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Q: What is a microcap
Our definition of a microcap is any stock with a market cap under $300 million.
Q: You say you are “microcap experts”. What does that mean?
A: Microcaps comprise a niche of companies that are typically harder to research because of information gaps, but can offer outsized returns. Our expertise resides in the way we approach our microcap research, from identifying companies to performing in-depth analysis. In between, we spend our time with a proprietary blend of reading filings, speaking with management, and identifying arbitrage.
Q: I think microcaps are too illiquid for my investing style. Why would I invest in stocks that I believe will be difficult to exit?
A: We agree that investing in microcaps generally comes with higher price volatility and overall risk. This does not, however, diminish our passion for them. The fact that larger institutions avoid microcaps opens the door for smaller investors to take advantage of irrational mispricing and potentially outsized returns.
We highly suggest you read Perritt Capital’s white paper “The Microcap Advantage”, which will give you some of the best insights as to why lack of liquidity is not always a bad thing. The section titled “The Small Firm Effect: A Rationale” does a great job in dissecting the “striking differences” between microcaps and large caps, and why an advantage may exist in the former. In the end, exiting a position can become a problem with stocks of any market cap when bad news hits.
A lot of investors feel like they should avoid microcaps. We, instead, have written an entire article that goes further into depth about why we like the space, which you can read here.
Q: How much research do you put into each stock idea?
A: It always depends on the idea. In some cases, research is formulated over the course of several days, and in other cases it may require extensive on-the-ground due diligence that can take weeks. We keep our members informed throughout our entire research process, including where, when and how we plan on performing our research.
Q: Will your service fit my investment style?
A: While we do highlight short-term ideas in some special situations and inflection point scenarios, our service is well-matched for investors who are looking for mid to long term success. We believe that investing is a marathon, where the most patient and disciplined investors come out ahead in the end. If you are looking for a constant dose of daily, quick-hitting trades or flips, our service may not be for you.
One of the unique benefits of our style is that our diverse team allows us to cater to a wide variety of investment strategies, such as growth/value, growth at a reasonable price (GARP), momentum, contrarian and special situation opportunities.
Q: Is your premium research available to the public?
A: No. This is the cornerstone of our service and we want to reserve our best information for our members only. Only select non-premium information, such as educational content and research case studies, will occasionally be disseminated to the public.
Q: How will I be notified of timely opportunities?
A: When we see a timely opportunity, we will send out a premium Tweet to our members as well as include the information in our daily premium email.
Q: Do I need a Twitter account to get your instant alerts and calls to action?
A: A Twitter profile is not necessary, but having one will give you access to timely updates and any additional key information. You can still receive our premium Tweets direct to your email inbox, or opt out entirely and simply enjoy our daily premium email.
Q: Do you give recommendations and stock tips?
A: No. We simply stress investment discipline. We construct model portfolios and have an array of learning material to help you understand why we make the buy and sell decisions that we make internally.
Q: How many calls to action do you put out a year?
A: We put out about 40 to 50 calls to action per year, averaging a little less than one per week.
Q: What kind of model portfolios do you provide?
A: We offer several kinds model portfolios following themes that have been able to produce good returns on a consistent basis. We often reference our “Buy on Pullback” portfolios which include stocks whose prices are depressed for what we believe to be wrong reasons. We are also continually building on to our “Run to One” portfolio, which contains microcap stocks trading under $1 per share that we believe, over the longer term, have a chance at eclipsing the $1 threshold. We also publish lists of stocks where we think there is multi-bagger or takeover potential. With all portfolios, we always provide supporting commentary and research.
Q: Can I pay monthly?
A: No. As of right now, we only offer our premium plans on an annual or biannual basis.
Q: Do you give refunds?
A: As an investing service where our proprietary research is the main product, refunds simply don’t work. Because our members immediately benefit from access to the knowledge that we provide and the thousands of hours of dedicated research that we put in to our member communications, we do not typically give refunds.