Ian Cassel, founder of MicroCap Club and Intelligent Fanatics Capital Management, dives deep into the fascinating realm of microcap investing. He discusses his strategy for identifying promising small companies and highlights the importance of exceptional management teams. Listeners gain insights into the concept of 'intelligent fanatics' and learn about key filters like profitability and management quality. Cassel also shares strategies for position sizing and the benefits of turnover in microcap portfolios, offering valuable tips for both new and seasoned investors.
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volunteer_activism ADVICE
Sourcing Microcap Ideas
Find microcap ideas through research, screens, networking, and relationships.
Screen for insider purchases, rights offerings, and skin in the game.
insights INSIGHT
Microcap Multi-Bagger Characteristics
Multi-baggers in microcaps result from earnings growth and multiple expansion.
Focus on simple businesses that grow revenue, earnings and avoid dilution.
volunteer_activism ADVICE
Microcap Position Sizing
Start with small positions (4-8%) and let winners run.
Avoid averaging down, and let position size reflect performance.
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In this episode of Excess Returns, we sit down with Ian Cassel, founder of MicroCap Club and Intelligent Fanatics Capital Management. We explore the fascinating world of microcap investing, where Ian shares his expertise in finding and investing in ultra-small public companies.
We dive deep into Ian's investment philosophy, discussing how he identifies promising microcap companies, the importance of finding exceptional management teams, and his approach to portfolio management.
We cover:
- What defines a microcap stock and the size of the microcap universe
- The concept of "intelligent fanatics" and its importance in small company investing
- Why profitability and management quality are crucial filters
- How Ian approaches position sizing and portfolio concentration
- The importance of setting proper capacity constraints in microcap investing
- Why turnover can actually be beneficial in microcap portfolios
- Red flags for individual investors to watch out for
Whether you're an experienced investor or just getting started, this conversation offers valuable insights into an often overlooked corner of the market where significant opportunities can still be found.
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