The 7th annual Microequites Rising Stars Conference was held on Tuesday at the Four Seasons Hotel at the Rocks. It was a free five-hour event with a free lunch and proved to be an excellent opportunity to hear various Micro-cap chief executives talk about their companies.
Micro-caps or “penny dreadfuls” are looked upon with a certain amount of disdain by many people, including some at the II office, and it is with good reason: their ranks include plenty of serial loss makers. But I am personally quite a fan.
Despite the obvious pitfalls, micro-caps are the most fruitful hunting ground for your next ten-, fifty- or even hundred-baggers. After all, it will take a while for the likes of CBA to ten-bag. For that to happen, Australia’s gross domestic product would probably have to quintuple. But in the right circumstances, a stock with a market cap of $100m can very quickly rise tenfold to $1bn. Take TPG for example. In July 2008, it traded at a record low of nine cents, but at its last traded price of $3.35, it has risen 37 times.
Seven different micro-caps presented at the conference (Silver Chef couldn't make it), and you can see their presentations here. While none of these companies satisfy the Peter Lynch criteria of never having been heard of by analysts or having dull sounding names, some of the companies told compelling stories.
The two stories that most piqued my interest were Vocus and BigAir. Both are telecommunication companies. BigAir is a provider of fixed wireless while Vocus is a fibre and data centre company.
I would love to hear anyone else’s suggestions for micro-caps worthy of further investigation.
As a final thought, I couldn't help overhearing someone sitting next to me remarking that the conference does wonders for share prices. As you can see from Table 1, the results are mixed but it seemed to do something for the companies that told a good story.
To find out more about the stocks mentioned, you can read it here on the Intelligent Investor Share Advisor website.