Head of Evidence Based Research at MicroCapClub. I am an individual investor who is obsessed with finding opportunities for alpha.
MC-GUTS was down -0.2% in Q1 2026, underperforming the iShares Microcap ETF +2.0%, but outperforming the S&P 500 -4.4%, and Nasdaq -5.9% respectively.
Do microcaps that experience deep drawdowns eventually recover? What about stocks that have strong fundamentals after the drawdown - are these potential buying opportunities?
Microcaps have larger peak to trough drawdowns when compared to largecaps. What can we learn from them?
We can predict future microcap equity dilution and equity dilution can predict future returns.
MC-GUTS was up +37.6% in 2025, outperforming the iShares Microcap ETF +22.5%, S&P 500 +17.7%, and Nasdaq +20.8% respectively.
Microcaps are often described as “illiquid” – we look at what that actually means, how liquidity has varied over time and how it has impacted returns.