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.
00:00:00 - Intro & welcome
00:01:54 - Introduction of Ian Cassel
00:02:41 - Discussion of "intelligent fanatics" concept
00:06:46 - Overview of microcap universe and market size
00:14:49 - Research supporting microcap investing performance
00:24:12 - Ian's investment strategy and process
00:25:25 - Definition of "Picassos" - rare, high-quality microcap companies
00:28:15 - Portfolio management approach ("veteran players" vs "rookies")
00:29:23 - How Ian finds investment ideas
00:33:33 - Characteristics of successful multibagger investments
00:36:04 - Position sizing and portfolio concentration
00:39:21 - Holding period and "hold forever" mentality
00:43:01 - Red flags for individual investors
00:45:19 - Discussion of promotional mailers and scams
00:47:18 - Sell discipline and four reasons to sell
00:50:18 - Fund capacity constraints and investor selection
00:56:04 - What Ian believes that peers disagree with
00:57:26 - Closing question: Do your own work and research
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