Download - The Case For MicroCaps
The Case For MicroCaps
By Ian Cassel
My Background • Started inves8ng when I was a teenager. • Worked for a broker/investment advisor full 8me while I
aCended Millersville University for Economics. Graduated 2003.
• Villanova University while working on my MBA, Graduated 2005.
• Founded Ian Cassel LLC: Advised several microcap companies (2005 – 2008).
• Full 8me investor (2009 – Present) • Founded MicroCapClub.com (2011 – Present)
Investment Philosophy
• Invest where inefficiency is greatest
• Exploit informa8on advantages
• Perform original fundamental research
• Invest in growth with definable catalysts • Keep management teams on a short leash
Small Cap Opportunity Set
Large Cap
(>$5B) 600 stocks
Mid Cap
($500M -‐ $5B) 1800 stocks
Small Cap (<$500M) 5000+ stocks
Investors are over-‐exposed to large caps Market efCiciency is greatest
I aim to exploit the many inef=iciencies of this under-‐exposed segment
• Small cap universe is 8x the size of large caps
Small Cap Outperformance
Small Cap Outperformance
Market Correla8ons
• Small and Micro Cap Equi8es historically exhibit low correla8on to the S&P 500 • Correla8ons are lower in downmarket periods, implying capital preserva8on
opportuni8es • Adding Small and Micro Cap Equity exposure may offer por_olio diversifica8on
benefits to investor por_olios
Find The Trend • I try to find emerging consumer trends,
financial trends, industry trends.
• Once I find a trend I’m confident in, I find the microcap companies that are the benefactors of that trend.
Find the Company…..
Self-‐Cinancing growth and clean capital structure
Low institutional ownership (undiscovered by larger investors)
Highly incentivized management teams with proper alignment of interests
Products or Services are the best in peer group
Due Diligence
Analyze public filings
Conference Call with Management
If I can, try the product or service
Try to speak to one or more customers (Channel Checks)
Company Visit
MicroCap Isn’t Easy
What Is MicroCapClub?
• Launched July 2011: Quality Members, Quality Stocks, Quality Content – Members Forum: Exclusive club for experienced microcap investors to share and discuss ideas. • Currently over 140 members discussing about 80+ microcap companies.
– Public Blog: Unmet need in the market place to educate investors about the MicroCap space. • Educa8onal ar8cles on microcaps • Interviews with opinion leaders