Thread by @Darrenlautf

Re-listened to @iancassel on the @PodcastDelphi recently and thought there were a few good takeaways to be shared on microcap investing👇

Note : this pod first came out in May 2020 so it's an oldie but a goodie

Microcap Club
- Launched in 2011
- Place for idea generation / networking
- Can apply or pay for access
- 20% of the applications become members
- 600+ companies profiled and are broken down by sectors
- Members ranked by aggregate gains/losses

Apply with 2-3 page thesis covering:
- Company Description
- Market Opportunity
- Share Structure
- Competition
- Management
- Financials
- Financing Risk
- Catalysts
- Current Valuation
- Future Expectations
-Price target with supporting logic
microcapclub.com/forums/forum/2…

Why microcaps?
- small, emerging growing companies
- Smaller markets are more inefficient
- not enough liquidity for large institutions, illiquid and not worthwhile for them
- more advantage for smaller players
- you have an edge over the institutions

Investing in microcaps
- What to look for?
-"The smallest, least liquid with least institutional ownership with the best businesses that are managed by great leaders"
- Businesses that can grow through recessions (bear)
- Healthy balance sheet
- Valuations that make sense

Positioning
- Can be picky and wait for the best opps
- Okay to buy higher / average up
- Look at their execution, they are small and emerging companies
- Watch and track progress
- Know what your thesis is and what threatens it

- Has a 40 - 50% turnover rate : either thesis didn't play out or a better idea comes along
- What you don't own can't hurt you so focus on what can hurt you first
- Know what you own better than anything to escape the large losses when you spot your thesis cracking

Exiting positions
- Lack of execution usually makes him sell
- Have to be transactional
- Okay to marry bags but be quick to divorce
- Talking publicly about it makes it hard since you stamp your name on it - try to avoid

Intelligent Fanatics
- His book on great leaders amazon.com/Intelligent-Fa…
- Finding great leaders in early companies
- Employees that love the company + Great culture
- Customers that love the product
- Make sure you're prepared when you're going to talk to a CEO, know what to ask

Markets he invests in
- Canada has just as many microcaps now as US
- UK has several small IPOs with really high quality companies -> multi baggers
- AUS similar to Canada, went from resources to tech markets

Finding the multibaggers
- Prob acts on around 5 picks a year
- 2 just returns initial, 2 returns like 20-50% while there is 1 that's a sustainable winner for a long period of time
- Only holding like 1 company out of the 40 - 50 he had the past 5 years
- HIGH turnover rate

Lessons learnt
-> Understand how the money flows and how the product/services works
-> Value this over the fundamental metrics like earnings per share etc

-> Some projects can go against common sense and execute way better than expected
-> Those are the multi baggers

Think most of the lessons here can be incorporated to investing in small caps in crypto and is well worth a listen, check out the pod here : open.spotify.com/episode/2lnxjV…
Great work! @Shaughnessy119 and @iancassel