April 24, 2013
Small Cap Stocks: Is the Russell 2000 Looking Bearish?
 Knowing when to enter a short-biased trade seems to always have a bit more fear and trepidation with it than when on the long side. I know they are just two sides of the same coin. I know that with the right downside strategy (be it option protection or a stop loss setting), there really isn’t any difference between taking a position one way or the other. Oh, I know there are those who believe there is some kind of mystically bad karma associated with betting that the market or a company will move lower so that you can profit from it. That is just silly, of course. But, nonetheless, shorting does carry a bit more risk than being long. After all, in a long position, all you can do is lose everything; if you are short, however, there is (more)…
September 1, 2012
Investing like its 1977
 “If Obama wins the election, the market will go all to hell.” Have you heard that one? How about this zinger, “The U.S. is technically bankrupt and faces an even bigger crisis than 2008.” Have you heard that? Here’s another: “The price of gold will go to $3,000 an ounce as the Fed is forced to do QEx.” Or how about my personal favorite, “The U.S. Midwest farmers are about to become the richest people in the world as inflation skyrockets.” There is no shortage of dire predictions of what lies around the corner for this market. Are any or all of them right? Perhaps they could be, but I’m not planning on it. If you have followed my articles on equities.com over the past year or so, you will notice that I have been a bit inactive for a (more)…
May 25, 2012
Why Investors in Microcaps Shouldn’t Time the Market
 When it comes to value investing, patience isn’t just a virtue; it’s a necessity. This is especially true for microcaps, which is really categorized as value investing to the extreme. While large cap and blue chip stocks may be undervalued by the market at times, it is rarely to the extent of those in the microcap space. With little-to-no media coverage or attention from the larger investment community, many of the opportunities in this arena may take long periods of time before their actual value is realized. The misconception is that microcaps is where fortunes are won and lost overnight. In reality, it can take months or even years before a small company is recognized by investors. When it does, however, the take-off can happen very quickly. We asked microcaps expert Stephen Kann for this thoughts on the risks of (more)…
April 30, 2012
A Brief History of Corporate Bribery
 The recent revelations that Wal-Mart (WMT) executives in Mexico had been engaging in widespread and wholesale bribery of officials in order to accelerate the construction of new stores rocked the retail giant last week. The scandal could reach the highest levels at Wal-Mart, with even CEO Michael Duke potentially being implicated in the cover-up, and the alleged violations of the Foreign Corrupt Practices Act (FCPA) of 1977, which makes bribery of foreign officials illegal for American companies, could mean a costly mistake on the part of the Arkansas-based company. While the facts behind this case are still drawn entirely from the New York Times article that exposed the corruption, it certainly appears as though this will ultimately be revealed to be one of the biggest examples of corporate bribery in history. Or does it? Here’s a look back at some (more)…
4 Bargain Small-Cap Financial Stocks on the Rise
 The financial sector, as a whole, appears to be on the rise. Since December, a combination of easing of concerns about Europe, strong earnings reports, and successful stress tests have helped the sector rebound from its previously moribund state. Since November 24 of last year, the Financial Select Sector SPDR (XLF), an ETF that tracks the financial sector, has gained over 30 percent, showing the sector as a whole has been on the rise. Given the potential that the financial sector is rebounding, some investors may be seeking out cheap options to invest in the financial sector. While many will simply cull over the well known investment banks and hedge funds, there are also several small cap financial stocks that offer attractive valuations. The following stocks have P/E ratios under 15, meaning that they’re coming at a cheap price based on their (more)…
April 26, 2012
Shakespearean Tragedies and Comedies in the Stock Market
 April 26th was a very big day in the world of drama. On this day in 1564, William Shakespeare was born in Stratford-Upon-Avon and went on to a career as possibly (okay, definitely) the best-known playwright in human history. Just think, were he alive today he would be a mere 448-years young. However, while a positive titan in the world of drama, Shakespeare’s birthday doesn’t seem to have nearly as much importance in the world of the stock market. Or at least, that’s how it might seem. For, while it would take a bit of a stretch in most cases, the universal themes explored in some of Shakespeare’s classics could potentially be applied to some of today’s publicly-traded companies. Romeo and Juliet – T-Mobile and AT&T (T) Romeo and Juliet tells the tale of star-crossed lovers who desperately want (more)…
April 25, 2012
Why Investors Need Microcap Diversification
 If there is any such thing as a free lunch in finance, diversification would be the closest investment principle to it. A well-diversified portfolio provides investors with a good balance of reducing risk but still enough exposure to capture profits. When dealing with microcaps, it is critical that investors understand this concept. Given that most opportunities in this space can promise astronomical rewards, many undisciplined investors tend to forget or disregard the risks involved. This week, Equities.com discussed the art of diversification in microcap investing with Stephen Kann, an industry veteran and expert in this arena, to gain some insight on this topic. EQ: One of the most important rules in your methodology is to diversify your exposure when dealing with microcaps. Why is diversification so critical in this space? Kann: Microcaps, by definition, carry higher risk. They’re small companies (more)…
April 23, 2012
Whitney Tilson Says Nokia, RIM, First Solar “Going to Zero”
 Whitney Tilson, noted value investor and co-manager of the hedge fund T2 Partners, has made waves of late for a variety of reasons. He wrote an op-ed piece for the Washington Post in support of the “Buffett Rule” on April 11th, and he’s long been considered one of the more prominent proponents of the Buffett-Graham school of value investing. However, Tilson’s most notable statements recently came in an interview on CNBC on Friday, April 20th. In it, Tilson explained his short position on Nokia (NOK), Research in Motion (RIMM), and First Solar (FSLR), proclaiming that each company’s future held even more dark clouds than currently existed. “This week, Nokia, RIMM, First Solar are all in the headlines. The businesses are in full scale collapse,” he said. “The stocks are down 60 to 80 percent, yet we are short those three companies (more)…
April 20, 2012
Does Splunk’s Successful Debut Resurrect the IPO Market?
 The IPO of data company Splunk (SPLK) had the biggest opening day pop since the debut of LinkedIn (LNKD) in May of last year. In the company’s first day of trading, its stock price spiked some 108.71 percent. Splunk’s Major IPO? Splunk could hardly be considered the IPO that was on most people’s minds. The pending IPO of Facebook (FB) has dominated most news coverage. However, San Francisco, CA company managed to reward anyone who got shares early by more than doubling in value before the end of the day. Splunk, a software company that makes a program to monitor and analyze machine generated data from applications, systems, and IT infrastructure, clearly entered into a market hungry for its shares. Splunk’s rising share price comes after the company priced its IPO well above expected ranges. The company had an expected (more)…
April 19, 2012
Two Myths of Small-Cap Investing Debunked!
 Small-cap stocks have earned the reputation as the ‘wild card’ of the stock market game. But do these tiny firms deserve the notoriety and can investors mitigate the potential risks? While definitions vary, a small-cap stock is often defined as having a market capitalization between $300 million and $2 billion. (Calculated as a function of outstanding shares multiplied by share price). And there are other characteristics generally associated with these stocks as well. They include: Illiquid trading Often opaque over-the-counter exchanges Extreme price volatility Low quality firms with higher risks of bankruptcy Small cap investors are often looking for the next Microsoft (MSFT) or Apple (AAPL) … before it takes off. They investigate a company’s story looking for the David that will take out Goliath for long-term upside gains of 10 or even 100 times their original investment. But are (more)…
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