I focus on the microcap space (market cap below $250 million) because it is one of the most inefficient and "alpha rich" areas of the global equity market, which provides the greatest opportunity to generate alpha through fundamental research.
I use a bottom up, investment decision making process. The ideal investment has an asymmetric risk/return profile with a limited downside (e.g. high net cash balance, strong cash flow) and significant upside (e.g. asset value extraction, overlooked business model transition).
Microcaps are particularly attractive to the following groups:
Activist investors. A small absolute investment (on a dollar basis) can be leveraged into a relatively large position (as a percentage of shares outstanding), which provides a greater ability to demand change.
Private equity firms. The persistent microcap discount can be “arbed away” via an LBO with the new owners accruing all of the gains for themselves. The small absolute size of many microcaps on an EV basis significantly expands the number of firms able to pursue this strategy.
This inefficiency exists for several reasons.
A lack of analyst coverage due to lower trading volume (less soft dollars from HF/MF), the global settlement that permanently severed the link between research/banking and the rise in electronic trading/decimalization. Moreover, none of these trends are likely to reverse for the foreseeable future (if ever).
A lack of institutional products given the natural capacity constraint for new/existing managers.
An inability to effectively implement a passive approach (e.g. ETFs, index funds) due to the lower liquidity and wider bid/ask spread. However, each of these obstacles can be overcome by using a combination of electronic trading tools (e.g. algos) and patience in building a positive size.
Inaccurate and persistent misconceptions about microcaps (e.g. they are riskier than larger cap stocks).
I currently trade for my personal account but would like to move into the investment management side of the industry.
I founded and manage Servo, a Registered Investment Advisor (RIA) that helps investors achieve financial independence, a secure retirement, and positions them to leave a meaningful financial legacy.
As director of research at Portfolio123, I have long specialized in rules/factor-based equity investing strategies of the sort characterized as “Smart Alpha” in the July 2014 Journal of Portfolio Management. In addition, I formerly managed a high-yield fixed-income fund and conducted research involving quantitative asset allocation strategies such as are at the foundation of what today has come to be known as Robo Advising. I formerly edited the the Forbes Low Priced Stock Report, and served as an assistant research director at Value Line. I have long had a passion for investor education, which has resulted in my having conducted numerous seminars on stock selection and analysis, and the authoring of two books: Screening The Market and The Value Connection.
Investing for 20 years, emphasizing stock picking for the last ten. Long-only, driven by valuation relative to risk and growth prospects. My contrarian approach works well during periods of volatility, typically trailing market returns during bull runs.
Tim McPartland is a private investor with over 45 years of investment experience. Additionally he is the editor, and former owner, of The Yield Hunter, a website devoted to the hunt for income producing securities of all types, but in particular specializing in preferred stocks, exchange traded debt and Master Limited Partnerships.
Day trader whose strategy is based on arbitrages in preferred stocks and closed end funds.My group consists of 10 traders.We trade every single preferred stock or closed end fund that provides an arbitrage opportunity. Our research includes stocks that most of the people have not even heard. We have developed our own statistical tools that make most of our arbitrages statistically proven. As a trader I don't just analyse , I trade my analysis and pay the price when I am wrong.That is the main reason I respect opinions only when backed by taking the risk of being wrong.Words or opinions mean nothing in this business and the only person who is right about a certain situation is the one who makes money out of it.
An investor with circa 30 years of professional, managerial and financial experience, gathered through both private-individual activities as well as asset management type of roles.
I'm involved in running a leveraged fixed-income, absolute return, hedge fund that aims at providing its investors with double-digit returns, per annum. The fund runs a fast, frequent and furious trading strategy and it focuses on the very short term. Definitely not a Buy & Hold!
I'm also advising and consulting to private individuals, mostly HNWI that I had been serving through many years of working within the private banking, wealth management and asset management arenas. This activity focuses on the long run and it's mostly based on a Buy & Hold strategy.
Risk management is at the very core of our essence and while we normally take LONG-naked positions, we constantly hedge our positions, in order to protect the downside, that usually occurs at times when you least expect that to take place...
I cover all asset-classes though mostly focusing on cash cows and high dividend paying "machines" that may generate high (total) returns: Interest-sensitive, income-generating, instruments, e.g. Bonds, REITs, BDCs, Preferred Shares, MLPs, etc. combined with a variety of high-risk, growth and value stocks.
I believe and invest for the long run but I'm very minded of the short run too. While it's possible to make a massive-quick "kill", here and there, good things usually come in small packages; so do returns. Therefore, I (hope but) don't expect my investments to double in value over a short period of time. I do, however, aim at an annual double-digit returns on average, preferably on an absolute basis, i.e. regardless of markets' returns and directions.
Timing is Everything! While investors can't time the market, I believe that this applies only to the long term. In the short-term (a couple of months) one can and should pick the right moment and the right entry point, based on his subjective-personal preferences, risk aversion and goals. Long-term, strategy/macro, investment decisions can't be timed while short-term, implementation/micro, investment decision, can!
When it comes to investments and trading I believe that the most important virtues are healthy common sense, general wisdom, sufficient research, vast experience, strive for excellence, ongoing willingness to learn, minimum ego, maximum patience, ability to withstand (enormous) pressure/s, strict discipline and a lot of luck!...
Being an early pensioner at 46 and travelling in developing countries for possibly the rest of my life I'm looking for a source of income that keeps me going for as long as I favour. Since my starting capital is healthy but not enormous I can only keep doing so if my annual income is big enough right from the start, remains healthy and predictable for the unforeseen future through all kinds of economic climates, and beats the average inflation rate in developing countries; the biggest countries where I'm likely to spend most of my time being the most influential in my calculations.
In my previous life I've been quite successful with options trading but surprisingly much less so with stock picking or even ETF picking. But since market timing and trading are not the kind of thing I want to do for the rest of my life (if possible at all when travelling) I had to look for an alternative. After 2 years of possibly reading thousands of articles about asset allocation and portfolio building I fell in love with the utter simplicity, diversity and results of Harry Browne's 1989 version of the Permanent Portfolio (not the mutual fund, ETF or Craig Rowland versions though) and I learned a lot about bonds, commodities, rebalancing, the power of doing nothing and most important of all: the fact that we absolutely have no clue what will happen and make or break markets in the remote or even near future. However, I had to come to the conclusion that the impressive results (9% per year over a 43 year time span with only 4 down years, a maximum draw of an incredible 4% in 1981 and extremely low volatility) probably wouldn't beat developing world inflation rates in the long run, meaning that I would have to touch principle. Since I have no idea whether I will die tomorrow, at 50, 75 or 100 that doesn't seem to be a clever plan as I would very likely run out of money before I run out of vital breath.
I tried modifying the Permanent Portfolio in various ways to spice up results, the most interesting being changing allocation shares, no rebalancing, replacing a US market fund by individual dividend growth stocks so adding dividends to capital appreciation, replacing individual US long term treasury bonds by individual long term investment grade sovereign emerging market bonds denominated in local currencies, adding other commodities to gold for seasonal trading, and replacing cash by emerging market CDs, again denominated in local currencies to make use of changing exchange rates. But then after some unexpected moves on more than one of these fronts I started thinking how predictable this all would become in the future and whether I really needed these risks. The answer was a firm No. But the exercise had been great.
After discovering SeekingAlpha and getting more and more interested in dividend growth stocks and hedging risks I started thinking about the best way to increase income through dividends for an unusual big part of my portfolio and hedge the income risks very aggressively with just a tiny part of the portfolio. Right now I'm in the phase of identifying the best dividend growth stocks for a kind of Buy & Die portfolio (buying stocks without any intention to sell unless there's an extreme situation, and just harvesting dividends to support my life style). And besides that I'm trying to learn as much as possible about hedging risks, costs and rewards while rethinking the value of the Permanent Portfolio on my life style as buying only once, an annual rebalance action lasting less than an hour and never ever reading about individual companies, ETFs, sectors, markets or even the whole economy for the rest of my life is extremely enticing as well.
The second path I'm following is extremely different although again inspired by the Permanent Portfolio but also by momentum strategies, leverage, asset allocation and hedging outside the momentum portfolio. I want my momentum portfolio ideally to be ever lasting as not to end up rethinking my strategy after every single market dip. Now that I've designed such a portfolio including hedges, et cetera, I invest every month in the 3 best ETFs over a 3 month period that are on my list. So far, so good and if I ever find the time to write and share about the selection process of building a multi asset momentum portfolio layer by layer I would love to do so.
And with that I'm at the biggest mistake I made since deciding to start travelling: I thought time was all I had. Well, that may be true but somehow it's incredibly hard to find!
I primarily invest in a globally diversified set of low-cost index ETFs. That's my safe money, and is on virtual autopilot.
Because you can't, tax efficiently, own funds of MLPs and/or other publicly traded partnerships, I am forced to spend my time managing my own portfolio of MLPs, which I plan to use as a base layer of income during a future retirement. I don't trade the stocks nor intend to do voluntary selling in the decades ahead, so "measure twice, cut once." Hence my time on Seeking Alpha learning from others.
With a smaller slieve of my portfolio, I will invest in opportunistic individual stock positions. Most recently I've grown pretty interested in shipping stocks.
INDEPENDENT Financial Advisor / Professional Investor- with over 30 years of navigating the Stock market's "fear and greed" cycles that challenge the average investor. Investment strategies that combine Theory, Practice and Experience to produce Portfolios focused on achieving positive returns over a period of time. Providing advice in helping to avoid the pitfalls and traps that wreak havoc on your portfolio with a focus on Income and Capital Preservation.
I manage the capital of only a handful of families and I see it as my number one job to protect their financial security. They don’t pay me to sell them investment products, beat an index, abandon true investing for mindless diversification or follow the Wall Street lemmings down the primrose path. I manage their money exactly as I manage my own so I don’t take any risk at all unless I strongly believe it is worth taking.
Blogging here on SA is part of my research. I write to find out what I think.
I invite you to join the family of satisfied clients send an e-mail :email@example.com
I suspect that most dividend investors are conservative by nature. I am. I don't believe I have any special talent or gift for trading, a crystal ball, or any access to insider information. Consequently, I have little expectation of prospering by consistently buying low and selling high. In fact, prior to becoming a dividend investor, my trading history boasted the opposite, buying high and selling low. Tis sad but true, over those years, I'd given more to the market than I'd taken from it. However, that's yesterday's news, and of no real interest. Of importance is that I'm patient, analytical, organized, pretty good at math, and always looking for that angle, strategy, or edge to help guarantee my continued market success. My book, The Dividend Investor's Guide, details my history, education and growth as a dividend investor and the lessons I learned along the way. It details an effective and safe overall investing philosophy, along with a discussion of several proven trading strategies designed to enhance one's portfolio's income and dividend yield.
Ronald J. Surz is a partner and CIO of Paladin FinTech, researching financial technology as well as providing a portal to leading edge financial technologies, including some developed by Paladin.
He is also President of PPCA and Target Date Solutions, and partner of TDF Builder and Sortino Investment Analytics.
Ron has served on several boards, and currently serves on a few. He earned an MBA in Finance at the University of Chicago and an MS in Applied Mathematics at the University of Illinois.
I am a former financial executive with extensive experience in the insurance, banking and asset management industries. In 2015 I left industry and since then I have focused on researching investment, financial planning and related topics.
Ian Bezek worked for 3 years as an analyst at a New York-based hedge fund. He's currently living in Mexico, pursuing some entrepreneurial opportunities.
Feel free to contact him regarding investments, writing, or speaking opportunities.
Adam has over twenty five years’ experience in capital markets and investment management, in a career that has involved proprietary trading desks, commodity trading advisors, sovereign wealth funds and private offices. During this time he has had trading book P&L responsibility, in addition to setting up and managing offices of regulated global financial entities in the UAE.
Have been investing for myself and my family for over 50 years. Retired sociology professor who also started and sold 3 retail stores over my career in teaching. Since I am retired, i am looking for stocks that pay dividends and offer some growth to keep up with inflation.
Mark Hebner is the founder and President of Index Fund Advisors, Inc., author of the ifa.com web site and the book and documentary film, Index Funds: The 12-Step Recovery Program for Active Investors, www.indexfundsthemovie.com. His firm has $2.7 Billion in AUM as of Dec 2015 and he has attended over forty investment conferences focusing on passive investing, and is considered the leading internet provider of articles, videos and data on index funds and especially information on Dimensional Funds Advisors mutual funds and portfolios of the research indexes used by DFA. He is an Investment Advisor Representative (Series 7 and 65) and has a Masters in Business Administration from the University of California at Irvine.
Seeking alpha has been one of the "go-to" sites for the investors in our family. We would like to strike a perfect balance between short term trading and long term investing, hence the name "Tradevestor".Good luck investing. In the interest of full disclosure, this is a group account handled by Father and Son. The Father was a trader for quite a few years years with mixed returns, while the son started out a few years ago with DGI and has slowly convinced the Patriarch towards investing rather than trading.
Disclaimer: Please do your own due diligence before buying or selling any stock. Ideas and thoughts presented in the articles are not professional recommendations.
I am a retired Air Force Captain, now on the second and final round of retirement. Although I had previously invested in mutual funds only, in 2012 I came across Seeking Alpha and became interested in Dividend Growth Investing.
IncomeSurfer.com is a website that discusses where I am finding opportunity in the markets and how I am capitalizing on those opportunities through posts. I also include stories about me and my family, books I found useful, travel and important investment decisions. Follow me @IncomeSurf on Twitter. IncomeSurfer.com and all content, are wholly owned by Fast Group, LLC
I was a software engineer for a little over 21 years before I decided to call it quits to the corporate world when I was 45 years old (in 2014). I have always dreamed of retiring early, but I didn't plan to retire until I was 50 years old. When I realized my investment portfolio could generate the income I needed to free my life from the shackles of the corporate world, I quit my job and never looked back.
I did not win the lottery, inherited large sums of money, nor got lots of stock options from a company that I worked at that IPO'ed. It was all very hard-earned. I lived below my means and saved a substantial percentage of my take-home pay ever since the third year of my professional life.
I've been a lurker on SeekingAlpha for years, and finally decided to become a contributor to document my journey as an early retiree.
It's hard to categorize me as an investor. Although I'm mostly "dividend growth" minded, I also dabble in growth, deep value, speculation, as well as a little hedging now and then with options.
I am a graduate student in biostatistics at Emory University in Atlanta, GA, and an individual investor. While my investments are mostly in low-cost index funds, I enjoy analyzing stock market trends and trying to find ways to beat the market.
Right now I'm convinced that the best way to beat the market is to pair a leveraged S&P 500 ETF (e.g. UPRO) with a total bond fund (e.g. BND). With one-third allocated to UPRO and two-thirds to BND, you get a portfolio with beta approximately 1 (depending on the current correlation between stocks and bonds) and alpha two-thirds that of BND's alpha. The result is a portfolio that sort of mimics SPY, but with an extra couple percentage points added on each year.
I favor computational investment methods over traditional fundamental or technical analysis, which require subjective analysis of earnings reports and visual assessments of price charts, respectively.
Ever feel like trading is like rolling dice? In a way, it is, because every mathematical model of the market includes a stochastic aspect. But I believe we can load the dice in our favor through the use of statistics. Understanding both the stock market and each individual stock as a sort of random process with its own characteristics allows us to more accurately predict what it will do in the future. Coupling statistics with fundamental analysis, I have the goal of revealing to you the hidden patterns within stocks so that you may do what you wish with that information.
Simply Safe Dividends helps conservative dividend investors increase current income, make better investment decisions, and avoid risk. Brian Bollinger, CPA, runs Simply Safe Dividends and previously worked as an equity research analyst at a multibillion-dollar investment firm.
Author of Tipswatch.com blog, David Enna is a long-time journalist based in Charlotte, N.C. A past winner of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and is an online producer on a newspaper Website.
The Tipswatch blog, which launched in April 2011, explores ideas, benefits and cautions about Treasury Inflation-Protected Securities, which David believes are an under-appreciated and under-used investment. David has been investing in TIPS since 1998.
Harry Long is the inventor of Hedged Contango Capture and Hedged Convexity Capture and is the Managing Partner of ZOMMA, the world's most innovative strategy index creator.
Mr. Long is a globally recognized expert on the research and development of quantitative investment strategies. The ZOMMA IP portfolio of strategy indices is sought after by asset management firms, investment banks, hedge funds, principal trading organizations, index providers, ETP sponsors, and private equity firms to help them develop and deploy active manager-crushing quantitative investment strategies.
ZOMMA helps investors create long term value by replacing reckless emotional decision making with cutting-edge technology based upon objective evidence.
Mr. Long is a graduate of Rice University with a B.A. in Economics.
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