Author Topic: Micro caps  (Read 43008 times)

Partner24

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Micro caps
« on: September 04, 2013, 06:08:44 AM »
Warren Buffett said that investing in very cheap small stocks is a good way to make money when you don't have the anchor of a large portfolio to manage. I've began to look for micro caps businesses that sell very cheap, have low or no debt, a good return on equity and generate free cash flow. Didn't found a lot of interesting companies yet...but I understand that with all these criteria, opportunities are not found easily.

If you have some ideas, don't hesitate to share them.

Cheers!


Palantir

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Re: Micro caps
« Reply #1 on: September 04, 2013, 06:16:25 AM »
I currently own RSKIA, but I don't recommend you buy at this price, maybe below 7.50, and I also own REED, which I recommend you not buy above 5.80.

I'm studying another microcap, but I'll only discuss it over PM. :)
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Cunninghamew

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Re: Micro caps
« Reply #2 on: September 04, 2013, 06:45:20 AM »
Nice Ballmer avatar...  that guy scares me

hendrie

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Re: Micro caps
« Reply #3 on: September 04, 2013, 07:09:43 AM »
Take a look at Macro Enterprises (MCR on the TSX Venture). Low P/E, minimal debt, great ROE. I suggest you wait for a pull back below $4.75-$5.00. Almost everyone has significant gains, so you could see hefty pullbacks as shareholders realize gains. They have had significant growth in the last 6-8 quarters. Would be nice to hear from management on their growth plans, they currently have a single office in BC, but recently purchased land in Alberta by the oil sands.

oddballstocks

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Re: Micro caps
« Reply #4 on: September 04, 2013, 07:15:42 AM »
I have a portfolio full of these little gems, the better ones require more work to find.

A few random names that I like:

First Aviation (FAVS)
Goodheart-Willcox (GWOX)
Scheid Vineyards (SVIN)
PD-Rx (PDRX)
Kopp Glass (KOGL)
Hammond Manufacturing (HMM/A.Canada)

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rpadebet

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Re: Micro caps
« Reply #5 on: September 04, 2013, 07:22:01 AM »
I recently got very interested in these too. Personally I find these companies easier to understand. The have unique risks/qualities associated with them, are under followed, less liquid, management/majority ownership is usually a bigger deal, but there are definitely some interesting companies in there.

Some good resources to find some quality names are
http://www.oddballstocks.com/
http://otcadventures.com/
http://www.whopperinvestments.com/
http://ragnarisapirate.blogspot.com/

Personally I own or I am waiting to own some of the names below
AMNF,TLF,ARTW, MPAD


You can't connect the dots looking forward you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something: your gut, destiny, life, karma, whatever.
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hellsten

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Re: Micro caps
« Reply #6 on: September 04, 2013, 07:41:44 AM »
I have a portfolio full of these little gems, the better ones require more work to find.

A few random names that I like:

First Aviation (FAVS)
Goodheart-Willcox (GWOX)
Scheid Vineyards (SVIN)
PD-Rx (PDRX)
Kopp Glass (KOGL)
Hammond Manufacturing (HMM/A.Canada)

Thanks. I'll try to go through these companies and see if I can reverse engineer your thinking :)

I had a very quick look at FAV:
http://www.ftportfolios.com/Common/ContentFileLoader.aspx?ContentGUID=81cae14e-5bba-4d9f-a40d-895abb9f2954

Quote
Inception 9/20/2007
Total returns Inception to Date
Share price: -13.60%
NAV: 0.23%
Discount to NAV 11.76%

Dividend is great, but they are underperforming the market pretty badly. I guess you have other reasons for owning FAV?

Quote
The Fundís NAV total return lagged the performance of its main benchmark, the Russell 1000 Value Index, by 15.21% for the twelve-month reporting period.
http://www.ftportfolios.com/Common/ContentFileLoader.aspx?ContentGUID=d69c9986-1ae5-4bd1-8280-6761f7ff30da

Quote
The Fundís underperformance was mainly the result of the Fundís defensive positioning and the benchmarkís ďhope basedĒ rally.

rpadebet

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Re: Micro caps
« Reply #7 on: September 04, 2013, 07:47:39 AM »
I have a portfolio full of these little gems, the better ones require more work to find.

A few random names that I like:

First Aviation (FAVS)
Goodheart-Willcox (GWOX)
Scheid Vineyards (SVIN)
PD-Rx (PDRX)
Kopp Glass (KOGL)
Hammond Manufacturing (HMM/A.Canada)

Nate,
Truly appreciate the great work you do on your blog. Are there any plans for keeping a running list of the stocks which you have analyzed and written about in a separate section on your website?
You can't connect the dots looking forward you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something: your gut, destiny, life, karma, whatever.
                       - Steve Jobs

oddballstocks

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Re: Micro caps
« Reply #8 on: September 04, 2013, 07:49:05 AM »

First Aviation (FAVS)


Thanks. I'll try to go through these companies and see if I can reverse engineer your thinking :)

I had a very quick look at FAV:
http://www.ftportfolios.com/Common/ContentFileLoader.aspx?ContentGUID=81cae14e-5bba-4d9f-a40d-895abb9f2954

Quote
Inception 9/20/2007
Total returns Inception to Date
Share price: -13.60%
NAV: 0.23%
Discount to NAV 11.76%

Dividend is great, but they are underperforming the market pretty badly. I guess you have other reasons for owning FAV?

Quote
The Fundís NAV total return lagged the performance of its main benchmark, the Russell 1000 Value Index, by 15.21% for the twelve-month reporting period.
http://www.ftportfolios.com/Common/ContentFileLoader.aspx?ContentGUID=d69c9986-1ae5-4bd1-8280-6761f7ff30da

Quote
The Fundís underperformance was mainly the result of the Fundís defensive positioning and the benchmarkís ďhope basedĒ rally.

I think you missed the "S" at the end of the ticker, it's FAVS, an OTC listed stock, not the fund you pointed to.  The company sold off their underperforming division and are left with two profitable divisions.  Earnings have shot up.  The CEO has a hedge fund/PE background and is very focused on capital allocation.  They paid down debt with the proceeds from the sale and not have a fairly clean balance sheet.  The company isn't afraid to take on debt for an attractive acquisition.

The company was a net-net for a while, but almost all of NCAV was tied up in the division they sold.  This was an interesting case, would I rather have the balance sheet safety where the safety comes from a money losing division, or no asset safety with earnings growth coming out strong?  I'll take the cheap earnings without the balance sheet.  Off the top of my head they're trading at an effective P/E of 5 or so. 

I've done very well buying the balance sheet bargains, but I've also done very well buying cheap earnings, and I mean cheap, P/E 5 or less type companies.
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oddballstocks

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Re: Micro caps
« Reply #9 on: September 04, 2013, 07:51:43 AM »
I have a portfolio full of these little gems, the better ones require more work to find.

A few random names that I like:

First Aviation (FAVS)
Goodheart-Willcox (GWOX)
Scheid Vineyards (SVIN)
PD-Rx (PDRX)
Kopp Glass (KOGL)
Hammond Manufacturing (HMM/A.Canada)

Nate,
Truly appreciate the great work you do on your blog. Are there any plans for keeping a running list of the stocks which you have analyzed and written about in a separate section on your website?

Thanks.  I tried this at one point, but it was an upkeep nightmare for me.  I see the value though, after doing this for a few years I've probably profiled 150-200 different companies, and some from a year or two ago are still very attractive.  There is probably a way to expose those somehow without having to read through the whole archives.  Maybe the prunes guy can write some web scraper for my site?
The ultimate edge for bank investors: http://www.completebankdata.com