Mine is Not a Diversified Portfolio

About a year ago, I re-allocated my portfolio and placed over 85% of it into just two stocks. I don't really believe in the theory that a diversified portfolio is the best strategy. At least not until my portfolio is big enough that I'm happy with lower growth in return for possibly more safety.

For now, I'm looking for high growth. So I chose the two stocks carefully. One a large cap, and one of the largest companies in the world, and trading around $500, the other, a tiny company with under $15 million in annual revenues and trading for around $1.20 per share.

The first stock is Google. Google seems like one of the very safest stocks out there, yet it also delivers high growth, no debt, lots of cash on hand (9 billion) and an increasingly non-US-based revenue base (over 50% this year). Over the year, I've watched it climb to $747 per share and then take a sharp nosedive to under $450. But I feel very safe owning this stock. Their quarterly numbers are due this Thursday (April 17) and I think the results will reassure everyone that growth in online advertising is not stalling anytime soon. The stock is trading many times cheaper than Yahoo (P/E and PEG wise) but is a greatly superior revenue model.

The second company I threw all my savings in is a tiny one - Sangoma Technologies (STC.CVE). Like Google, they are growing quickly (and still much faster than Google at this early stage), have no debt, have lots of cash on hand, and have an incredibly low P/E ratio given their growth rate and near-term prospects. Their stock has also been pounded down from a very short-term high of about $1.70 last year to about $1.25 today. But this stock is completely under the radar, no one seems to know about it. There are no funds looking at stocks with a market cap of under $50 million, so this stock trades very sparsely but continues to show astoundingly pleasing growth rates each quarter.

Recently, with the rumor that Google may be talking to Skype about a partnership and buyout, I got to wondering how this would impact on Sangoma's business. So I emailed the CEO of Sangoma, and he was very kind to answer me.