Equity Mates Investing Podcast 4 proven ways to pick winning small caps - Luke Laretive
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Jun 9, 2025 Luke Laretive, CEO of Seneca Financial Solutions and Portfolio Manager of the Seneca Small Companies fund, shares his insights on investing in Australian small caps. He outlines four winning strategies, highlighting key metrics like profit turnarounds and identifying undervalued stocks. Listeners learn about successful case studies, including RPM Global and Energy One, showcasing how to evaluate potential turnaround opportunities. Additionally, Luke delves into lucrative mining investments and emphasizes the importance of strategic decision-making in selecting successful small-cap stocks.
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Four Key Small Cap Drivers
- Luke Laretive identifies four key drivers of small cap success: inflecting profitability, undervalued commodities, underappreciated growth, and mispriced assets.
- These categories help screen opportunities beyond traditional metrics and emotional market biases.
Data Quality Matters in Screening
- Avoid relying solely on standard quant screens, as they may overlook opportunities due to accounting practices like expensing R&D.
- Use high-quality data and adjust metrics to better compare software businesses for smarter investing.
RPM Global's Profit Inflection
- RPM Global provides mining software with nearly 100% subscription revenue growing at 18% CAGR.
- Adjusting for R&D expense treatment reveals profitable growth at 40% EBITDA increase, making it attractive despite appearing expensive.