Why U.S. microcaps have shrunk

My guest today is Robert Gardiner, Chairman and Co-Founder of Grandeur Peak Global Advisors. Robert has over four decades of experience investing in small and micro-cap companies across global markets, and in this conversation, he shares how his core investment philosophy has remained remarkably consistent over that entire period. His approach is rooted in bottom-up research — identifying high-quality growth businesses early in their lifecycle, partnering with strong management teams, and maintaining strict valuation discipline.

A major theme of this episode is why Robert believes the most compelling opportunity in micro-cap investing today is outside the United States. He explains how international micro-cap markets now resemble the U.S. micro-cap environment of the 1990s — a time defined by a large and growing universe of public companies, limited institutional coverage, and meaningful inefficiencies. We discuss why regulatory changes and the rise of private equity have shrunk the opportunity set in the U.S., and why regions like Japan, the UK, and the Nordics now offer what he describes as “mouthwatering” opportunities.

Robert also walks through Grandeur Peak’s two-phase investment process — starting with rigorous quantitative screening across a global universe of roughly 35,000 companies, followed by deep qualitative research that emphasizes direct engagement with management and extensive on-the-ground company visits. We talk about why “touching the company” still matters in an era of AI and data abundance, and how global “dot connecting” can make investors better decision-makers, even in domestic portfolios.

Finally, Robert shares lessons from a recent three-year sabbatical that prompted meaningful refinements to both process and culture at Grandeur Peak — including the importance of balancing breadth with depth in research, reinforcing buy and sell discipline, and building a firm culture where every team member feels true ownership.

This is a wide-ranging conversation that touches on global markets, micro-cap inefficiencies, investment process, leadership, and long-term perspective from someone who has seen multiple cycles firsthand.

For more information about Grandeur Peak Global Advisors, please visit: https://grandeurpeakglobal.com/ 

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