In honor of Ep. 200 of @PlanetMicroCap, thought I’d put together a thread of #MicroCap #Investing observations over the years since launching the pod in July 2015. I’m not a great tweeter, nor sharer of wise, philosophical, investor-y quotes, but this was fun to reflect...
Would love to see some of your takes from the show over the years, please forgive typos or poor punctuation...
MicroCap stocks are unique and still an inefficient market: giant universe of companies, most institutions stay away even from the quality ones, management teams are accessible, and yet, most tend to shy away from looking here usually b/c of bias, myths
There is a clear edge investors have when investing in MicroCap Stocks, knowledge of the basics (reading financial statements, knowing where to find info on pubcos) is, however, necessary, but very accessible
There is an art to interviewing management teams. #MicroCap Management teams want to engage with investors of all sizes, however, you have to show respect for them spending their time to speak with you. How do you show respect...
...after 1,000s of CEO video interviews, 1x1s meetings, having questions ready to go and basic understanding of their businesses, CEOs will be appreciative, more willing to chat with you and have an open dialogue and won't just pawn you off to IR rep
There are many ways to make money investing in #MicroCap Stocks. Value, Growth, GARP, Day Trading, Long-term, Short-term, Hedging, Shorting - the key takeaway, understand what works best for you and your personality, and run with it.
The greats in MicroCap are as disciplined as it gets - will happily leave $$$ on the table and congratulate others when they succeed. Your investing strategy has to fit you. Know the game you’re playing and master your strategy. H/T @vitaliyk and @AnnieDuke
Boring is beautiful. Power of inflection points. Compounding is the 9th wonder of the world. Human nature hasn’t changed in millennia, use that to your advantage. H/T @BrentBeshore, @MattJoass, @BenClaremon and @jposhaughnessy
Quantitative numbers tend to be the effect of good qualitative factors. H/T @SlingshotCap
Narrative and intuition has (and should have) a role in your investing process. H/T @Lizquidity
MicroCap Investing is not limited to the United States - as far back as November 2015, we started covering opportunities in Canada, which has since expanded to ASX, India, Japan, LSE, TASE, and more! H/T @smallcapdisc @PFHCapital @puppyeh1 @mtobinwex
READ FILINGS! @majgeoinvesting should have a tattoo of this by now, “Information Arbitrage” is EVERYWHERE! Management teams sometimes pick and choose what to put in the Press Releases, but the real story is all there in the Q’s and K’s - take advantage of this!
MicroCap investing 🔑 is to try and understand the businesses even better than management. You’re dealing with businesses that may have one product/service that sells to 1-2 verticals - the majority of these co's have up-to-date websites, filings, investor decks. H/T @iancassel
Most MicroCaps are Pre-Revenue with murky value props (at best), however, that doesn’t necessarily mean they are stay-aways, rather, becomes more crucial than ever to understand those industries, what the value catalysts are, where things can go wrong (most likely, they will)
Corporate governance matters, even in MicroCaps. That’s it, that’s the tweet. Follow @TheAdamJEpstein and @smallcapinst for more information as to why!
Time and again, those who have gained outsized returns were either:
1. Believed the business had long-term growth runway and would buy the stock even when its perceived to be overvalued
2. Patient
3. Both 1 and 2.
1. Believed the business had long-term growth runway and would buy the stock even when its perceived to be overvalued
2. Patient
3. Both 1 and 2.
Timing - when something fundamental about the company changes - positive and/or negative changes - messaging, management or business model - it’s time to re-assess. H/T @snamiri
Professor Sanjay Bakshi is one of the greatest philosophers of our generation, and deserves a much larger following than he already has. Ep. 41 to this day is my favorite episode I’ve ever done. @Sanjay__Bakshi Thank you!
Listen here: planetmicrocap.podbean.com/e/ep-41-%e2%80…
Listen here: planetmicrocap.podbean.com/e/ep-41-%e2%80…
In life and investing, enjoy the work, enjoy the process, it’s worth it. Always be a student of the game. H/T @GSpier and @InvestmentTalkk
Economic narratives can shape investor behavior and decision making; be aware of this, and take advantage of it. H/T @cvpayne
Closing the wealth gap in the United States and bringing financial literacy into the classroom needs to be addressed NOW! H/T @KeithBevCFA and @TR401
Simplifying your process is key to your investing success, and common sense is your best friend (esp. in #MicroCaps) - if an idea sounds too good to be true, it probably is. H/T @awealthofcs
Do you have professional training or skills that you use on a daily basis and/or have in your arsenal? USE THEM! Those can be incredible advantages when analyzing various businesses, sectors, or in the case of @LockStockBarrl, helped uncover a great investment opportunity!
When you find these growing (#MicroCap) companies, where you are quite confident that the pessimists are wrong or at least people aren't seeing the reason for the growth, you can often have an outsized return because you can buy cheaply. H/T @MikeDDKing
The Greatest Investors of All Time got their start in #MicroCaps
Diversification vs. Concentration - the main takeaway I had is that I’ve had guests that have had successful investments with a portfolio of a few names, and others with many.
Those who focus specifically on #MicroCaps, or generally have a longer term investing horizon, don’t really pay attention to daily market movements.
Understanding your downside risk is a beautiful thing, a little pessimism may save you from an optimistic mistake. H/T @AltaFoxCapital
SEEK OUT Differential Insights: channel checks, reading trade magazines, current/former employees, customers, industry trade shows [insert random, cool resource you used for DD]. H/T @plountzis
As a retail investor, should you care about liquidity? Care about the business. Liquidity usually takes care of itself.
It’s never too early to start investing in the stock market (or investing, in general). And it's never too early to be an awesome investor (like the folks tagged here) - H/T @michael2017l @findingmoats @Gfilche @SrivatsPrakash @DeadCaitBounce
Maybe most quality MicroCap opportunities are special situations? Isn't it a special situation to find a quality opportunity that gets overlooked and ignored by the majority of the investing universe despite it being right there for the taking?
With investing, you want to play the easiest games possible. H/T @OtterMarket
Don’t just praise younger generations for starting to be active investors, thinking about investing; support their efforts, give feedback/advice, and most importantly, listen to what they have to say! H/T @juliaccarreon and @DeadCaitBounce
There’s a ton more, but truly, it’s so much fun hosting this podcast. I’m excited for what’s ahead with Planet MicroCap and the SNN Podcast Network. Thank you for listening, thank you for sharing your insights, your knowledge, and thank you for all your support!
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