[Music] I've entitled this presentation all great companies started as small companies what I'd like to do is tell a little bit about my journey on how I became a full time private micro-cap investor like to then give you the case for micro cap investing and then give you a little bit of an overview on the strategy that I utilize and then give you a couple of case studies and then tell you a little bit more about micro cap Club and the micro cap Leadership Summit I started my journey in investing 1997 really to back up a little bit further in 34 years of age today I'm married and have a daughter a three month old so my life has definitely changed in the last three months but I really got my start and investing when I was 16 years old was around 1997 I remember this time period fairly well because I was a sophomore in high school and this is when my parents sat me down and really explained to me that they had saved for me approximately $25,000 that I could use towards my college education this was all I was going to be getting so they thought they better give me an ample heads-up to know how much I would be getting so I could better apply for whatever college or university I would want to go to and because of that you know it was up to me if I wanted to spend that $25,000 on one semester in college or if I wanted to find a place that might have been a little bit more cost efficient to be able to string it out over all four years and around the same time period as you can imagine 1997 1998 the technology bull market was in full steam and a lot of other people were getting interested in the markets as well because of that and I remember talking to my parents financial advisor at that point in time and I was getting more and more interested in the market in the stock market he was telling me about these small cap technology companies that were just taking off that were IP owing this is exactly the same time I was trying to decide what college to go to and so what I realized was that I could go to Millersville University which was a university in Lancaster County and commute and also worked the equivalent of full-time and be able to really pay for my tuition as I went so I would be able to invest this $25,000 in small-cap to technology companies that's pretty much what I did I ended up going to Millersville at universe City than working full-time for a financial advisor not the ones my parents use but another one that was there locally it was a pretty big financial advisor actually he had around 1200 clients around 200 million assets under management and I was more or less hired to be a glorified secretary if you will you know answer the phones and do other marketing type things for that branch office more or less this was in 2001 when the Internet bubble finally burst and I was fully invested in two small cap technology companies I had taken that $25,000 and grew it up to around 60 or 70 thousand dollars and then when the bubble burst I ended up losing about 80 percent of that amount of money and I think that's probably a similar story to a lot of other people that went through that time period especially those that got into investing during the tail end of that technology boom but losing 80 percent of my money wasn't the really the biggest lesson that I learned out of that time period it was really working for that financial advisor that I really got the the biggest lesson up to that point in my life because I was answering the phones constantly because I was working there almost every day during the week when that technology bubble burst with that internet bubble burst you know I swear I heard from everyone of our 1,200 clients over the course of a three month period in time and every day I would go into work the phones would ring and I just get the beat out of me every single day people were angry people were sad and I just saw the full gamut of human emotion at that point in time and I remember even getting threatened over the phone we actually had to fire a few clients during that time period so what I learned through that experience was really going into working for that financial advisor I really thought that I would be a financial advisor I would be a broker but going through that experience just showed me that I really didn't want to manage other people's money because as we all know you know managing your own emotions is hard enough let alone the emotions of others the psychology of others you know hand-holding especially for those that probably don't have the emotional constructs to be able to handle the long-term market environment the ebbs and flows the bull and bear markets that happened and occur over the long term and that's really the point in time I can point to that says that I did not want to manage other people's money I had to figure away how to really keep investing and also stay in the industry in the financial industry and figure out a way how to do this on my own at the same time period that the internet bubble was crashing I was starting to get more and more interested in micro-cap companies I started looking at smaller and smaller companies and I'd subscribe to a few newsletters during that time period through that experience I stumbled upon a company that I really liked and I don't know why I liked it in hindsight because the fundamentals of this company were awful but the company was XM satellite radio many of you probably know of XM satellite radio it would later merge with Sirius satellite radio and probably many of you have a Sirius satellite radio in your cars today back then in 2001 and 2002 XM satellite radio was a micro cab company it was sub 200 million market cap XM satellite radio just launched a bunch of satellites up in the space they had a pile of debt they had no subscribers they had no om agreements as well and it was just really a company that was on the brink the company itself 40% of the shares were sold short for whatever reason this company really caught my attention and I saw the CEO Hugh Panero was going to be presenting at a conference in New York City I decided as a sophomore in college that I was going to get on a bus and go up to New York City to see the company percent to see the CEO present his story and so I had fake business cards drawn up and got on a bus and went in New York City and I was able to hear that presentation I was also able to have a one-on-one with the CEO at that point in time and I really left that meeting really engaged ended up buying really XM satellite radio with a dollar 78 per share I can remember the trade like it was yesterday this was 99.999% luck but I remember buying that stock and then over the next 14 months the company started executing and what would happen would be a historic short covering rally in XM satellite radio that would take the stock from $1 78 up to around 34 dollars a share in about a 14 month span and even though that gain was 99.9% luck or maybe even greater what I really gained out of that experience and the biggest lesson of that experience was if that's my love affair with micro-cap investing began and it was really because of the accessibility of management teams the ability for a small private investor like me to be able to access management just boggled my mind and I really thought that this was a place where me as a small investor could gain an edge over others I graduated from Millersville University in 2003 I went right into a MBA program at Villanova and when I wasn't sitting in the classroom at the MBA program I was talking to other micro-cap investors it's talking to micro-cap management teams this is when I would first do my first company visits traveling out to see company's headquarters mean with management teams really honing my craft of scuttlebutt research and things of that nature by 2005 I had a real hard decision to make unlike other classmates of mine in the MBA program you know who got internships during the summer times that really made themselves more employable when graduation time came around you know I didn't do anything like that I was too busy you know researching stocks and talking to companies and I really wasn't paying attention to the fact that the graduation date was looming I needed to figure out a way how to stay in the industry that I loved which was micro cap investing and also create an income stream for myself because I didn't have enough capital at that point in time to be a full-time investor and so I decided to work for a consulting firm in New Jersey and that catered to micro cap companies after about six months of working there I realized I could do this on my own so I started my own advising business in 2005 in the main goal in the getting of the advising business was to get out of the advising business as quickly as possible this was really just a means to an end I just wanted to create an income stream for myself that would hopefully allow me time to snowball my portfolio really that point in time happened in late 2008 into 2009 when I felt I had enough capital to become a full-time private micro-cap investor this is a chart that I penned for one of the blogs of my cur cap club.com but this really shows the investor maturation or at least my investor maturation which I think can probably be transcended onto a lot of other people as well you can see in this chart the first peak that's my XM satellite radio gain you know I think a lot of people have early success in investing they that they're the next Warren Buffett you know get ready I'm gonna make five billion dollars in the next year or two and I know that's what I thought about myself - coming down to that game but then reality kicks in and then you started losing money you know your ego gets revalued if you want to put it that way and you really just learn the ropes by losing your money over and over again I know that's how I did it many people like to believe that you can learn investing is greatest lessons by sitting in a classroom or reading a few books and surely that can help you but the biggest lessons and investing can't be learned that way they have to be experienced fortunately the best educator that's out there is losing money the best motivator that's out there is losing money now I can just speak towards my own past in my own history that that's certainly the case for me I'd like to now give you the case for micro cap investing and this might not be new for a lot of people viewing this but I think it will be helpful going forward there's approximately 23,000 public companies in North America 48% are considered micro cap companies having market capitalizations just under 300 million or less so what you find is that 95% maybe even 98% of investors focus on the small mid and large cap companies those companies that have market capitalizations more than 300 million and there's 12,000 of these companies that exist but what you'll find is that investors are typically over exposed to these companies and because of that you have a lot of market efficiency and the companies that that are up in these higher market cap classes and you know these companies have 10 20 30 a lists that cover them what we find is very few investors focus on micro cap companies it's the fact that they are small illiquid and they have low institutional ownership that creates the opportunity but it's not the fact that my our cap companies are small that creates the opportunity is actually the illiquidity that drives the a performance in the micro cap space I think nothing best illustrates that than this chart in this slide right here you'll see that small illiquid companies return the best annual performance since 1972 at 17 point 8 7% annually if you look across to the right you'll see that the worst-performing market cap and liquidity threshold are actually small would companies they performed the worst since 1972 so again it's not the fact that these companies are small that creates the opportunity it's really the illiquidity that presents the opportunity and it just so happens that small micro cap companies are small and illiquid a couple other statistics that I find that even experienced major cap investors aren't aware of there's approximately 11,000 micro cap companies in North America if you were to combine all of these 11,000 micro cap companies into a ball and form one company that company would have a combined market value of 480 billion that's just under the size of Google's market cap today that goes to show just how small and large the micro cap space is if you would combine all 11,000 micro cap companies in North America into a ball and form one company that one company would be considered the North America's largest private employer employing over 2.8 million people that's more jobs than Home Depot IBM GE Google Berkshire Apple Pfizer Microsoft Cisco McDonald's GM several other companies that are here on the slide all of those companies combined the mainstream financial media and other pundits if you will they love to broad brush the micro cap space as some an investable wasteland of sleazy slimy companies that taken as a whole or rather insignificant I think I've just showcased to you that the layer cap space as a whole is very significant I think it's a significant place for people to invest and I think it's a significant place for the economy as well many people forget that the most famous and the best investors of all time got their start investing in micro cap companies Warren Buffett Peter Lynch Joel Greenblatt and many others got their start investing in micro cap companies many people forget the best performing companies of all time Berkshire Hathaway autozone Netflix Amgen Celgene Walmart all started as small micro cap companies Walmart IPO in 1970 had a 21 million dollar market capitalization even on a 2015 inflation adjusted basis Walmart would be considered a micro cap company today I love this quote by Charlie Munger and he basically is talking about if he was a younger man he would definitely be interested in trying to and buying the Walmart when Sam Walton first took it public in 1970 he would be very interested in trying to find these great companies early get him when they're little the best-performing stocks over the last five years a majority of these companies are micro cap companies just like the title of this presentation all great companies started as small companies and that is a fact and the key to outsized performance out sized gains in your portfolio is finding these great companies early now to give you a little bit more about my strategy if you remember back to the slide where I showcase the the 23,000 public companies in North America you know we had a over 11,000 that are considered at micro cap companies I'm really focusing on the bottom 15% of the micro cap space these are companies that have market caps less than 50 million and believe it or not there's still over 8,000 of these companies that exist in the marketplace today barbar to explain my strategy in one sentence I'll be a run-on sentence I went to own the smallest most illiquid least institutionally owned best businesses I can find that are run by intelligent fanatics I'm a concentrated investor I only want to invest in the best four or five or six companies that can find any given time I'm looking for quality businesses I'm looking for businesses that that can hopefully become great businesses it is really a bet on the jockey strategy the reason it's a bet on the jockey strategy is because the CEOs the founders of these small micro cab companies they wear a lot of hats they're not only the CEO oftentimes that the CEO o sometimes into the CFO sometimes they're the president of sales the chief bottle-washer the garbage man you name it these management teams and specifically what I find is the founders and CEOs wear a lot of hats inside those companies so you better be sure that you're betting on the right jockey I really have a long only strategy I don't short stocks I'm a long-term oriented investor you know holding these companies as long as they perform and I really believe in qualitative analysis because I believe qualitative analysis is the edge and investing for all the reasons I gave you about betting on the jockey as well and I believe it's a really constantly learning accumulation of knowledge on your positions on those management teams on the businesses on the industries is very important to my strategy as well I would say these are like the the five strategy principles or pillars to my strategy number one know my investments better than most and we'll get into this a little bit more later but make as few investment decisions as possible you want to set a high hurdle rate mistakes and errors occur when you go down quality because you were either bored or because you just get bored really honestly that's pride the number-one reason why you go down quality you want to keep your hurdle rate high when you start looking at your investment checklist and start investing in companies that had a seven out of ten of the things you look for or a out of ten that's when mistakes and errors occur I haven't bought a new investment in the last two years and I refuse to go down quality looking for more investments just because I'm gonna look at ideas and invest in new companies keep your hurdle rate high at least that's one of my strategies on investing companies that are undervalued that can get overvalued I'm not a deep value investor I really do not want to own an undervalued company that will always be undervalued I really want to find an undervalued company that can get overvalued great businesses always get overvalued because there's a scarcity of great businesses in the marketplace today so I'm really looking to find undervalued companies that can hopefully get overvalued I want to scale into my positions as my conviction builds you know I'm trying to find great companies early but oftentimes greatness is not obvious when these companies are very small so oftentimes when you do your analysis your quantitative and qualitative analysis you take a position and then you have to sit back and wait for management to execute let them prove themselves to you and then you end up buying more as your conviction grows some of my biggest winners were companies that I was constantly averaging up in and I'm gonna hold as long as management executes and this can be two or three days but hopefully it's five or 10 years or more this is what I look for and why and this is a very broad checklist of what I look for in companies I'm looking for intelligent fanatic iconoclasts and that is a mouthful I know I believe that Charlie Munger is the one that really brought intelligent fanatics that term to light but it really it's sunjai Bakshi that is making it famous today and sunjai Bakshi wrote a great piece on his blog several months ago talking about the intelligent fanatics of India these owner-operators of these businesses that most of them ended up you know growing these companies and creating significant shareholder value these owner operators these intelligent fanatics had an intense focus integrity energy and intelligence and these owner-operators you know owned a significant piece of the business most cases as well you know owning 10 20 percent or more of those companies these intelligent fanatics were also shared account of clastic behavior William Thorndike in the book The Outsiders devotes a big portion of the book to talking about how Henry singleton and other people that were mentioned in the book had these econo clastic behaviors they didn't care what I was thought about them they didn't care what Wall Street thought about them they didn't care about what the world thought about them they really judged their performance by their inner scorecard what I find is that a lot of the micro cap winners that come out of the miry have space they're the owner operators share this iconic plastic behavior and it's something that I look for I'm looking for market leaders many people wonder well how can a micro cap company really become a market leader well it needs to dominate a small market it's the old Peter Thiel zero to one approach when I read Peter Thiel's book zero to one you know I kind of put it down when I was done with and I said wow somebody actually summed up what I look for when I look for in my micro cap investments and it's what I do look for I look for companies that are dominating a small market niche that is expanding rapidly because what you'll find is that the quality attributes that a market leader has it ends up funneling down to the financials of that company and specifically in the micro cap space when you find a market leader as a micro cap company it's somewhat vets the management team because either that company created the market that they now dominate or they took share away from their competitors in that marketplace and so it sort of showcases that management knows what they're doing I also look for a sustainable profitable growth companies companies that can grow 20% plus over the long term profitable companies and maybe even more importantly companies that can self-fund their growth a lot of companies can grow not many of them can actually fund that growth utilizing their own cash flows and become compounding machines you're really looking for those compounding machines that are out there and the reason why that's so important to the stock price as well is when larger money larger pools of capital specifically institutions know that that company doesn't need to go raise money a sell equity to fund its growth that means that there's larger pools of capital need to go into the marketplace and buy those shares in the open market and that's when you see some very big moves in the micro cap space I'm looking for companies that have low to no debt what I found is that my your cap companies in debt just don't go well together so the old travel light travel far philosophy I'm looking for companies that have clean and capital structure a clean share structure and maybe the best analogy I can use to kind of share with you why this is important is if you wanted to find out the most about me as a person I would say you want to look at my bank statements because it would show you where I spend my money what I spend it on how much I spend and it's the old you know your your money follows your heart philosophy you really get to see what type of person I am by looking at my bank statements it's very similar to when you look at the capital structure and share structure of a company over time the ability to go back three or four or five years and see how that management team how that founder or CEO issued shares to see you know is it all common shares are their preferred shares to see of super voting rights how did he finance the company was it with convertible debt and how is he incentivized is it with a bunch of options or warrants did that owner/operator by his stake or was his state was his ownership position given to him or did he actually write a check for it all these things and watching how that share structure changes over time really tells you a lot about how that CEO and Founder or management team operates that company because what you want to find is a management team and CEO that really treats their shareholders their common shareholders like a gold they don't issue shares frequently and freely I'm looking for companies that have immediate upside like I said before I want to find companies that are undervalued that can get overvalued and lastly I'm looking for companies that have no institutional ownership if you remember back to that a liquidity chart you'll remember that the worst place to invest is in small liquid companies and there's small liquid companies is just a fancy way of saying that they're institutionalized what you want to look for is illiquid small companies the best way I can put this is when you find a great business nobody else owns it only has one way to go and that's up how do you find these companies is a question I get asked quite frequently and really it's a combination of all of these things I would love to say and point you took just one place that you need to go or one thing you need to do but it's a combination of all these things word of mouth is a big one it might be the biggest one private message boards which is what micro cap Club represents public message boards you know investors have used to be rating bull back in the day when I got started Yahoo Finance things other public message boards like that Silicon Valley silicon investor in me searching filing searching PRS my partner a micro cap Club Mike shelling ER literally reads every PR and filing on every micro cap company in North America every day sounds tedious and very manual and it sounds like a lot of hard work and it's all three of those things but nothing can replace that manual and tediousness and hard work of searching filings and PRS for example I subscribe to the best screening software that's out there it's very expensive but I still find that a lot of companies fall through the cracks when I do of micro cab screens and oftentimes it's the ones that fall through the cracks are the ones that you should be investing in and so nothing can replace really just hard work and the tedious manual nature of looking through PRS and filings and lastly just serendipity we have a member on micro cap Club that actually put a symbol of a stock in wrong and he stumbled on another company and he ended up investing in this company that he stumbled upon through serendipity and really liked what he saw and it ended up being one of his biggest winners I think ended up being a twenty or thirty bagger for him so even serendipity plays a role in how you find these companies I'd like to now go through it my analysis process and so once you find a company you know the analysis process begins and it really starts with quantitative analysis you want to look through all the filings all the press releases going back in time as far as you can Mayer cap companies are mostly small emerging companies many of them don't have long operating histories some of these companies have been around for a year some I've been around for ten years but you want to go back as far as you can to try to get a gauge on how well that management team has executed on how that company is positioned today I oftentimes like going back to see what that management team is said in their MD to figure out you know how much of what they said five years ago did they actually execute on how is there a position in the company has changed also looking at the competitors the peer analysis looking at industry reports really understanding the Tailwind in that business the undercurrents driving that business as well and really that's the quantitative approach to investing and what you'll find is that a hundred percent of experienced investors do quantitative research and analysis but what you'll find is twenty percent maybe twenty-five percent actually do qualitative analysis and research and that's why that really the qualitative analysis is the edge and investing is because so few people do it and especially when you're analyzing small companies qualitative analysis is really a must as well and when I go through this analysis process as you're kind of going from quantitative to qualitative to site visit to maintance you're adding more to your position or at least I add more to my position because mostly what happens is your conviction builds or if you see something that you don't like you to stop and you have a rather small position you're able to get out of it rather quickly because you decided to get into your position slowly as your conviction built but after the quantitative analysis you move on to qualitative and what I like to do is interview the company's management team this can be one conference call it can be a series of conference calls you're really trying to gauge really understand where that management team is positioning that company for the future what I also like to do is talk to the large shareholders of that company the reason I like to talk to large shareholders of companies is because they've usually been in the company a very long time and so oftentimes you can pick up on different nuggets of information by speaking to these large shareholders stuff that's not exactly you know illustrated in press releases and things of that nature to try to gain an understanding of how well or not so well this companies executed over time I would then look for what Paul wants us would call trying to find that person a third party person with differential insights somebody that is really a expert in the business or industry of the business that you're analyzing and trying to find that person searching for that person and then interviewing that person to try to gain differential insights I want to then perform industry channel checks you know the normal scuttlebutt research talking to suppliers custom you know where appropriate then after that qualitative analysis then I would do a site visit what this means is traveling out to the company's headquarters meeting with management team on their own turf if you will and oftentimes it's the information that you get out of the conversation with management is sometimes not the best information you get is then it's the other little things that you pick up with your other senses you know some things that you hear things that you see you know for example when you are meeting with management does the CEO let anybody talk does the seal at a CFO talk is it a dictatorship when you are pulling into the headquarters you know does the CEO have his own spot that is marked CEO out front does he drive a brand new Mercedes does the license plate say you know I'm number one in the back all these things give you a little clues you know when you're touring the facility is it marble floors or do they pinch their pennies you know do they really spend wisely or freely also love to talk to secondary employees these are employees that would be right below the sea level these folks that normally haven't been warned of my arrival to be nice to me and what you'll find is these secondary employees also have worked for the competitors so a lot of times you can gain really valuable insights by talking to some of these secondary employees on the competitive landscape on what this company is doing differently maybe on what the culture is like as well inside this company is very important and also like I said before investigating the headquarters the manufacturing if they have a manufacturing facility there you know all these things that you would never be able to get these little nuggets of qualitative kind of scuttlebutt if you just stayed in your office at your home you can only gain these valuable insights by traveling and making a site visit and once you get through the site visit the due diligence doesn't stop the analysis doesn't stop the maintenance due diligence then it begins and it's really getting back to continuously accumulating knowledge on this position you want to be an expert in this business you want to accumulate knowledge on that management team on that business and on that industry you want to be in a constant state of what Jim Collins who are good to create cause a productive paranoia and the reason why it's so important is because the most important thing in micro cap investing is to know your positions better than most we all want to be able to tell our grandkids or our kids or our friends that we achieved a multi bagger in the portfolio that we remember this company that we bought at X and sold at Y and it was a ten bagger or a fifty value or maybe even a hundred bagger but to achieve a multi bagger in the portfolio you have to hold a multi bagger in the portfolio and the only way you can hold a multi bagger in the portfolio is to really fully develop the conviction to hold and the only way you develop the conviction to hold is to know your positions better than most the other reason why you want to know your positions better than most is because you're investing in small illiquid companies and so the key to investing is letting your winners run and cutting your losers as quickly as possible and so part of knowing your positions better than most is really the fact that because of that you'll have a heads up on being able to know when to sell before the masses so when do I sell and these are really the four reasons why I would sell a number one is probably the most prevalent which is you would sell when you find something better I don't manage a fund I don't have an RIAA I don't have clients I'm a full time private investor so that means that to buy a new position I have to sell an existing position so what you're doing is when you're looking at new opportunities you're constantly evaluating those new opportunities against what you already own when you put in the time and energy to do the correct qualitative analysis into these companies you know it takes a few months it takes a lot of time and when you really develop that conviction in that company and into that management team you really believe in their long-term vision of the company when you look at a new opportunity that new opportunity just can't be you know fractionally better than something you already own it needs to be multiples better than what you already own to be able to sell something you own and Trust to buy that new position but it does happen and oftentimes it's the biggest reason why you would sell a position is you finally find something that is a lot better than what you already own I want to sell when the story changes I have lost hundreds of thousands of dollars by not selling quick enough when I knew the story had changed this is something that I'm still getting better at and it's it's taken 15 years to get even half good at but it's okay to fall in love with stocks but you need to be prepared to divorce them quickly I want to sell at the first sign of management and competence or unethical behavior sometimes management teams make such a boneheaded move that you can't help but you know sell the stock you can't look at that decision they just made and sweep it under the rug because unfortunately really bad decisions it's it's like the old cockroach theory where there's gonna be a lot more coming behind them and so oftentimes it's best to just sell your position when you see a company and management team make a really bad boneheaded move and lastly you want to sell when a company gets very overvalued and I look firm belief in holding your positions especially on the companies that are executed in doing well but there are sometimes unfortunately doesn't happen enough but there are some times when a company goes up so far so quickly that it out stretches the fundamentals of that company and it just makes sense to take some off the table I thought I'd include this chart and this is really a snapshot of my portfolio it's a very busy chart so let me explain but this will give you an idea of my holding period and position sizing if you look on the right side my sold positions you know if you look at Company F a 5% next to Company F that represents that Company F was a 5% position in my portfolio company EE a 5% position if you look on the left column my current positions you'll see that company a is 42 percent of my portfolio you'll see that Company B is 33 percent of my portfolio so currently my top two positions are 75% of my portfolio and most people that see this will say that is completely insane and this is the riskiest portfolio ever and this is where I would disagree with them because I think there's a firm bias against for whatever reason there's an anchoring bias towards people's cost basis and when somebody is up a lot in something they just want to sell it one of the biggest mistakes I see is investors that sell winners to buy more of their losers there is nothing wrong with letting your winners run that the reason why a lot of the companies that are doing the best in your portfolio are doing the best is because the management teams are executing quite frankly they are the best companies so why would you sell the best things in your portfolio why would you sell the management teams that are executing the best now you don't lose track of the fact that you need to continue to make sure that you know these positions better than most I firmly believe that of letting your winners run and cutting your losers as quickly as possible William O'Neill said it best take your losses quickly and your profits slowly because your objective is not just to be right but to big money again these are case studies I don't want these are not recommendations to go out and buy a zag or bio site or where food comes from I really wanted to showcase these as examples of companies and then go back in time to when we first started looking at them to see what commonalities we could pick up on and what you'll find is and this is the chart that I showed you earlier in the presentation when you take out the errors which are the ones that I put the red lines through you're left with companies that have similar characteristics and they're the common elements that shared with you earlier and what I look for in my checklist they had intelligent fanatic econo classed CEOs and founders they were market leaders in a small market niche that was expanded rapidly that allowed them to expand into other niche markets or expand their own market they had sustainable profitable growth and probably even more importantly they were self funding their growth they didn't need to go to the capital markets to raise money via equity or debt they had low to no debt they had a very clean capital structure a low amount of shares outstanding a small percentage of their outstanding was in warrants and options they had all common shares and lastly they had no institutional ownership the bigger money didn't own these companies yet and so when these companies started to execute certain perform their stocks went up because the companies had to go into the market to acquire shares just a little quick overview on micro cap Club was founded in 2011 and really our number one priority is finding great companies early we have around 145 members really the club was formed to be an idea engine to really just turn over a bunch of these rocks and we have over 370 companies profiled today over 50 of these companies ended up doubling or more since one of our members has profiled them internally this is not a newsletter service this isn't a pic of the Month Club this is really about looking at these 11,000 micro-cap companies in North America and turning over rocks trying to find these great companies early we all have two ways that you can join the subscriber the only access is about to launch here shortly and that's gonna allow people to be able to view our private members forum to see what we're talking about you can also become a member by submitting a to page 3 page investment thesis on your favorite micro-cap stock basically the membership then votes on that application if you get enough votes you get in as a member we have around 145 members today actually a low point in our membership and I say that in a good way we really focus on quality over quantity and everything that we do including our membership we have a very active participating membership on the club it's just something that's taken four years to get to this point and something that I get excited about logging in every day and I know a lot of our members do as well lastly the mayor cap leadership summit is the our inaugural micro cap leadership summit is gonna take place in 2016 and this is an event that I've been thinking about personally for over two years and our mission of this event is to create better micro cap investors and find great companies early I wanted to find the best speakers that I could find to speak on a variety of topics that could make all of us better micro cap investors myself included unfortunately some of the worst investors on the planet invest in the micro cap space from sleazy slimy institutions that are just looking to do structured financing deals with these micro cap companies to short-term minded short-term sited retail investors that you know the only time they want to contact management is to complain about why there's not more news coming out we really need to look internally as investors and really up our game you know myself included and so that really the goal of the first day of this two-day event is to create better investors day two we're going to be bringing in a dozen or two dozen companies trying to find great companies early and so that really concludes my presentation on micro cap investing on my journey and I hope you gained some valuable insight for me doing so thank you
