.V and OTC APEUF) is Canada’s largest producer of roof trusses, floor trusses, and factory-made wall panels. Atlas’s uniquely national scale allows for purchasing and distributions at a lower cost, but the increasing deployment of robotics likely enhances their long-term competitive advantage. Atlas has a strong management team led by their capable founder CEO, solid CFO, and a solid Board. The current total market cap of the company is below replacement cost during the current trough in the Canadian housing cycle. Ola Media is a private company providing a Latin American advertising platform for ride share vehicles and adjacent businesses. Their impressive co-founders have made connections with global advertising agencies and captured a valuable position in Mexico, with promise throughout Latin America. There are other smaller investments, at least most of which seemed sensible to me. Given the growth of the domain business free cash flow in recent years, future investments are likely to be larger than the smaller ones not specifically listed here.

The table below summarizes the ownership stakes in the various businesses THIS TABLE IS STILL UNDER CONSTRUCTION AND SHOULD NOT BE RELIED UPON.

Additional note

The annual report for 2024 and preceding years contains a prominent auditor’s note about the large working capital deficit of NameSilo Technologies and mentions that they are relying on the company for assurances that “going concern” accounting should be used for assessing the financial statements. (See Note 1 of the 2024 annual report, for example.) My understanding of this note is that NameSilo tends to receive payment up front for the web domain services and agrees to provide web domain hosting services for the typically one to ten year period of the contract. NameSilo LLC tends to dividend up some of the cash to the parent company before the contract is completed, where it can be reinvested into more profitable investments than, for example, short-term government bonds. If hugely losing investments were made and the number of new domain contracts were to plummet, in theory the company could become challenged in meeting its obligations. I think that that probability is very low.

Disclosure: I currently own URLOF shares, and I may buy or sell URL.CN or URLOF shares at any time. Nothing in this description or any other statement I make constitutes a recommendation to buy or sell any security, nor is any investment advice whatsoever. You must do your own due diligence or consult a licensed and qualified advisor. I am not your advisor. This description is for educational and entertainment purposes only and may contain unintentional errors or omissions.

APPENDIX A: Structure of NameSilo Technologies Options and RSU grants

APPENDIX B: [To be completed]

ENDNOTES:

5

I gathered reasons for NameSilo gaining market share by an admittedly small amount of market research, mostly reading internet reviews and by comparing pricing and offerings. The number of web domains registered with NameSilo LLC at dates over the past 3+ years available at Archive.org are shown in the table below:

The current business is approximately 2/3 new build and 1/3 improvement. Builder has turned to automation and pre-building components in factories with delivery and installation on the building site. Fabricating components in factories leads to better component performance, less waste of materials, and considerable labor savings, which helps to meet the skilled-labor shortage and increasing costs of on-site construction. Builder seems the dominant company in its niche, with scale; lessons learned in one of its facilities, or from a new acquisition, can be shared across the company. Builder has an enviable track record of acquisitions, and a long runway to expand its geographical footprint and expand product categories nationally. Since they have the experience, and each acquisition is incremental rather than relying on speculative synergies, the acquisition strategy is low risk at the company level. While accretive acquisitions are typically available somewhere each year, Builders can and does grow organically where that is preferable. An industry expert reviewed Builder’s acquisitions and estimates that they’ve been returning a 25% ROIC on their acquisitions and that the current pricing of targets is consistent with a continuing this rate. My generalist view is that Builder has ample room to reinvest most or all of their earnings organically or inorganically for well over a decade. As long as the share price stays this low, Builder’s can also buy back shares at an attractive price. A nice feature of the business is that when business picks up and cash is needed for working capital, the share price tends to be higher; when business slows down, the share price tends to drop, yet this is when working capital shrinks and cash is available to buy back shares.

I like businesses where they have many suppliers and many different customers, and the business itself has fewer competitors. I think that Builder is one of those businesses and will increasingly have a strong position.

Management: Management is aligned and seems highly competent. Management owns a lot of shares, including the regional presidents. The CEO owns $28.2m in shares as of 12/31/2024, priced near the 52-week low. Compensation is appealing from a shareholder perspective. For example, the CEO receives $1m/year in salary, up to 135% bonus on that base salary, and $5m in RSUs. The culture seems good. There have been two CEO changes in the past few years through retirements of long-term employees. The new CEO was the prior CFO. That sometimes means a strong financial background but can sometimes be a concern for depth of understanding the business as a whole. But a long discussion between Bob Robotti and the current-CEO, Peter Jackson, when he was CFO, suggests to me that he’s been steeped in the business for a long time.

Valuation: There have been many changes to the business through mergers, Covid-19, post-Covid boom, increased interest rates, and a highly cyclical business even without those factors, which makes precise valuation less straightforward. Looking back, it looks like the current earnings are below the normalized (i.e., more or less average) earnings over the past 10 years. Yet I estimate a most-recent FCF/EV level of ~7.5-8%, and a price to owner’s earnings ratio of under 10. While the business is highly cyclical, it reminds me of the quote by Warren Buffett is his 1990 letter to Berkshire Hathaway shareholders: “Charlie and I always have preferred a lumpy 15% return to a smooth 12%.” Please let me know in the comments if you have different estimates or any other comments.

Note: I do have concerns that we might enter a deep recession, maybe even greater than anything experienced since the Great Depression. Potential trade wars could be disastrous. Political instability and risks to the rule of law are real in the US. Regardless of what you think about deportations, if there’s less demand for housing, that’s not a plus for Builder’s; but less low-priced undocumented labor could actually be a plus for Builder’s – Builder’s products save time and cost at the work site. And even some inflation is not all bad for Builder’s: as input costs rise, as long as they don’t crush demand, the percent markup and saving of materials tends to make for higher profits. And potentially lower corporate taxes and lower regulatory burden could provide a boost to company profits in the US.

For education, entertainment, and discussion use only; Not investment advice.

The enthusiasm seemed to stem from the fact that Vistry was slowly closing down its traditional homebuilding business and focusing on its “partnerships” business: after purchasing Countryside, Vistry has a dominant position in the partnerships business, which uses less capital than a traditional homebuilder and has higher returns on capital. One thesis was that the freed up capital from the traditional homebuilding business would be used to buy back shares, resulting in a far better business and a continued increase in the share price. So as not to duplicate background material, I refer you to the outstanding interview by Andrew Walker of David Capital released January 7, 2024. I’ll note that there are some excellent and informative comments on Vistry at ValueInvestorsClub.com around that time as well.

What triggered the initial share price decline in October was a Trading Update from Vistry that certain projects in the South Division were priced about 10-12% below their total cost, that earnings would be significantly lower in 2024 and 2025, and slightly lower in 2026 due to the inaccurate budgeting. They also announced that they’d do a thorough review of all projects with an outside auditor.

A further decline occurred when Vistry reported earlier in November that the underestimates were somewhat worse than originally estimated. You can look at the numbers in the two company releases. The Vistry share price collapsed further. Some discussion of the Vistry situation can be found in a UK trade press article here.

To make a long story short, as I posted on Twitter, I thought that the share price decline in October was mostly justified. As of the November 22, 2024 close, I think that it depends on one’s time horizon: in the next 6-12 months, I think it’s worse for the share price. In addition to the earnings miss, my understanding is that Vistry will probably get dropped from the LSE 100 in December due to its smaller market cap. I also think that it lengthens the likely holding period for a good outcome. This is not investment advice, but I am betting that the outlook for Vistry 3-5 years out is better now than it was when the initial Trading Update was released in October and will result in an attractive return from the current 847 GBX price. The business has been internally and externally reviewed, the problems were reportedly only in the traditional homebuilding business being wound down, and the partnerships business contracts are being written consistently with a 40% ROE floor. And they are winning business, becoming the UK’s builder of the most homes during this year.

Some additional notes:

* I assess that Vistry has a strong moat. It looks like the business going forward gets excellent returns on equity.

* They have the reputation to be a strong competitor nationwide. The incentives of decision-makers to go with the company with the best reputation is strong which makes for a nice intangible asset.

* The partnerships business requires multi-year planning and a fairly complex set of steps. Vistry has developed systems, personnel and scale to make the projects work. This makes for somewhat of a process moat.

* They have the scale and infrastructure which provides a cost advantage to be a strong competitor nationwide. The scale and predictability helps to get the best contracts with sub-contractors, and the factories to pre-fabricate parts to reduce waste and especially labor hours; parts can be pre-built in factories with fewer labor hours than on site.

* The CEO is somewhat controversial. He’s hard charging. Some folks don’t like it that he’s also the Executive Chair of the board of directors. Some blame him for the cost overruns. He seems to have an ego that rubs some people the wrong way. I mostly like that he’s the CEO. I don’t know him personally, but he seems to get to the main point, is focused and determined. His track record seems quite good. The only thing that is a bit bothersome to me are some related party transactions. See The Times article for more. He has been involved in the industry his entire career, so part of it is acceptable. It would be cleaner and probably better if he weren’t. But it’s not a deal breaker for me at this point.

* I am long as of today, with no plans to sell this year. That could change in an instant. Not investment advice. Do your own due diligence.

In summary, I’m betting that Acorn Energy ($ACFN) has room to run. It’s roughly tied for my largest holding, and I haven’t been selling. Of course, things could change at any moment, but I’m not planning on it. There’s a nice, concise description of the business on the investor relations page of the company’s website and annual report, aka 10(k). I trust management, and the CEO owns ~30% of the company. Nice. The contract for monitoring of backup generators at some cell towers of one of the three major wireless companies in the U.S., announced on June 5, 2024, is going well; the contract delivery schedule was accelerated and the number of towers increased. [Share price on June 5 was ~$10.] Payments are coming in, as reflected in the Q3 earnings report, released November 7 [share price ~$15.81 at close]. While a lot of those early payments are for the monitoring device, the big potential is the ongoing recurring revenue if the purchasers find the ongoing monitoring economically advantageous. The purchaser wouldn’t have bought the devices if they didn’t think it would be worth it, but Acorn needs to execute.

If you’re willing to look at a microcap stock, IMO this one’s still worth looking at. Even at the current share price of $19.19.

I’ve posted on Twitter / X, but that place has increasingly become a cesspool of disinformation and hate, so that’s another reason to try substack more. I’ve posted a few $ACFN thoughts on Twitter, such as this one on June 5, 2024,

but I’m not sure what my limited social media presence will look like going forward.

Addendum (June 2, 2025):

Acorn Energy continues to execute. To understand the earnings power of the company, it’s critical to consider the financials for Hardware (device) sales and recurring Monitoring revenue one and more years out from the initial hardware sale; the first year of ongoing monitoring is included with the device sale. The Q1 2025 financial results are below:

The company is pretty straightforward and presents results very clearly. By the way, in May 2025 the company submitted an application to uplist from over-the-counter to the NASDAQ exchange. Thanks for reading. Please let me know what you think below.

Since I originally wrote about Tamarack here on January 2, Tamarack has gone up a bit over 45%, including dividends. It’s natural to ask, is it still worth holding? This is not investment advice (!), but here are a few of my thoughts.

* Tamarack’s wells seem to be producing as well as outlined in my earlier note. They pay back the capital expended in a very short time frame, even at 2024’s oil prices.

* Tamarack’s secondary oil recovery, through water flooding, seems to be going very well. While the initial oil extraction pays back the capital quickly, the decline rate in oil production is high. The decline rate in the secondary or enhanced oil recovery via waterflooding is slower and less capital intensive.

* My understanding is that Tamarack can continue to drill new inventory for 20 years and that enhanced oil recovery can continue for decades more. Although most oil will likely never be recovered, there are over 8 billion barrels of original oil in place in Tamarack lands.

* While cash generation depends upon oil prices, Tamarack will probably generate over 10% in something like free cash flow in the medium term at today’s share price. There is a nice confluence of events that’s likely to happen around 2026, assuming current capital expenditures, the current or mildly rising share price, and oil prices similar to 2024: oil production should increase as more enhanced recovery kicks in, debt gets paid down, and share buybacks start compounding. A crash in oil prices or unexpected production problems could make that less rosy, of course. A quick rise in Tamarack shares could make the ultimate 2026 share price lower than the optimistic scenario since Tamarack wouldn’t be able to buy back shares at highly accretive prices.

* Tamarack management and directors continued to buy shares on the open market in 2024, a positive sign that the value was there as well as enhancing alignment of interests with outside shareholders.

* I’m a generalist investor and not an engineer nor specialist. All this could be wrong. Do you own due diligence.

* While the opportunity isn’t as great as on January 2, execution risk is less now. Each month that goes by without an oil price crash makes Tamarack a less vulnerable company. The TMX pipeline expansion to the Pacific Ocean terminal helps support the Canadian oil prices, including reducing the WCS and WTI differential. I understand that the incoming US administration has said that they support the previously proposed Keystone XL pipeline, which would help Canadian oil prices as well as the US’s long-term energy security – as well as improving the environment by importing cleaner Canadian oil rather than from dirtier sources, and improving US security by importing heavy oil from a friend rather than foe.

* A few other names that I like in the Canadian oil and gas space are: (1) Athabasca and MEG, two Steam-Assisted Gravity Drainage (SAGD) oil sands producers with ~30 years of low decline inventory; (2) ARC Resources (ARX), a large natural gas producer in Alberta with a lot of natural gas liquids (NGL) production – the natural gas liquids are needed to dilute the thick oil produced from the oil sands in order to transport it via pipeline; and (3) if you’re looking for something to generate ongoing income, consider looking at the royalty company Topaz Energy.

* IMO none of these five companies is super cheap now, but none strike me as expensive. I currently only own Tamarack, but that could change at any time.

* As I’m looking for my investments to provide resources in order to live off of, somewhat of a “neutral” position for me is about 5% of my assets. Oil and gas goes into so many everyday expenses, including food, transportation, housing, and goods and services. All of those things are influenced by the price of oil and gas and will for at least quite a few decades. An ownership interest in oil and gas assets seems like prudent risk management as well as a decent investment at today’s prices.

* Not investment advice. I’d love to hear any comments below or directly. Happy investing!

On the down side: (1) Tamarack has around C$1 billion in debt; (2) has fairly high royalty rate (~20-22%); (3) significant ongoing capital expenditures, although a lot of development was made and costs paid in the first half of 2023; and (4) the historical track record of the company is somewhat unclear as the company undertook a major transformation in recent years by purchasing a large quantity of assets in the Charlie Lake and Clearwater areas and disposed of its assets in the Cardium area of Alberta, issuing a lot of shares in the process as well as taking on a lot of debt and selling rights to Tamarack infrastructure, which will decrease future profitability.

On the positive side, the Clearwater and Charlie Lake assets have terrific economic characteristics. Tamarack reports that it breaks even at US$37 WTI, including paying out its current base dividend. Not only can oil be produced at relatively low costs, but the payback period is very short, which should help Tamarack to profit quickly if oil prices should rise for a limited period of time.

I think that there’s a good chance that oil prices will be volatile rather than consistently higher or longer than the current US$70 WTI price in 2024. If inflation takes off again, and global economic activity rebounds, I think that there’s a possibility that oil prices might increase. If inflation takes off again, my other equity holdings may struggle, and exposure to oil might be a very welcome positive diversifier. My assessment is that Tamarack has decades of oil reserves.

Management. There are a lot of negative comments about Tamarack management on Twitter, aka X, but I haven’t seen a strong basis for that, at least from investors with a multi-year perspective. There have been a lot of comments that Tamarack overpaid for the Deltastream acquisition in late 2022, and a lot of frustration by investors while the Tamarack share price declined during during 2023 (the $TVE.TO share price declined from C$4.46 on December 31, 2022 to C$3.07 on December 31, 2023 with a dividend totaling $0.15 per share). I’ll discuss valuation in the Price section below.

My quick assessment is that the CEO is technically competent and sincere, held over C$12 million of shares as of the March 2023 proxy statement, and other upper management appears qualified. The Board also appears highly qualified and insider ownership is solid and is adequately aligned with shareholders. Insider ownership per the 2022 Information Circular – Proxy Statement dated March 21, 2023:

The significant Deltastream acquisition took place in October of 2022. Some commentators believe that Tamarack paid too much for the acquisition. It appears that insiders believe otherwise and have bought more shares than they’ve sold since the acquisition. The Tamarack management transactions from November 1, 2022-December 31, 2023 are shown in the following table:

The Tamarack Board of Directors has also acquired more shares than they’ve sold since the Deltastream acquisition:

I find it quite significant that the CEO holds ~C$10 million of Tamarack shares, including recent purchases, and I view him as aligned. Most other insiders are buying shares, and only one director has sold (a modest percentage of) shares held.

I have never met the CEO, but I have found the CEO to speak directly and logically in earnings calls and interviews. For example, see the three-part extended video interview with excellent questions from Sohaib Abbas at this link. The first part has a lot of background personal information, and if you’re uncertain you want to watch it all, check out part B or part C first.

Price. At ~US$70 WTI, I estimate the 2024 Tamarack free funds flow to be around 14%, which should grow over the next few years at current levels of capital expenditures and current oil prices. This free funds flow rate is above Tamarack’s peers, on average, if my analysis is correct, especially considering Tamarack’s large reserves and resilience to low oil prices as well as upside if oil prices increase substantially. My assessment is that sentiment is low on the company due to the large decline in share price in 2023, the relative lack of a steady-state operating history, the willingness of company management and the Board to subject shareholders to a one-year drawdown in share price for the prospect of a better company with better long-term shareholder returns. In particular, the purchase of Deltastream in late 2022, issuing a lot of shares which were inevitably going to be sold into the public markets in 2023, likely drove down the share price substantially. In addition, the need for significant capital expenditures, especially in the first half of 2023, and the commitment to use a lot of free funds flow to pay down debt, eliminated the possibility of share buybacks or enhanced dividends in 2023. Even if Tamarack overpaid for Deltastream, the current share price seems to more than offset any possible overpayment.

By all accounts, we would have been very happy to have taken out the mortgage and offset the mortgage with the stock portfolio. Of course, markets have gone up over that period. In order to use some actual numbers and stocks, let’s assume that we took out a $400,000 mortgage at 2.625%, 30-year fixed rate, rather than paying off the mortgage with a $400,000 Roth IRA (close to the time of this post, I actually refinanced my mortgage at that rate, with transaction costs paid and received a significant cash amount for accepting a mortgage above the going rate). We’ll also assume that we weren’t able to deduct mortgage interest, and instead used the standard deduction. Finally, we’ll assume that we’ve been able to pay the difference in mortgage payments and dividends received out of a cash reserve fund, and that we’re now going to reconcile the numbers, replenish the cash reserve fund, and review the situation.

For our mortgage, we would have paid $1606.60 per month in principal and interest, for a total of $25,705.63 over the 16 months. The remaining principal balance would be $388,100.

Our stock investment portfolio would look like this as of April 30, 2022:

We’d need to replenish our cash reserve fund since our mortgage payments of $25,706 exceeded our dividends by $7,623, as we expected at the outset. That leaves our total stock portfolio at $511,754 - $7,623 = $504,130. One option would be simply to pay off the mortgage, which would leave us with a net balance of $116,030 and call it a day, with a heck of a vacation or a debt-free investment portfolio after the 16 months.

Or we could review and reallocate our investments into the most promising options. It seems to me that the market is offering better opportunities than most of the stocks now, but Berkshire Hathaway ($BRK.B) still seems reasonably priced and may be useful as a stable holding to offset the mortgage. Going forward, we might want to sell off a small part every year to make up the difference in mortgage payments and dividends received. Lumen ($LUMN) seems even cheaper now than a year ago given its upcoming sale of some of its assets at prices above the price the market is placing on its more valuable remaining holdings, as I see it. So suppose we keep those. Coca-Cola ($KO) seems less attractively priced than a year ago. For simplicity, let’s say we hold it; it is definitely valuable in our scenario as a very stable dividend-paying stock, where the dividend still exceeds the mortgage interest rate.

That leaves the other three. For illustration, I’m going to say, let’s sell those and reallocate to other holdings. Kroger ($KR) provided a great return, but it seems to me that it is richly priced. Nuvera ($NUVR) is in a stable industry, but I’m not convinced that they’ll be able to raise prices or grow as much as inflation, at least with its current management and structure. I’ll replace Wal-Mart ($WMT) too. While these last three holdings are in stable industries, we’ve done very well with them as a group and seem to have a little breathing room to consider holdings that might grow more. For our illustration, I’ll also add a bond holding of a few thousand dollars, to help bridge the difference in mortgage payments and dividends. You could adjust this as you see fit. 5-year Treasuries are paying 2.92% right now; or one could buy a ladder of holdings to be liquidated over time to make payments — until dividends rise over time to cover our mortgage payments, or we have enough of a cushion in our non-dividend payers to sell off holdings for capital gains to make the mortgage payments. I-Bonds are currently offering more than our mortgage interest rate, and I’m sure you could do better than the 2.92% interest rate, but I’ll use it in our illustration.

We have many options, but I’ll toss out one option for illustration:

We now have a lot of flexibility in our stock holdings. We could put together a dividend growth portfolio to pay the entire mortgage payment, by finding other dividend stocks instead of Berkshire Hathaway ($BRK.b) or Alphabet ($GOOGL), but selling off shares of those two companies as needed seems like a solid approach.

There are a lot of ways to handle a portfolio like this, but we’re in a pretty good position right now. It would probably make sense to have a few more holdings, but just a few where you’re very confident in the future of the company and management makes a lot of sense. Six holdings was simply used so that the illustration would be more manageable.

I’m not planning on updating this mortgage-offset portfolio, nor am I recommending anything. But I hope that you found this discussion interesting. Thanks.

I’m not really a big fan of Walmart nor the stock ($WMT), but I might buy some shares. I don’t know anyone who owns the stock, nor have I seen any write ups from anyone I follow. Half my holdings are microcaps, and this just isn’t my style. But I want to have a resilient portfolio, and $WMT seems to have some very appealing characteristics.

I’m regularly redeeming assets for living expenses (and have given some background on how I invest and why, which may seem to contradict $WMT). I’ve been looking for something counter-cyclical, and $WMT is the best I’ve found so far. Specifically, I’m looking for something that would do well if most of my stocks tank during a 1-3 year period, while we’re selling assets for expenses. The types of downturns that I’m looking to ride out would be like 1973-74 or 2008.

Yes, we could hold cash or cash-like amounts. But at best they’d hold their value, before taxes, and not provide growth. We don’t have enough in assets just to hold several years of expenses in cash. “Your mileage may vary,” as in the old saying. If we were to enter something like a stagflationary environment, or a crisis like 2008, I think that Walmart might actually become more attractive, unlike most businesses. Like it or not, when people are pressed for cash and want to save money, they head to Walmart. Walmart’s ability to keep costs low is second to none.

In looking at stock market history, the S&P 500 index dropped ~38% in 2008, the worst performance in a single year since an earlier version of the index dropped 47% in 1931; only 25 of the S&P 500 stocks went up in value in 2008. Walmart ($WMT) rose 18%, although it was still growing fast in 2008, so a future economic crisis may not result in as good an outcome.

There have been share buybacks in recent years enough to result in a decline in the outstanding share count of around 2%/year. The outstanding share count (in millions of shares) from the past 15 years of WMT 10-Qs is shown here:

While the share price may not have been cheap enough for buybacks to have had a great capital allocation impact, at least there hasn’t been widespread dilution, and there has been some discipline.

Revenue has continued to grow at a decent clip while gross margin has been very consistent for the past 10 years. Median Return on Equity has been around 18%/year over the past 10 years (ROIC ~ 10.5%), although it has dropped significantly in recent years (last 5 year ROE ranging from 8.3% to 18.5%, and ROIC from 4.9% to 10.3%). Although I haven’t investigated carefully yet, it appears that Walmart has struggled with online selling and international stores in recent years; it appears that the online selling issues have mostly been worked out, but I’m guessing that international growth will be erratic. As the world’s largest retailer, my guess is that Walmart will have a strong position for a long time given their buying heft, infrastructure, and developed supply chains.

These are a few thoughts on a potential counter-cyclical investment with decent prospects in the event that economic conditions continue to be bright. Please let me know if I’m misguided. Or let me know it sounds reasonable if you agree. Thanks!