The Acquirers Podcast Unemployed Value Degen Stephen Farrington on small cap stocks $PTLO and $CROX | S07 E31
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Sep 13, 2025 Stephen Farrington, known as the Unemployed Value Degen, dives into the world of small-cap stocks with insights from his investing journey. He emphasizes the significance of the price-to-sales metric and shares insider trading implications, especially regarding companies like Portillo's and Crocs. Farrington offers a fascinating view of consumer behavior in dining and retail sectors, while discussing the volatility of the options market. He also highlights the benefits of small caps in a shifting marketplace and the role of AI in shaping future investment strategies.
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Small Caps Hold Extreme Mispricings
- Small caps contain the most extreme mispricings because they attract less efficient markets and attention.
- Mispricings can persist long after fundamentals improve, offering outsized returns if you wait.
Use Price-to-Sales And CFO Buys
- Focus on price-to-sales rather than price-to-earnings to avoid accounting manipulation.
- Screen for insider buys by pessimistic officers like CFOs and general counsels for stronger signal.
Why He Trusts CFO And GC Purchases
- Farrington recounts that CEO and director buys are noisy and often optimistic theater.
- He prefers buys from CFOs and general counsels because they are the internal pessimists who know risks.