Micro-cap Investing

 

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Search for the tiny, obscure, and neglected

  1. value-guide
  2. 090810_Hummingbird_Investment_Strategy
  3. vii_sonkin_v2

The above links will show you the methods of a micro-cap investor.  You typically won’t find many franchise-type companies in the sub-$300 million market cap area, but you might find a few strong niche companies like MLR (Miller Industries, Inc. – Tow Trucks).  Financials are usually easier to follow.   You need to be aware of the stock price volatility especially in bear markets (remember those?) to use Mr. Market to your advantage.   One of the best investments is to know the value of a company and take advantage of repeated volatility.

Update: Case Study in a Value Death Trap (PRXI). 

PRXI

 

Small PRXI

 Mark Sellers discusses the keys to investing (Interview)

 

 

Mark Sellers Capital

Sellers_Speech

Value Traps_PRXI Premier Exhibits

Sellers Piling into MCF (Contango Oil & Gas)

http://www.gurufocus.com/news/107859/mark-sellers-contango-investment–intelligent-investing-or-the-act-of-a-relatively-inexperienced-investor-

What can you learn from his saga?

9 responses to “Micro-cap Investing

  1. Pingback: Microcap investing readings. | whopperinvestments

  2. I saw the Hummingbird investment strategy a few years ago. At the time, it struck me as probably the purest form of Graham investing that would be possible in the modern era (given that “net nets” are few and far between). However, Sonkin’s numbers were not particularly impressive since the early 2000s. Last I heard, Sonkin had shut up shop and gone to work for Mario. My guess is that Sonkin had large redemptions after the Lehmans panic and was not able to raise more money. It’s a pity. I had been hoping that Sonkin would do well, as a kind of proof that the old ways work best.

  3. http://www.hedgefundletters.com/hummingbird-value-fund/

    More letters above.

    Yes, Nemo, I checked and you’re right. Sonkin joined Gabelli in 2013 as a micro-cap specialist. Having heard him lecture a few times at Columbia GBS in 1998, 1999? I am not that surprised. He–as we probably all do–had some serious personal issues that might interfere with investing.

    Again, as I harp on, it isn’t the approach so much as being able to apply it consistently within your personal framework. At first you focus on technique, style, method and Gurus, but then you realize you should only follow yourself. Investing is a personal endeavor.

    I wish Paul well at Gabelli. ….and thanks for sharing the info.

  4. hummingbird had a big position in PRXI, correct? I remember them heavy into some well-trafficked name that didn’t do very well. that couldn’t have helped. wish he was still around though.

  5. Jason:

    See my update in the post above. Mark Sellers suffered a similar fate. He was in over his head managing money for others.

  6. I believed so much in Mark Sellers that I bought a big position(~100K) in PRXI. I had several opportunities to get out in 2012/2013 and here I am…
    What have i learnt – a painful lesson in portfolio allocation. I got out of 3 positions which were less than 2-3% of my portfolio for gains of 100% , 25% and 35% respectively (long term gains). This, however, did not make a dent in my portfolio given the outsized nature of the PRXI position. When the auction didnt go as planned in apr 2012, i shd have bailed ship. sigh.

    Regardless of how juicy it is, it is a good thing to remind oneself of the downside (much like canadian value investor talks about MarkSellers Contango bet size).

    There is value in PRXI but i gotta admit, I am ensnared in it.

    • I think you must consider opportunity costs. Is the opportunity in PRXI vs. another opportunity better? Today, would you buy PRXI in size?

      We all need to work on the psychological issues to learn from our mistakes. It seems overconfidence and pride were your snares. I ain’t poining fingers–my mistakes are much worse.

    • Actually, we, as beginners in our investment journey, make the GURU mistake. Mark Sellers has no insight over anybody for what investment is right for them. PRXI is highly risky in the sense it is dependent upon one or two “Big” exhibits.

      Follow yourself not others. Yes, you can find an idea through others but then do your own work and decide then.

      • Thanks John. More than pride, I’d say it was plain greed. The signs were there(since Aug 2010 – Apr 2012, their biggest chance 100th year anniversary), I ignored it. up until 2012, it was a great opportunity. I didnt sell and now am paying a price since the management(&board) have no clue how to sell the assets.

        As to your point, PRXI is a purely an asset play…The operating business is a joke. With the progression of time and Sandy, their operating business has been hit clearly hard and now they are looking to raise money to finance a new exhibit in NY. This is one of the things that fall into the “You dont know what you dont know”. When i bought PRXI, its cash hoard was 6M, 0 debt and operating business was eking a 1-2cent profit.

        Thanks, I may have learnt the lesson and do not blindly buy GURUS now. I pay attention to gurus buying and an event significant.

        Finally, most of my free time is spent identifying my behavior biases(its a long list) and making it a checklist item. Thank you for sharing and help learn.

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