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How to Choose a Micro Cap Company
Look for a business that's relatively unknown. Companies that are small and not owned by institutions likely offer the biggest upside potential. We're scheduled to interview Ian Castle on the show who I would consider are micro cap guy as he runs a service called micro cap club. If you have any questions you'd like me to ask Ian feel free to shoot me an email clay at theinvestors podcast.
On today’s episode, Clay reviews Thomas Phelps’s book - 100 to 1 in the Stock Market, and also highlights writings put out by Akre Capital Management.
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro.
02:30 - Common characteristics of companies that increased their share price by 100x.
11:11 - Why most investors aren’t able to hang onto their winners as Phelps suggests.
14:05 - Why good stock selection is much more important than good stock market timing.
31:36 - Mental models Phelps uses to figure out the odds when investing.
42:47 - Why we should invest with companies that align with our own values.
45:29 - When to look for potential 100 Baggers.
47:39 - The four categories of companies that were 100 Baggers in Phelps’s study.
52:53 - Who is best equipped to be individual stock pickers.
56:57 - Chuck Akre’s three-legged stool approach.
60:15 - Takeaways from two of Akre Capital’s brilliant articles - ‘Why Compounding is so Difficult’ and ‘The Art of (Not) Selling’.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
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