Microcap companies (<$300m market cap) represent 48% of all public companies in North America. The ~11,000 microcap companies in North America have a combined market value of $490 billion, smaller than the current market capitalization of Google. Some of the best investors ever, including Warren Buffett, Peter Lynch, Joel Greenblatt, and many others started their careers investing in microcaps. Some of the best performing public companies ever, including Berkshire Hathaway, Wal-Mart, Amgen, Netflix, and many others started as small microcap companies. The key to outsized returns is finding great companies early because all great companies started as small companies.
“How do you get into these great companies? One method is what I’d call the method of finding them small – get’em when they’re little. For example, buy Wal-Mart when Sam Walton first goes public and so forth. And a lot of people try to do just that. And it’s a very beguiling idea. If I were a young man, I might actually go into it.” – Charlie Munger
I am humbled and honored to say I’ve been a full time private microcap investor since 2009. “Full time private microcap investor” is just a fancy way of saying I support myself by managing my own capital, and I only invest in small microcap companies. I don’t run a fund or manage other people’s money. Last week I was invited to present my story at Google, explain my strategy, and the case for microcap investing. They seemed to enjoy the presentation, so I thought others might find the presentation useful as well.
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I really enjoyed that Ian, and learned a lot from it. I plan to listen again later today.
Thanks Rod, I’m glad you enjoyed it.
Great presentation! Do you have this presentation in pdf file? Thanks
Thank you Ian for sharing this.. 🙂
wow….thanks for sharing such an information for beginners like me.
Thanks Sumit, glad you enjoyed it
That was a great presentation. Just a question about Mike. When you say that he reads every PR in north america, are you referring to the PR at otcmarkets.com?
Amazing presentation. Is there an article of yours which I can refer to figure out if the company’s capital structure is clean or not ? ..Is it just focussing on debt levels ?
Siva, thank you and I’m glad you enjoyed the presentation. I’m mostly talking about Share Structure. This is an old article by Neil Cataldi on the subject: http://microcapclub.com/2012/08/the-importance-of-share-structure/
In general, seeing how management issues shares, how many warrants/options, how management is incentives with equity, etc can tell you a lot about management.
Great presentation. One question.
Small illiquid returning 17,87% 1972-2009. Do you have data including the last 7 years? Thx!
You can find the newest results from the paper called Liquidity as an Investment Style by Roger G. Ibbotson and Daniel Y.-J. Kim (http://www.zebracapm.com/research.php). This paper is being updated with new data every year. Small illiquid companies have returned 15.92 % 1972-2015.
Thank you for sharing this link to the updated study.
Thank you Ian for the inspiring presentation.
very interesting. MicroCapClub.com is now saved in my “favorites” value investing list
and I am sure I will be visiting very often.
Keep those gems coming.
I’m glad you enjoyed it.
May I have the transcript of this talk?