TIP607: Small But Mighty: Uncovering Smallcap Value w/ Paul Andreola
We Study Billionaires - The Investor’s Podcast Network
Intro
This chapter explores the evaluation of small-cap stocks, focusing on the importance of assessing business value and making investments below that value. It offers strategies for identifying thriving companies and discusses vital metrics for successful investments in the microcap sector.
Kyle talks to Paul Andreola about how he evaluates smallcap stocks, why flipping over as many rocks as possible is such a strong strategy, why to put all your focus on profitable growing businesses, why the PEG ratio is so important for finding great opportunities, the importance of understanding the capital raising process, why value will always succeed in the long term, the current state of microcaps and much, much more!
Paul Andreola is a highly successful microcap investor who has been managing his own money for over 30 years. He is a board member for Atlas Engineered Products, Total Telcom, and Departure Bay Bay Capital. He’s a big proponent of microcap investing and runs an investing community called SmallCap Discoveries where he interviews CEOs of microcap businesses and shares his ideas and strategies.
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro
03:28 - The importance of flipping over as many rocks as possible.
05:00 - The power of owning businesses that institutions can’t invest in.
05:08 - Why focus your efforts on profitable businesses that are growing.
05:22 - How to use the price-to-earnings-growth ratio to help you identify undervalued growth stocks.
06:22 - How to add a margin of safety using the PEG ratio.
06:22 - How to use the PEG ratio to help you determine what needs to be sold.
08:43 - How increasing fund flows can attract low-quality businesses in search of capital.
09:46 - Why owning profitable companies can de-risk your investing.
09:46 - Why you should stay away from low-growth businesses even when they are cheap.
13:23 - Why you should stay away from businesses that are likely to heavily dilute shareholders.
And so much more!
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
BOOKS AND RESOURCES
- Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
- Check out Paul’s services at Smallcap Discoveries.
- Read Paul’s articles here.
- Learn more about the Berkshire Summit by clicking here or emailing Clay at clay@theinvestorspodcast.com.
- Follow Kyle on Twitter and LinkedIn.
- Check out all the books mentioned and discussed in our podcast episodes here.
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