SUMMIT
I asked our membership of experienced microcap investors to list the things that really irks them about microcap companies. To say the least it was a spirited discussion, but here is the list that we came up with:
In no particular order:
- Over Promising and Under Delivering CEO’s
- Overly Promotional CEO’s
- CEO’s running a stock price instead of running a business
- High Executive Compensation: >$250k/year
- Management teams that own so little stock that they care more about their salaries than the stock price
- Bad share structures
- Companies-CEO’s that don’t call me back
- When I know more about the company then the paid IR person
- Companies doing reverse splits to keep a NASDAQ-NYSE listing
- Preferred Share classes screwing up the cap table
- Companies waiting until they are out of money to raise money
- CEO’s that think they know it all with stock prices at all time lows
- Business models whose sole purpose to sue other companies
- Companies that can’t file on time
- Companies that don’t issue quarterly earnings releases
- Companies that go to investor conferences but don’t do earnings conference calls
- Self described “Visionary” CEOs that never ran a profitable company
- CEO’s that contact me only when they need something
- Companies that only communicate when things are great
- Getting harder and harder to deposit a microcap certificate
- Brokers not being able to buy microcaps for clients anymore
- The same corporate governance rules and regulations are the same for a $10m market cap as a $100b market cap
- Non SEC Filing Public Companies
- MicroCap service providers (investment banks, investor relations, etc) whose managers don’t even invest in microcaps
- Companies that Issue Press Releases stating they don’t comment on “Unusual Stock Activity”
- Companies that issue Press Releases in response to Shorts
- Companies that do business exclusively outside the US
- Companies with too many business lines, particularly those that don’t offer symbiotic value
- CEO’s that are attorneys or scientists by trade
- CEOs and management teams that never buy stock because they’re always blacked out for some reason or another
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