The Investing for Beginners Podcast - Your Path to Financial Freedom Microcap Mastery: Exploring Tiny Titans with Pieter from Compounding Quality
Sep 15, 2025
In this discussion, Pieter from Compounding Quality shares his insights as an expert in microcap stocks. He delves into the unique growth potential of tiny companies, outlining the importance of diligent research and direct engagement with management. Pieter highlights strategies for identifying high-quality opportunities and evaluates the crucial role of CEOs in small-cap firms. He also touches on challenges in accessing company executives and offers valuable methodologies for potential investors to consider.
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Why Tiny Companies Offer Huge Upside
- Microcaps can 10x–100x because small revenue bases allow much faster proportional growth.
- Pieter argues it's easier for a $5M company to scale fast than for Apple to 10x revenue.
Small Caps Historically Outperform
- Historical data shows small caps outperformed large caps by ~4% annually over a century.
- Pieter suggests combining small-cap exposure with quality filters could raise that premium further.
Filter First, Research Deeply
- Filter the 60,000 global listed companies by market cap and quality metrics to create a manageable universe.
- Use ROIC, low net debt/EBITDA, margins, free cash flow conversion and addressable growth to narrow candidates.
