AlphaNorth Asset Management’s Chief Investment Officer and founding partner Steven Palmer believes in small-cap stocks despite their volatility. “They’re more volatile than large-cap stocks, but in the long run the rewards are much higher. The perception of large caps that many investors have is that perception of less risk. However, there’s been many occasions where large-cap stocks can go to zero,” Mr. Palmer explains.
@Jessica Vomiero | November 13, 2015 | SmallCapPower
Looking at companies like Vogogo Inc. (TSXV: VGO) and Helius Medical Technologies, Inc. (CSE: HSM), he says he wouldn’t give up on the small cap market just yet despite its discouraging performance overall. He explains that finding the right small-cap equity is the key to significant returns.
“They’re more volatile than large-cap stocks, but in the long run the rewards are much higher. The perception of large caps that many investors have is that perception of less risk. However, there’s been many occasions where large-cap stocks can go to zero,” Mr. Palmer explains.
AlphaNorth Asset Management is a Toronto-based investment manager specializing in micro and small-cap Canadian equities. The company currently hold three funds, the Alpha North Growth Fund, the Alpha North Partner’s Fund and the Alpha North Resource Fund.
He states that their investment philosophy follows a risk vs. reward model.
“We like to look at things that offer the most attractive reward while minimizing the risk.“ Mr. Palmer continues, “We also like to look at companies that have a proprietary technology, and are not dependent on acquisitions for growth.
Changes have been made in the investing community as Canada’s traditional strength in resource stocks wanes in favour of less traditional ventures. Though resource stocks are still worth looking at for the time being, he goes on to say that tech and healthcare stocks are booming right now. Palmer specifically names Vogogo Inc. and Helius Medical as two small-cap companies to watch.
Vogogo Inc. is a startup in the payment processing space. A software development company that specializes in risk management solutions and payment services, Mr. Palmer describes Vogogo as a tech company that processes high-risk transactions online.
Recently, Vogogo Inc. announced the integration of its proprietary risk management and payment processing service with globally-leading Independent Sales Operator (ISO), Easy Payment Gateway.
Furthermore, the company has expressed a keen interest in cryptocurrencies, such as Bitcoin, and has integrated its platform with Australia’s leading Bitcoin Exchange. Its cryptocurrency platform operated by allowing cryptocurrency users to participate seamlessly in the traditional banking system.
Furthermore, Bitcoin Exchange Celery launched in Canada with Vogogo Inc. leading the charge. Currently, Vogogo Inc. is in the process of offering its services to global markets.
Several outlets, including the Motley Fool Canada, agree that the technology sector has seen some of the highest growth rates in the market today.
Furthermore, according to Bloomberg Business, tech startups are receiving venture capital investments that not only break national records, but rival Silicon Valley startups.
This past July, Vogogo raised $12.5 billion in Series B round of financing. This coincides with Mr. Palmer’s investing philosophy, which states that “in the current market, it’s always best to stick with strong management teams, companies that are well financed and companies that have the ability to get financing.”
According to Mr. Palmer, making sure small-cap companies are well financed is key to determining whether they yield significant returns.
Though the pool of investors interested in small-cap stocks is decreasing due to poor performance in recent months, Mr. Palmer wouldn’t advise shareholders to bow out just yet.
He believes, and as the Canadian small-cap trends indicate, that “there are signs to be optimistic.”
Discover more insight from AlphaNorth’s Steven Palmer here >>
Questions or comments? Email me at Jessica Vomiero
