The Micro Cap Investor: Strategies for Making Big Returns in Small Companies

The Micro Cap Investor is an explanation and analysis of micro cap stocks. These very small companies have endured a checkered history. In general terms, micro caps are large in absolute numbers but historically have been a small and misunderstood sector of the investment landscape. In this world of efficient markets and index funds, this perception has started to change. Many micro cap companies are well-managed, high-quality businesses that present an excellent investment opportunity. In addition, micro caps are a viable and competitive investment option for those who are looking to broaden and diversify their investment portfolios.

Author’s Introduction:

As a professional investor in micro cap stocks, I noticed that the average investor largely misunderstands these companies. Many professional investors and portfolio managers also have little knowledge or interest in micro caps. In addition, there are very few books or other resource materials on the subject of micro caps. Those books that are available are either very simple overviews of the subject or highly complex academic treatments of the topic. And most books do not address the fundamental research issues that underlie the basics of micro cap investing nor do they address the concept of how to integrate micro caps into an investment portfolio.

The Micro Cap Investor: Strategies for Making Big Returns in Small Companies is an attempt to address these very issues. The book begins by defining micro caps and reviewing why micro cap investors might be in a position to gain an information advantage. This is followed with a general discussion of micro caps as an asset class, an analysis of how micro caps behave as an investment class, and an explanation of how they are best integrated into an investor’s portfolio.

The next three chapters of the book describe the fundamental economic issues that affect micro caps in general and attempt to analyze these issues in the context of the micro cap investment vehicle. The book continues with a series of case studies and a review of specific methods for analyzing and screening for micro cap investment opportunities. The final three chapters of the book use the theoretical constructs developed in the case studies to build a framework for investor action as well as reviewing the growth of PIPES, or private investments in public equities, a new capital financing opportunity for micro cap companies.

Micro caps are an emerging asset class. As in any new asset class, there is a limited amount of quality data available from which to draw conclusions. This book offers a practical and useful overview of the limited data that bridges theoretical constructs with practical investment knowledge. In addition, the book provides the reader with some practical statistical data relevant to the general analysis and valuation of the micro cap asset class. This appears in the numerous charts, tables, and graphs that summarize key micro cap data into a usable format. My intention is for this book to fill a void in the available current literature about micro cap investing and to help supply a better understanding of an emerging asset class.

Contents:

• Characteristics of Micro Cap
• The Information Advantage
• Micro Cap Stocks as an Asset Class
• The Micro Cap Asset Class and Portfolio Construction
• Using the Information Advantage
• Corporate Governance
• Micro Cap Stocks and the U.S. Domestic Economy
• Micro Cap Case Study: A Company with All the Indicators
• Consolidating Industry Case Study
• Gehl Company Case Study
• Pozen Company Case Study
• Private Investments in Public Equities (PIPEs)
• A Framework for Investor Action
• Micro Cap Fund Investing

The Micro Cap Investor: Strategies for Making Big Returns in Small Companies By Richard Imperiale pdf