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Global Market Trends and The Microcap Benefactors

Global Market Trends and The Microcap Benefactors

As a full time microcap investor, I have a very easy (easy to comprehend, not to execute) investing strategy. I want to identify a bullish global market trend in its infancy and find the micro caps that will benefit from the trend before any other investor.  In general, I want a stock with a gale force tail wind.  The perfect situation is a bullish global market trend where there are only a handful of microcap companies that are benefactors.  In this scenario a scarcity value occurs which acts like a second tail wind for the stock.

A perfect example of a bullish global market trend where there is only one company that benefits happened two years ago for me.  In late 2009/early 2010, the social networking arena really started to heat up with IPO buzz brewing around Facebook.  At the time the only publicly traded social network was Quepasa Corp (QPSA).  As investors scoured the public company universe for a vehicle to participate in this trend, it lead them to one name: Quepasa Corp (QPSA). This global trend and scarcity effect drove the stock from $3 to $15 over the next 12 months.

Here is a list of some microcaps whose stocks have benefited from this type of phenomena.  Sometimes it has led to a short-term share price increase and others had sustained increases:

Zagg Inc (ZAGG) – Mobile Trend – Seen as a derivative of Apple Inc. (AAPL)

Mitek (MITK) – Mobile Trend – Mobile Banking

Acorn Energy (ACFN) – Energy Infrastructure and Surveillance

Lifevantage Corporation (LFVN) – Nutraceuticals

At MicroCapClub we try to identify these types of stocks before they move. On the next MicroCapClub Radio program I’ll be discussing a company that has similar characteristics as Quepasa had in late 2009: An undiscovered, profitable microcap company that is one of the only ways to play what some researchers believe to be the number one global market trend for the next decade.

It is important to stay cognizant of global market trends, niche trends within them, and the participants in the microcap arena that will benefit the most.

Author Notes I recently interviewed the CEO of Quepasa Corp (QPSA) [HERE].  I have also interviewed the CEO of Acorn Energy (ACFN)  [HERE].  

Author Disclosure: No Position in any company mentioned

The MicroCapClub (mc2) is an exclusive micro cap forum focused on micro cap companies (sub $500m market cap). The MicroCapClub was created and founded by Ian Cassel as a way to share ideas and to learn from other seasoned like-minded micro cap investors. Our goal at MicroCapClub.com is quality membership and quality stock ideas.  If you are an experienced micro cap investor, feel free to Apply today.

About Ian Cassel

Founder of MicroCapClub, Ian is a full time private investor focusing on micro cap companies. He lost a lot of money early on in his investing career in micro caps, which motivated him to learn from losing. Now he loses less. Ian created MicroCapClub as a place for experienced micro cap investors to share and discuss ideas.

4 thoughts on “Global Market Trends and The Microcap Benefactors

  1. Excellent post Ian. I’ve picked up on this being a major investment strategy of yours but it’s nice to see examples.

    • Thanks David. Just like a lot of things easy in theory but hard to actually do it. I’m constantly searching for the big trend with few participants..really a crowd theory.

      IC

  2. There was an interesting piece on Consuelo Mack’s PBS show this weekend related to investment philosophy. Keynes was a miserable investor through the 1920′s as he was trading in and out of the market based on his macroeconomic forecasts. He had macro-economic data that nobody else had based on his professional position. Evenso, he predicted miserably and was even fully invested going into the 1929 crash. Later he switched to a bottoms up philosophy focusing on undervalued small stocks. He was concerned more about the opportunities specific to that company and ignored macroeconomic forecasts. He racked up a terrific long-term record with average annual returns on the chart Consuelo showed that looked like around 18% annualized return. I personally ignore macro-economic forecasts not because macro-economics doesn’t matter but because I have no faith in macro-economic forecasts.

    You try to identify global trends and find the micro-cap benefeciaries. Are you relying on macro-economic forecasts to identify the trends? Maybe you find trends that are more predictable?

    • Googie: I’m an economics major by education, but find it not that useful in investing (or useful in anything really ;). The only way I’ve found “economics” useful in picking a trend would be the lack of monetary fiscal restraint by the US feeding (dollar printing) the Gold-Silver/precious metal stocks over the last decade. But I’m mostly out of that trade outside of some bullion. I’m mainly focused on bullish macro trends with few (hopefully one) micro cap participants. These trends tend to mostly be in technology/biotech. How do you first find the trend before everyone else? Well I should rephrase that question, How do you find the trends before the bulk of investors do? I am constantly researching, reading, etc. I outlined INMG as really the only participant in the food safety/transparency trend in our last radio program with Chris Lahiji. This doesn’t mean I think the stock will go to $1 tomorrow..these things take time to mature, and its why “timing” is always important. I’ve been wrong before and will be wrong again, but in most of those cases I was wrong with the timing. Then you hit one right with the timing like ZAGG (Smartphone, derivative of Apple) in the fall of 2008, and it goes up 10x in 9 months even during the greatest economic collapse since the great depression. So I guess that is a long answer in saying no I don’t pay that close of attention to economics or economic forecasts. I try to find scarce high growth rate companies with a huge tailwind (macro trend) that investors will always pay a premium for.

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