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In concert with one of our favorite themes of highlighting compelling content from other investors, this week I have opted to bring you another investment thesis from a peer who also focuses on micro to small cap companies. Last week, we shared a pitch from a hedge fund that is putting stake in a money services company that it believes is grossly undervalued and whose opportunities are misunderstood or discounted by investors who think foreign bank notes don’t have a bright post-Covid future.
So, after another bout of research from “around the web”, we found an intriguing pitch from a Seeking Alpha author who wrote on a dividend-paying microcap company that designs, manufactures, and sells recreational fiberglass powerboats for the sport boat, sport fishing, and jet boat markets worldwide.
I liked his piece so much that I invited him to sit down with me for a talk so we could dig a bit more into both his investment philosophies and bullish pitch
He explained what kind of investing makes sense to him, emphasizing that the more boring, simple and easy the business model is to understand, the better, something that we’ve actually preached on multiple occasions.
The filters he runs to whittle down his universe of stocks usually result in an output of companies in the market cap range of between about $200 to $800 million. The subject company was in the middle of this range when he wrote his column in December. In October, when the stock was trading 39% lower than today’s price, the market cap was in the upper end of the range we typically focus on – up to $300.
The author has been a value investor for over 7 years. Below are some highlights from our interview, including his pitch and a few more reasons on why he is bullish on the stock.
The more I spoke with him, the more it became clear that the calculated and strict rules he follows to select his investments are a standard that he uses to try and create visibility for his portfolio for times frames spanning years into the future.
Please enjoy the clips below, and feel free to comment with processes and philosophies or your own.
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