Investing Venture Capital Style: A Conversation with Harold Leishman (LLC Private Wealth)
Mar 2, 2025
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Harold Leishman, an investment advisor with over 30 years at LLC Private Wealth, shares his family's rich venture capital legacy. He delves into the small-cap market, revealing its unique risks and opportunities, stressing the importance of strong revenue growth and management track records. Leishman emphasizes diversification and having a clear exit strategy while exploring market dynamics that can sway stock performance. His insights reveal the thrill of seeking out winning stocks, making investing a captivating adventure.
Harold Leishman emphasizes the importance of investing in companies with strong revenue growth to mitigate risks in the volatile small-cap market.
Understanding market dynamics and having a clear exit strategy are crucial for successful investing, particularly in the small-cap sector.
Deep dives
Legacy of Venture Capitalism
Harold Leishman's family has a rich history in venture capitalism, starting with his grandfather, who pioneered oil and gas investment in Saskatchewan during the 1950s. Initially a surgeon, his grandfather, along with other doctors, created a junior capital pool to explore oil and gas opportunities, leading to significant discoveries, including the Stelman field. This early venture not only established their family's legacy in the industry but also culminated in a merger that formed Tech Resources, now one of Canada's largest diversified mining companies. Harold emphasizes the mixture of luck and strategy involved in those early investments, highlighting how his family's journey shaped his investment philosophy.
Investment Strategies and Preferences
Leishman's investment approach primarily focuses on non-resource companies, as he prefers those with consistent cash flow and controlled pricing mechanisms. He notes that the small-cap sector is particularly risky due to potential dilution issues, which can arise when companies finance at significantly lower valuations. By selecting businesses that show revenue growth and have strong margins, he aims to mitigate risks while maximizing upside potential. Leishman also takes a macroeconomic perspective, actively monitoring trends in the Canadian venture capital market to inform his investment decisions.
2024 Small Cap Market Outlook
The small-cap market showed resilience in 2024 following a challenging 2022, driven by increased acquisition activity from private equity firms, particularly in the U.S. Leishman reported substantial gains from investments in companies like Enterprise Group and Vital Hub, reflecting strong growth trajectories. He describes a strategic focus on managing positions to avoid overweight risks and maintain a diversified portfolio while also capitalizing on opportunities where he sees significant cash flow and growth potential. Looking ahead, Leishman believes that as more liquidity enters the market, small caps will benefit, potentially leading to greater multiple expansions.
Navigating Investment Challenges
Leishman highlights several essential criteria for avoiding poor investment choices in the small-cap space, such as steering clear of companies without proven product markets or whose management teams lack accountability. He underscores the importance of recognizing red flags, including poor corporate governance and persistent negative growth trends. Additionally, he shares a personal lesson learned from a previous investment, where failing to exit a declining stock cost him significant gains, emphasizing the value of disciplined selling strategies. Ultimately, his approach combines thorough quantitative analysis with qualitative assessments to build a resilient investment strategy.
In this conversation, Harold Leishman, an investment advisor with over 30 years of experience, shares insights into his family's venture capital legacy, his investment philosophy focusing on small-cap companies, and the importance of understanding market dynamics.
KEY TAKEAWAYS:
Harold's grandfather was a pioneer in venture capital
The small cap market presents unique risks and opportunities
Uncontrolled dilution is a major risk in small cap investing
Investing in companies with strong revenue growth is key
Diversification is crucial in managing investment risk
Management's track record is important in investment decisions
Market dynamics can significantly impact stock performance
Investors should have a clear exit strategy for their investments
The thrill of investing comes from finding winning stocks
This content is for informational purposes only, and should not be construed as offering of investment advice or stock recommendations. This content is based on the author's independent analysis and research and does not guarantee the information's accuracy or completeness. The information contained in this video is subject to change without notice, and the author assumes no responsibility to update the information contained in this video. All information contained herein this video should be independently verified with the sources and companies mentioned. The author is not responsible for errors or omissions. The author does not purport to tell or suggest which investment securities viewers should buy or sell for themselves. Those viewers seeking direct investment advice should consult a qualified, registered, investment professional. The author is not a professional or financial advisor, and does not provide financial advice. Viewers are advised to conduct their own due diligence prior to considering buying or selling any stock. The author will not be liable for any loss or damage caused by a viewer's reliance on information obtained in any of this content. It’s important to understand that investing involves risk, including loss of principal. The author is not engaged in any investor relations agreements with any of the publicly traded companies mentioned. The author does not receive compensation of any kind from any publicly traded companies that are mentioned in any of this content. The author has acquired and may trade shares of some of the companies mentioned through open market transactions and for investment purposes only. Refer to the “author’s ownership disclosure” where applicable. There may be affiliate links to Amazon, and other companies in which the author is compensated if any of the affiliate products are purchased from Amazon.ca/.com or any other companies.
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