Author Topic: Micro caps  (Read 43007 times)

Palantir

  • Hero Member
  • *****
  • Posts: 2620
Re: Micro caps
« Reply #90 on: November 04, 2013, 03:39:03 PM »
Quote
If Charlie and I had $500,000 or $2 million to invest, we'd find little things we could do, not all of it in stocks.

I thought the bolded was interesting.


Really makes me wonder what I'm doing investing in GOOG, MSFT, and AAPL.
My Portfolio: AMZN, PAGP, FSLR, OKE, PYPL, RHT, MSFT


DoddDisciple

  • Full Member
  • ***
  • Posts: 160
Re: Micro caps
« Reply #91 on: November 04, 2013, 04:58:37 PM »
few will do the work required to uncover the opportunities.  It's probably less about being smarter than the competition and more about outworking them.

Absolutely true. I'm trying to start an international portfolio of net-net and net-cash stocks, and suffice to say, you can't just take screen results at face value. For example, F, M, and Z scores within something like screener.co can differ since a lot of international companies only file yearly or twice per year.

I'm going to start with FT screener with some novel basic screens like P/B less than 1, less than 0.5, and P/E less than 5. I'm not too familiar with each country or exchange's EDGAR equivalent, so I am hoping that the data listed on Financial Times is pretty reliable in aggregate for these beasties.

oddballstocks

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2252
    • Oddball Stocks Blog
Re: Micro caps
« Reply #92 on: November 04, 2013, 07:55:18 PM »
Just goes to show that, although 50% returns with small sums is possible, few will do the work required to uncover the opportunities.  It's probably less about being smarter than the competition and more about outworking them.

Hear, hear.

This is key, just showing up is 90% of investing in micro caps.

There are a LOT of tiny companies, it's a matter of numbers.  Go through enough of them and eventually you'll turn up the gems.  Knowing how exactly to look is difficult.  I have adopted a new routine in the last month or so, each Monday I look at ALL the financials for companies that have reported to OTCMarkets in the last week.  Most of them I open, and after 2 seconds of scrolling and skimming close and move on.  A few I linger on, and a few more go into the research pile.  It's all a numbers game, I have seen enough money losing resource companies with crazy capital structures to last a life time, but the prize for sifting through those is finding a little company selling at 75% of BV and 5x earnings.  I think I went through 90 companies or so today, it took maybe 35-45m at the most, I found one company that was moderately interesting, nothing to look at further...until next week...

Get a list of some market, or some stocks that qualify for something and just start charging through.

A last thought, for anyone wanting to put numbers to this, after going through a few thousand stocks I would say that about 5% of any list is actually worth researching, and maybe 1-3% is worth investing in.  When you start you'll spend a lot of time on companies that seem good, that is until you've looked through a few dozen and get the rhythm down, then you can move quick.
The ultimate edge for bank investors: http://www.completebankdata.com

orion

  • Full Member
  • ***
  • Posts: 116
Re: Micro caps
« Reply #93 on: November 05, 2013, 08:25:19 AM »
Good post about PD-Rx Pharmaceuticals at Alpha Vulture : http://alphavulture.com/2013/11/04/pd-rx-pharmaceuticals-obvious-cheap/

matjone

  • Hero Member
  • *****
  • Posts: 601
Re: Micro caps
« Reply #94 on: November 05, 2013, 04:08:05 PM »
For some of these that don't report to the SEC but do post reports on their website, I am thinking of tracking them with changedetection.com.  Anyone tried this?  Or do any IT people know if this will work reliably?
When stocks are high, money rates rising, and business prosperous, at least half a given fund should be placed in short-term bonds. - Philip Carret

NeverLoseMoney

  • Full Member
  • ***
  • Posts: 151
Re: Micro caps
« Reply #95 on: November 06, 2013, 06:35:19 AM »
I use ChangeDetection for some sites and it works well for very simple webpages. It is not useful in other situations, for example when you're tracking a page where annual reports are posted, but where that page also includes a list of links to industry news that automatically updates every day.

It should work fine for the PD-Rx site, because the annual reports page is a static HTML page.

It looks like they downloaded a free template for their site: a link to the template directory is at the bottom of the page. For most companies this would be a red flag for me, but here I get the impression that the company just didn't want to spend any money on their website design. If the website is not important at all for their business this is OK, but in most cases it makes no sense to risk putting off some of your customers with a poor website design just to save a few hundred bucks.

Ham Hockers

  • Sr. Member
  • ****
  • Posts: 274
Re: Micro caps
« Reply #96 on: November 06, 2013, 07:18:18 AM »
Re: PDRX 2012 AR

"Our net worth increased this year to $8,356,459 from $8,171,709 in 2011"

Just nitpicking, but this is wrong. That's their total assets, not net worth.

JBird

  • Hero Member
  • *****
  • Posts: 527
Re: Micro caps
« Reply #97 on: December 10, 2013, 03:32:14 PM »
Thanks for the input.  And thanks to JBird for putting the Buffett statement into context.  I found this link that aggregates some of his statements about the 50% return … http://valuevista.blogspot.com/2007/06/warren-buffett-50-returns.html

What I thought was interesting was that he researched every company in Moody’s early on in his career.  He would recommend the same to any manager starting out with a small amount of capital, saying that the “bank of knowledge” would do him or her terrific good over time.

Just goes to show that, although 50% returns with small sums is possible, few will do the work required to uncover the opportunities.  It's probably less about being smarter than the competition and more about outworking them.

"If you are managing only $1 million, then you should be able to beat the S&P 500 by 10 percentage points with no risk or leverage." - WEB. Dec. 8, 2013 at University of Maryland
Woman and wine, games and deceit, make the wealth small and the wants great. - Ben Franklin

DW1234

  • Newbie
  • *
  • Posts: 17
Re: Micro caps
« Reply #98 on: December 02, 2019, 04:22:06 AM »
Where do you find the financials for these? They're not on OTC markets or the SEC website....do you have to contact the firm for an AR?

Sometimes you need to buy a share and call the CFO.  Seems like a pain doesn't it?  It is, but where information is hard to get it's extremely valuable.  It's very hard to have an informational edge on Pfizer, but to have one on Thermwood Corporation you just need to spend a few cents for a share and call the CFO.

Bump.

Can it be argued that the people buying these type of stocks all go through the trouble of getting their financials that there isn't as much edge as you think there is?

I find it hard to believe people just buy companies being completely in the dark about their numbers.

oddballstocks

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2252
    • Oddball Stocks Blog
Re: Micro caps
« Reply #99 on: December 02, 2019, 07:26:05 AM »
Where do you find the financials for these? They're not on OTC markets or the SEC website....do you have to contact the firm for an AR?

Sometimes you need to buy a share and call the CFO.  Seems like a pain doesn't it?  It is, but where information is hard to get it's extremely valuable.  It's very hard to have an informational edge on Pfizer, but to have one on Thermwood Corporation you just need to spend a few cents for a share and call the CFO.

Bump.

Can it be argued that the people buying these type of stocks all go through the trouble of getting their financials that there isn't as much edge as you think there is?

I find it hard to believe people just buy companies being completely in the dark about their numbers.

I think there is this notion, especially on here that "everyone is doing it, the edge is gone." 

I've looked at shareholder lists for micro caps.  Out of the thousands of shareholders for a given company maybe 100-150 are micro cap value investors.  So the "smart money" is maybe 15% of the shareholder base. 

I don't know the odds, but if you were playing a game where you knew more than 85% of the participants wouldn't that seem like some sort of an edge?

I'll also be the first to admit.  In today's market you want to avoid microcaps.  Purchase the tech stars of the world, the Tesla's, then sit back and count your cash.  Work isn't rewarded in the market anymore and value doesn't work either.
The ultimate edge for bank investors: http://www.completebankdata.com