Have any additional questions? Get in touch Here.
Q: What is a microcap
Contrary to what some people may believe, the term microcap does not denote the size of a company or the breadth of its revenue. Instead, it is simply a market cap that stands at $50 million to $300 million. (Price times number of shares)
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 microcap research, from the first step of stock discovery to the final step of determining whether it is a worthy investment. In between, there are a series of tasks that we have honed over the years that require a specific set of skills designed to squeeze out the most relevant and pertinent information, be it from reading filings, speaking with company management, identifying arbitrage, from internal alerts or via collaboration with our network of experienced like-minded investors. We know the right questions to ask and implement valuation techniques that we feel make the most sense for various scenarios.
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 actually agree that investing in microcaps can come 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 earn outsized returns.
We highly suggest you read Perritt Capita’s white paper called “THE MICROCAP ADVANTAGE” that will give you some of the best insights as to why lack of liquidity is not such 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 becomes a problem with stocks of any market cap when news turns bad.
A lot of investors feel like they should avoid microcaps. We’ve written an entire article about why microcap stocks aren’t as much of a headache as they seem to be and why we love them.
Microcaps (less than $300 million market capitalization) are even smaller than small caps, but they provide an excellent opportunity for investors. The goal is to find great companies early that are run by intelligent fanatics. You only need to find one great company every few years to beat the market and transform your portfolio.
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 the pick requires extensive on-the-ground due diligence that can take weeks to completely wrap up. It’s important to realize that we keep you informed throughout our entire research process.
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 like the proverbial 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 flips, then stop reading now and move on.
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, 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 education and research that has already played itself out as 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. This way you will have access to the information in multiple places so you won’t miss a thing.
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 right to your email inbox, or opt out entirely and instead enjoy our daily premium email.
Q: Do you give recommendations and stock tips?
A: Nope. We simply stress investment discipline, since everyone has different investment goals and styles. However, we do 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 CTA’s per year, averaging a little less than 1 per week. We stress quality over quantity.
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 Contrarian (Pullback) Portfolios which include stocks whose prices are depressed for all the wrong reasons. Results from a few of those can be found here. We are also continually building on to our Run to One (R21) Portfolio which contains legitimate microcap stocks trading under $1 per share we believe, over the longer term, have a chance at eclipsing the $1.00 threshold. We also publish lists of stocks where we think there is multi-bagger or takeover potential. Regarding any of our 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, refunds don’t work. Because our members immediately benefit from the knowledge that we provide and the thousands of hours of dedicated research that we pour in to our member communications we do not typically give refunds. We think every last piece of information can help you learn along the way and give you “an edge” over your other investors, and that this is worth its weight in gold, especially when that information costs less than a cup of coffee each day!
Again, keep in mind that investing and trading is a marathon, not a sprint! It’s our livelihood, and helping our members achieve extraordinary results is our passion so we ask you to only sign up if you are serious about winning the game, not just the coin toss!
Q: What is the difference between your paid service and your free newsletter?
A: Our paid service includes all facets of our pro platform, while our free newsletter offers monthly wrap-ups, education, case studies and updates on what the GeoTeam is up to. To be clear, our free newsletter does not include actionable ideas.