Given the meticulous and thorough analysis done my co-host of LTInvestments, I have decided to build a small position in this micro-cap company trading for less than liquidation value with an upside catalyst- Scheid Vineyards, Inc. (“SVIN”). Since I began building out my equity portfolio roughly 5 years ago I have tended to shy away from illiquid micro-cap investments. Not because I didn’t view them as good investments, but mainly because I wanted to build a dividend income stream to help me increase the rate at which I could put capital to work. This remains my underlying strategy that makes sense given my personal financial situation. However, investing is a constantly evolving process and I don’t intend to ever limit my portfolio to one style or look for investments in a constrained universe.
You can find the original anlaysis here:
The truth is, if I have conviction in the investment thesis and can justify the risk a new security brings to my portfolio, I will happily invest. It just so happens that I am typically drawn to established companies with demonstrated competitive advantages that produce meaningful free cash flow and dividend growth. When shares of quality companies are trading hands for cheap, I intend to scoop them up. I continue to comb through financial statements regularly on the look-out for these types of investments but haven’t found any as of late. I monitor my current portfolio constituents regularly but do not intend to increase any of those positions at this point. Either I am waiting for a lower entry point or the position makes up a significant percentage of my portfolio.
The co-author (Porcupine) and I have a lot of similarities in how we think about investments. However, what I believe is even more beneficial to both our growth and success, lies in our differences. As much as we are a team, we play devil’s advocate with each other, often bringing different perspectives that result in different “stories” for the same potential investment. As is typical, I have been trying to poke a hole in his investment analysis for Scheid Vineyards since he first posted the analysis back in February. The more I do this, the more I find myself drawn to the thesis. The due diligence was thorough and conservative in nature. In the end I’ve found the investment worthy of a small position in my portfolio while the story for this tiny company continues to unfold. I will add to the position if certain expected milestones are hit. You can see my updated portfolio in the author’s section.