The Canada SMID-Cap 30 Goes Hunting for Tiny Stocks

By Will Ashworth

This is the ninth installment of my list of 30 TSX and TSX Venture stocks to cover over the next few months.  

So far, I’ve selected 24 stocks from eight mutual funds, with the consumer cyclical and consumer sectors leading the way with three companies each, followed by several sectors with two each. Since I don’t want more than 20% from any sector, I’ve managed to maintain a good balance in all sectors.

Today’s three are from an index rather than a fund. I want to get some microcap stocks closer to the bottom of my market cap range of $100 million to $10 billion, so I’ll select three from the S&P/TSX Venture Composite Index. It has approximately 125 holdings with a mean market cap of $384 million.  

Happy Investing.

Tiny Ltd. (TINY)

Tiny Ltd. (TINY) is a Vancouver-based holding company founded by tech entrepreneurs Andrew Wilkinson and Chris Sparling in 2016. It has a market cap of $271 million (All figures in Canadian dollars, unless otherwise specified).

The company’s founding actually dates back to 2006, when Wilkinson created MetaLab, a creative agency for mobile app design and development. Sparling joined as CFO in 2009, and the duo allocated profits from the main business to incubate tech startups. 

They started Tiny after learning about Warren Buffett’s decentralized business model. 

In 2020, it raised US$150 million for the Tiny Fund 1 Limited Partnership (LP), which opportunistically buys businesses. Tiny owns 50% of the general partner (GP) that runs the LP. The GP charges no management fee and is paid a 30% performance fee over an 8% hurdle. Tiny Ltd. also holds 20% of the LP and has invested US$20 million. 

Their mantra is “We buy wonderful businesses.” In a later article, I’ll get into the “why” of investing in Tiny. 

These next two stocks will test me. I am a tech novice and an energy/mining stock avoider, but in the interest of diversification, I’ve got to wade into the deep end. 

POET Technologies (PTK)

POET Technologies (PTK) has a market cap of $264 million. Its main claim to fame is the POET Optical Interposer, which enables electronic devices such as microprocessors and memory chips to communicate at high speeds with photonic devices.

Nature describes photonic devices as components for creating, manipulating or detecting light. This can include laser diodes, light-emitting diodes, solar and photovoltaic cells, displays and optical amplifiers.

In September, POET CEO Dr. Suresh Venkatesan discussed in Photonics Online why optical interposers are essential to AI.

“An optical interposer forms the foundation for combining electronic and photonic components in an optical transceiver – a device that converts electronic signals carried on copper wires into light signals carried on fiber optic cable.”

It turns out that fiber optics carrying photons are a much better way to move data than electrons through copper wire.

The risk of investing in PTK stock is that it has limited revenue—$465,777 in 2023—and a significant operating loss of $20.4 million. 

It is not for the faint of heart.   

Mako Mining (MKO)

Mako Mining (MKO) operates a gold mine in Nicaragua and has a 100% interest in the Eagle Mountain gold project further south, in Guyana. Its market cap is $248 million. 

Mako Mining was created in November 2018 by merging Golden Reign Resources and Marlin Gold Mining. Marlin Gold Mining interim CEO Akiba Leisman became a director of Mako after the merger. Leisman became the interim CEO of Mako in March 2019 and permanent CEO in August 2019. He remains its CEO.

The company is riding gold prices at or near all-time highs of around $2,800, average realized prices of $2,349 and AISC (all-in sustaining costs) of $1,098. Revenues and profits are way up. The chart above uses the Canadian-traded iShares Gold Bullion ETF (CGL) as the proxy for the precious metal.

This will help it finance the costs of developing its Guyana project, leading to further growth. 

I’ve never been a gold bug, but Mako could convince me to change my opinion slightly.  

Until next time.

Disclaimer: The author did not hold a position in any of the securities mentioned above. The information provided in this article is for educational and informational purposes only and should not be construed as investment advice. Always conduct your own research or consult with a licensed financial professional before making any investment decisions. Past performance is not indicative of future results.

Will Ashworth is currently ranked 206 out of 30,453 financial bloggers analyzed by TipRanks, with a 16.5% return on his buy and sell ratings. He is one of the founding contributors to this newsletter. 

Will has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.