Learn about small-cap investing from Bill Mann and Ricky Mulvey. They discuss the disappearance of the small-cap premium, navigating limited feedback, and the value of book value. Tickers like WINA, COST, and FVRR are examined. Dive into the challenges of small-cap investing and communication strategies compared to Berkshire Hathaway. Explore investments in billboards, broadband, and the future of companies like Fiverr in the information economy.
Institutional focus on larger companies limits interest in small caps, impacting their performance in indices.
Investing in small caps requires patience and strategic approach due to volatility and limited information available.
Deep dives
Challenges of Small Cap Investing
Small cap stocks have faced challenges recently, with the Russell 2000 showing lower returns compared to the S&P and NASDAQ. Large companies dominate indices, impacting small cap performances. Institutional investors' focus above the $1 billion mark limits interest in smaller companies.
Role of Institutional Attention in Small Caps
Institutional money often avoids small caps due to regulatory burdens and insufficient trading volume. Lack of attention from analysts and Wall Street impacts small cap company evaluation. Institutional mandates set limits on investing in companies below a billion dollars, affecting market perception.
Potential and Pitfalls in Small Cap Investments
Investing in small caps requires understanding volatility and limited information. Companies like Fiverr face challenges in the evolving landscape of AI impacting gig work. Small cap companies offer potential growth opportunities but necessitate a strategic and patient approach for investors.
With small caps, come great thrills. What about great rewards?
Ricky Mulvey caught up with Bill Mann, a lead analyst at the Fool and our Director of Small-Cap Research, for a primer on small-cap investing. They check in on a handful of different small caps and discuss:
If the disappearance of “the small-cap premium” is a win for investors.
How to navigate environments with limited feedback.