What Were Your Biggest MicroCap Winners and Losers?

Ian Cassel Blog, Question & Answer 17 Comments

If you’ve been investing in the microcap space very long then I’m sure you have some great stories about some winners and some war stories from losers. I learned the ropes of the space by losing my money over and over again.  The difference between a .225 and a .325 hitter in Major League Baseball is about $15 million per year in salary. I find this analogy is accurate for investing in microcaps. The key is to always educate, learn from your experiences, and increase that investing batting average. I will always make mistakes, but the key is taking losses sooner, and winning more often. I thought it would be interesting to have a blog post where we shared some of our winners and losers from the past and the lessons learned in the comments section below.  I’m sure there will be a lot of crossover in both categories. I will go first…

What Were Your Biggest MicroCap Winners and Losers?

The MicroCapClub (mc2) is an exclusive micro cap forum focused on micro cap companies (sub $300m 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.

Comments 17

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    Winners of the Past: ZAGG, GORO, TIXC, PRXI, QPSA, MNGGF, TLR
    Even though today everyone hates ZAGG, the move back in 2008-2009 exemplifies why I love microcaps. Even the middle of the worst economic crisis since the great depression, ZAGG still went up 400% in from 9/2008 – 4/2009. It goes to show you the powerful dynamic that happens when you have a huge emerging trend + 100% rev growth + a tight share structure. It’s what I still try to look for today and am still looking lol

    Losers: EGMI, GLTC, VSST, IBIO, BCST, and many more
    The lessons learned for most of the losers was to scale into positions, don’t buy a full position all at once. Have management prove themselves by actually doing 10% of what they say before adding. Also, in some instances like EGMI, sometimes shit just happens, and it doesn’t matter how much DD you do.

    1. Winners of the past: FRPT, AXST, ZAGG, TRLG, & BFDI. Each of these have gone up over 500% from my initial purchase price. Investing in Microcaps and not being patient has always been my flaw. I’ve learned from this and plan on being more of a long term investor in Microcaps. The problem is that I’ve lost a lot of money as well and when your up 100-200% it doesn’t look so bad. I would take the money off the table instead of just taking off my cost basis.

      Losers of the past: ACHI, LYJN, BEAC, HSTH and many more. Ian made a very good analogy with baseball and Microcaps. Ever since I started to implement my desire to travel to the company to “kick the tires” my personal batting average has increased significantly. Visiting the company allows me to feel more comfortable with the investment long term. In all of my losers I’ve realized that it all comes down to poor management and lack of execution. As we’ve said in the past “place your bets on the jockey….make sure you know who they are”.

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  2. Biggest Wins

    VEN:TO, KCL:TO, UUU:TO, NSU:TO

    All my biggest wins came from an exit strategy in the mining sector. If the company doesn’t have a reasonable asset to become a take out target, the stock will either A) never be bought out or B) never command a premium in the market

    Biggest Losers

    CZH:TSXv – I have many more but this is my biggest. Put too many eggs into one basket. The asset is fantastic and management is credible however, I didn’t research the political environment in the Philippines. Learned huge on this one.

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      Arlen: Yes, position sizing is a constant struggle for me. I normally use the “thinking about it too much test”. If I think about the stock too much which can happen, which can be very unproductive, I own too much. I also tend to keep management teams on a much shorter leash then I used to.

  3. I have only owned Chembio Diagnostics for the last two and a half years. Bought at 21 cents. Had a one for eight reverse split this year, but that’s o.k. because it has been profitable since before I bought it. Now selling at $4.50 and anticipates FDA approval for the most accurate oral AIDs diagnostic before year-end. What I like about it most is their process “DPP” can multi-plex: diagnose more than one disease from single sample, which should provide excellent growth prospects.

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      George: Chembio’s a good company, I’ve followed them for some time as well. In fact I just spoke to Brian Markx from Zacks about them yesterday. Small world. Thanks for sharing.

  4. GORO – bought at $4 and sold almost all of it above $26. Stock is currently at $18

    PRXI – bought into a PP at $1.50 with 2/3rds warrants at $1.75(I think) and sold the majority of my stock at/around $17, exercised and sold the warrants between $8-13 I think.

    AMY(American Manganese) was a big loser who’s dilution and High Capex model wasn’t exactly rewarded when a study showed a very low IRR.

    Like Ian, I’m too quick to go to size. It is very very rare that you buy into a stock in size and it takes off immediately. Lately I have come to conclude that almost falling in love with a company isn’t a bad thing if you know where the exit is. Almost falling in love makes me exercise patience, keep adding to my position as the stock slides down(they always slide down after you buy them right?), and know that if the company does something ugly I can cut and leave and not be tied to the position. A few of the positions I’m in now, which I almost love, I started buying at much higher prices and then ended up averaging down in to the point where I’m either break-even or green in them. If I had gone all in from the get go I’d be heavy in the red and/or would have become disgusted by now and have already cut my losses.

  5. Biggest Winner: Absolute Software Corporation (ABT.TO / ALSWF) — This was the stock that led to my “discovery” of the three stages of a winning small cap. Details here:

    http://seekingalpha.com/instablog/84364-mark-gomes/90373-the-three-stages-of-a-winning-small-cap-stock

    I bought ABT in the late-2005 time frame as the stock rose on the promise of their “Lojack for Laptops” business. Data privacy was a big issue and they had a solution that could track down stolen laptops and also erase the data on them. I thought it was a “great find”, but the stock dropped 25%. I learned the hard way that great finds can take a looooong time to develop. With ABT, my “wait time” was over 9 months. Finally, the company started executing against its opportunity. It was a “gold mine” — the stock rose 10x in 15-months 🙂

    Biggest Loser: Electronic Game Card (EGMI) — This company had many problems, many of which might not have come to light if they had simply executed against their promise. As was the case with ABT, I should have waited until the “wait time” was over. Due to several management blunders (and some outright fraud), the gold mine never came. The stock went to zero.

    These days, I try to buy before the “great find” stage reaches its peak and/or once the “gold mine” begins. I still make mistakes in that regard, but have become more disciplined over time. Avoiding the “wait time” has been one key. Not being afraid to miss the first couple innings of a stock’s “gold mine” ascent has been another.

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      Thanks for that insight Mark. EGMI was my biggest loser ever, and I learned a couple things that have proven valuable to me. First, when a CFO resigns unexpectedly it is usually a bad sign. Second, when I don’t exactly understand the product or the value in it, to just pass.

  6. The following are the three biggest gainers in our historical review: MCRS (recommended in ’81 and ’84), SFD (recommended in ’77), and SMTC (recommended in ’86). Each of those stocks soared OVER 10,000% since their original recommendation price!

    I know, I know, how about at least in this decade is what most are probably thinking. A few of our biggest gainers (each of 500%) since 2000 include: EVST (acquired), ZAGG, BSTC, IRIS, and KTCC.

    In the past, we have had a number of losers that fell victim to a number of slides. Recents include FFI and CPHI.

  7. Howdy guys,

    Isnt it strange that none of these companies have become main stream? yeah ok they have gone up blah blah blah. But how come you dont hear abt them in the media? for eg: monster drinks- priceline- i can think of those two.. BTW QTWW got an upgrade today…hopefully this company can make a few dollars

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  8. Within the past 2 months or so, I stumbled upon this blog. I just started investing in microcaps, as I was tired of being out-resourced in larger cap names. After a lot of research on several of the ideas highlighted, I am currently only in two names. VTNR … my best winner of the two up 40% (not a bad start) and ICCC. While ICCC has not experienced much in terms of appreciation, this is common for biotechs as we all know until they hit their FDA dates. ICCC looks like a solid company and the upside potential is considerable.

  9. winners: $jmba $Plug $Cosi

    Losers: $Igo

    Have been lucky so far. still have positions in Plug and Cosi. very inexperinced on igo. didn’t understand the company enough. was up 400% and ended up losing 50%

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