I’m Not a Value Investor. I’m a Value-Added Investor.

Here is the bonus chapter from my book, Stock Picker.

Twenty years ago, I built a close relationship with a microcap fund manager. We owned the same company, traded notes on it, and compared our conversations with management. He was running 50× the capital I was, so the exchange was equal parts fun and education. One day he told me about a new position he was building: a small healthcare company at a $10 million market cap.

The business had everything you’d want underneath the surface. Solid technology. Growing recurring revenue. Loyal customers. It was inflecting toward profitability. What it didn’t have was a voice. Terrible investor communication. Zero capital markets strategy. The fund manager also worried that when the company finally had real money to allocate, it wouldn’t know how to allocate it well.

So he did something most investors never do. He invested $1.2 million to help them bridge to profitability. He now owned 10% of the company. He also joined the board, and rolled up his sleeves. He helped the CEO build an investor deck, pitch it to funds, and rebuild the company website, and over time he became the company’s clearest voice for sound capital allocation.

Then the company executed. Revenue doubled in three years. The stock rose 500%. The higher share price let them raise equity on favorable terms and make an accretive acquisition.

The business continued to grow. Customers kept pulling them into new, underserved corners of the market. Four years in, the company was acquired. A 20-bagger outcome for the fund manager.

There was no magic. Just management execution paired with a better story, one that finally connected with investors. Watching it unfold in real time changed me. I was only a small retail investor back then, and I’ll admit it, I was a little jealous.

I kept thinking, how great would it be to be that fund manager?

The win was inspiring, sure. But it ran deeper than buying low and selling high, deeper than the 3,000 other investors who made money on the stock. I kept coming back to the business. It grew from 20 employees to 350. Thousands of family members affected for the better. Tens of thousands of patients with better outcomes and happier lives. The stock success and the business success were the same win-win story.

That fund manager made an impact. He wasn’t a value investor. He was a value-added investor.

In the world of small-business investing, whether it’s venture capital, private equity, or the microcap public equities where I spend my time, there’s a deeper question worth asking:

Are you a value-added investor?

In my early stock-picking years, the answer was no. I only cared about buying low and selling high.

The routine was simple. Find a trend or a tailwind. Find the one or two microcaps that best represented it. Read the press releases and filings. Do the analysis. CMA (Cover My A$$) with a management call. Buy before discovery, sell after discovery. Rinse and repeat. Get in before the momentum, get out once everyone else piled in.

I wasn’t thinking about whether I added anything to a company. I was thinking about the incremental buyer. Who was going to take this stock off my hands 100% higher?

That mindset started to crack when I saw what the fund manager had built. Around this same time, I started consulting for a handful of microcap companies myself.

From 2006 to 2009, I advised companies on capital markets strategy. It paid the bills before I became a full-time private investor, but it also gave me something more valuable than income: A peek behind the curtain. I worked directly with a dozen or so CEOs and saw what they wrestled with day to day.

One struggle showed up repeatedly. How to talk to investors? Most microcap management teams got it wrong in one of two directions. They either communicated far too much or not at all.

The over-communicators leaned on service providers who meant well but gave bad advice. The pitch was always “do more.” More presentations. More press releases. More guidance. I found myself telling those CEOs to tone it down. Do less. Stop overtelling the story. Stop firing off immaterial press releases to juice the crowd. Stop giving guidance. Stop catering to short-term investors. As Buffett put it, you get the shareholders you deserve.

At the other extreme were CEOs who did nothing at all. They issued no press releases. They conducted no earnings calls. They had no investor presentation on their website. They didn’t even respond to investor inquiries. Many felt burned by a bad IPO or financing, so they retreated and ran a public company like a private one. That didn’t work either. New investors couldn’t build trust without transparency, and the stock never found the momentum the business deserved.

The right answer, it turned out, was in the middle.

Great investor relations isn’t rocket science. I told management teams to do six things:

1. Transparency and execution. Under-promise and over-deliver. Do what you say and say what you do. You don’t have to be perfect. You just have to be honest.
2. Investor presentation. The company should have an updated investor presentation on the corporate website so investors can quickly understand the business and management strategy. The presentation should be updated after quarterly results and after significant corporate events.
3. Communicate a three-year goal. Every public company should give the market a three-year fundamental goal. It isn’t guidance; it’s a goal. It lets long-term investors understand the fundamental upside over a time horizon that matches the company’s business strategy. It also gives management room to miss a quarter, or even a year, without breaking the thesis.
4. Conduct quarterly earnings calls. Most investors do their diligence by reading transcripts; it’s the fastest way to understand a company’s past, present, and future. Hold four calls a year, every year, with live Q&A.
5. Investor conferences. Present at one or two conferences per year where investors can meet you in person. (I’m biased toward Planet MicroCap events.)
6. Insider buying. The best investor relations is insider buying. Nothing signals conviction like management adding more skin in the game.

What I loved most about those consulting years was having the CEO’s ear. I was usually the first call on anything capital-markets related. Not every company became a success, but several turned into multibaggers.

More importantly, the work gave me a small taste of what that fund manager experienced. I helped create a better outcome, not just for myself but for shareholders, stakeholders, employees, and their families. I had become a value-add.

Meanwhile, my own portfolio was growing, and growth forced me to evolve.

When you take $10,000 positions in small microcaps, you can be nimble. You can trade off the incremental buyer. You’re a kayaker, quick to turn, pivot, and react to whatever’s around the bend.

But when you take $500,000 positions in those same names, you might own a week’s or even a few months’ worth of volume. The nimbleness is gone. Now you’re a cruise ship, and cruise ships take time to turn.

This is the illiquidity dilemma, and it’s a problem born of success. Every microcap investor who does well eventually runs into it. It’s why most of them drift up the market-cap ladder, slowly and then quickly.

If you want to stay in microcap, you have two levers: get more diversified, hold longer, or both.

I chose both. The super-concentrated three-to-four-position book of my 20s became six to eight positions in my 30s. The positions were still large relative to daily volume, which stretched my time horizon. The two-to-six-month flips became nine-to-18-month holds.

Something interesting happens when you’re forced to hold longer. You start to care about business quality and management quality, because you need management to execute over a few quarters. Not just one. Almost by accident, it aligns you with management.

When I left consulting to invest full-time, my horizon stretched further still. For me to win as an investor, I needed the company to win.

Don’t get me wrong. Buying low and selling high is wonderful. But you know what feels even better? Looking back at a monster winner and knowing you played a real part in it.

If you’re just starting out, you might be thinking: “This sounds great Ian, but all I have $5,000 in a Charles Schwab account. How can I add value to a company?”

The same way you’d get into the orbit of any mentor you admire. You show value before you ask for anything. You treat every email, every call, every earnings Q&A, every interaction as a chance to give rather than take. You flip the question from “How much can I get out of this?” to “How much can I add to this?” You show up with something useful.

The most common way is to share your research. It’s worth even more if you’ve talked to competitors and surfaced an insight the company can actually use. Make it obvious you did the work, and you’ll earn their attention.

You can add value in other ways too. Introducing larger investors, organizing a company visit for a few of them, or publishing a thoughtful interview with the CEO on your blog, your Substack, or MicroCapClub.

The method changes from company to company. If you really want to help, you’ll find a way.

Value-added investing is widely misunderstood. Most of your peers will call it inefficient, unscalable, and frankly too much work. They’re not wrong about the effort. But when you find the right company with the right leadership, the payoff goes past returns and into something closer to fulfillment. Each company stops being a line item in your P&L and becomes a line on a résumé you’re proud of.

Value-added investing is slow. It’s personal. It takes patience, empathy, and a willingness to ask, “How can I help create the upside, not just for me, but for everyone?”

You can’t do this for every name in your portfolio. But when you’re concentrated, you have the time to understand the people, the process, and the pain points. You earn the right to make a difference.

As my fund has grown, we’ve settled into a hybrid investing approach. I offer advice when it helps and provide capital when it’s needed. I’m not an activist. I don’t wade into bad situations to make them less bad. Value-added investing isn’t about control. It’s about contribution.

It’s about finding the rare situation where the business, and probably the stock, would do well even without you, and then being the multiplier on top.

When you find that situation, something magical happens. And it usually makes for the best stories.

We all know the Buffett line: “I am a better investor because I am a businessman, and a better businessman because I am an investor.” That’s the whole idea. The best small-business investors think like owners. They know when to push and when to listen. They show up with more than money. They show up with curiosity, humility, and a longer view.

It doesn’t matter whether you manage $5,000 or $50 million. You can be a value-added investor to the select few companies that deserve it.

In a transactional world, value-added investing is a quiet rebellion. It says I will do the work. I will learn the business. I will earn the trust. And in doing so, I’ll create more than returns. I’ll create value, for myself and for everyone around me.

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