Today, I want to address a comment made by a personality on X with a large following and a subscription service of his own, albeit not in investing. I like to give credence to the fact that investing in high-quality microcaps can produce outsized returns, and in doing so, I often cite some statistics that support my suppositions, especially when it comes to setting the record straight on negative stereotypes surrounding microcaps.

Our October 9, 2024, conversation with Dan Schum, founder of NoNameStocks.com, provided a deep dive into the world of microcap and OTC stock investing. This is the second time Dan has been a guest on our Podcast, his first appearance being in 2020. Dan used to have a presence on X under the @nonamestocks handle, but left the platform in 2023. So, we wanted to see what Dan has been up to in the world of the OTC and dark stocks. This was a great conversation, where we covered about 10 stocks, many of which are in our own coverage universe. If you used to follow Dan and are wondering how he feels about some of the stocks he used to talk about on X, this is a must-listen Investor Insights Skull Session.

This week, we’d like to rewind the month of September and quickly spotlight a few of clips from Skull Sessions that we held – clips that we promised we’d extract with hopes that they’d inspire you to watch the rest of the events in case you missed them. They included 4 microcap management executive Skull Sessions and 2 talks with investing peers, both of which spoke with us about some bullish stock pitches.

Our Run to One portfolio looks at sub-$1 stocks for their long-term potential as multi-baggers. Think of these as higher-risk, long-term “lottery tickets.” Many of these stocks have their challenges—that’s why they trade under $1—but we’re on the lookout for real companies with real revenues and solid management, not pump-and-dump schemes.

Now, almost 11 years later, the stats across the 49 stocks currently in it have been quite impressive, showing that long-term patience pays off.

There’s only so much money to go around in the market, and now, some of that money that was finding its way to low-quality companies during the easy money days is going to continue to make its way into the higher-quality microcap universe that we play in (a trend that began in 2022). 

For well-managed, undervalued microcaps with great fundamentals and a clear path to growth, the current environment could allow them to shine as capital becomes more selective. We also think the environment is fantastic for high-probability turnaround situations, where balance sheet restructurings or small tweaks in business plans put a company back on track for growth.

At the end of last week’s trading, on Friday, we decided to close Buy on Pullback (BOP) Portfolio #11 at a final closing return of 45.04% (average peak 67.71%). The portfolio was launched on September 25, 2023, as part of our long-standing strategy that we began with BOP #1 in January of 2016, that intended to capitalize on mispriced opportunities in the market.

There’s a turnaround story unfolding at a power solutions-focused company entering the data center market segment that could help the company reignite growth and reach profitability The company has not inflected to profitability yet, but we are waiting to see if the things management is doing will allow the company to reach break-even results, anytime soon.

Last week, we were very fortunate that the company’s CEO decided to join us for a deep dive into his company’s multiple growth objectives and the pace of the company’s turnaround.