'Stay hungry, stay foolish' small cap strategies with Courage & Conviction Investing
Sep 27, 2023
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Courage & Conviction Investing, an expert in small cap strategies, discusses the importance of staying hungry and foolish as a small cap investor. They share their bullish position on Advanced Emissions Solutions and strategies for companies like Red Robin, Farmer Brothers, Daktronics, and Yield10 Bioscience.
Investors in small cap stocks should stay committed, weather challenges, and have a long-term perspective.
Thorough research, understanding company trajectory, and staying informed about developments are crucial when investing in small cap stocks.
Deep dives
Investing in Small Caps and the Importance of Conviction
Investing experts discuss the art of investing in small caps and the importance of conviction when facing drawdowns. They emphasize the need to weather challenges and have a long-term perspective. Examples like Farmer Brothers and Red Robin illustrate the opportunities available in small cap stocks. The podcast also highlights the potential of companies like ADES Advanced Emissions Solutions, which focuses on sustainable aviation fuel and renewable diesel. Additionally, the discussion touches on the potential of Yield 10 Bioscience and its innovative camelina seed for biofuels. It is important for investors to conduct thorough research and stay optimistic in the small cap arena.
Analyzing Stock Performance and Adaptability
The podcast explores how investors can analyze stock performance and determine if the fundamentals are changing. The importance of recognizing when a thesis is no longer valid and being willing to make an exit is emphasized. The example of Farmer Brothers shows the significance of understanding a company's trajectory and making adjustments accordingly. By staying committed to the art and game of investing while considering factors like headwinds, investors can spot buying opportunities and make informed decisions.
Insights into ADES Advanced Emissions Solutions
The podcast provides insights into ADES Advanced Emissions Solutions and its potential amid the PFAS (Per- and Polyfluoroalkyl Substances) crisis. The company offers a direct way to play the theme of PFAS regulation and has signed an agreement with Marathon Petroleum. Although ADES is a binary bet and its outcome is uncertain, the CEO's commitment, low market cap, and potential involvement of other big oil companies make it an intriguing opportunity. The importance of weighing risk-reward and staying informed about developments is highlighted.
Analyzing Red Robin and Yield 10 Bioscience
The podcast discusses Red Robin and Yield 10 Bioscience as potential investment opportunities. Red Robin, despite facing temporary negative sentiment in the restaurant industry, is seen as a margin story with long-term potential. Yield 10 Bioscience presents a binary bet with its innovative camelina seed for biofuels. However, investors should be aware of the risks and uncertainties involved. Conducting thorough research, understanding the value chain, and keeping an open and adventurous mindset are crucial when considering these small cap stocks.
Courage & Conviction Investing shares why small cap investors should stay hungry and foolish (2:50), why he's never been longer on Advanced Emissions Solutions (13:50) and strategies around Red Robin, Farmer Brothers, Daktronics and Yield10 Bioscience (33:35).
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