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Fast-growing small caps at a super-cheap price
nipper
post Posted: Nov 23 2016, 07:47 AM
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a good 'view' on the sector.

Leah Zell on Small Cap Investing

https://www.livewiremarkets.com/feeds/latest?welcome=true



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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Nopoo
post Posted: Oct 20 2016, 02:06 PM
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$LAG.C Laguna Blends Signs NFL Champion Marvin Washington

http://www.celebstoner.com/sports/sporting...ical-marijuana/



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Nopoo
 
Nopoo
post Posted: Oct 17 2016, 01:55 AM
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In Reply To: nipper's post @ Aug 19 2016, 09:41 AM

YDreams Global (YD.V)

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www.ydreamsglobal.com




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kiril
post Posted: Aug 19 2016, 12:07 PM
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In Reply To: nipper's post @ Aug 19 2016, 09:41 AM

good post Nipper, thanks.

One that I am backing right now in a major way is TSN. View the TSN forum on SS where I have been banging on to myself mostly for the last 12 months.

Me and 2 Sydney fund managers met with the analyst that structured the recent transaction for TSN and is the company adviser on a potential company making deal we are working on right now.

If this comes off....watch out.

Kiril.

I hold...lots.


Said 'Thanks' for this post: wolverine  nipper  Nopoo  
 
nipper
post Posted: Aug 19 2016, 09:41 AM
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In Reply To: kiril's post @ Aug 18 2016, 09:59 PM

got to agree with you, kiril, on several of those points
- K1 contributions... BIG TICK
- have learned so much since those days by investing in small and micro caps... TICK
- most of the contributors are MIA... NOTED

- use to love this thread back in 2007 ... the strengths and weaknesses of any open forum were all too apparent, with hobby-horses and deviations and tangents and the curiously uninformed often taking the conversation away from original intent.

That said, micro and small caps are where the action, fun and potential upside is, and that's where I want to be for the active part of my portolio (even more so when the factors and headwinds outlined for bigger companies, as outlined in my post of yesterday, are taken into account).

So, to look at Fast-growing small caps at a super-cheap price, we require runs on the board, not super speccies. I've got a list somewhere, and will dig it out, for posting.

Ignoring mining speccies, health and IT would be the sectors to play in.
Global Health GLH - look like they may get somewhere
Macquarie Telecom MAQ - too late (unless a takeover comes)
Medical Developments MVP - too late
Paragon Healthcare PGC - integration should deliver more. PE not outrageous
Class Super CL1 - how much market share can they capture?
MegaPort MP1 - data centres; growth and margins. this is my tip



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
alonso
post Posted: Aug 19 2016, 07:36 AM
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In Reply To: kiril's post @ Aug 18 2016, 09:59 PM

GMC & GMCO?



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"The optimist proclaims that we live in the best of all possible worlds. The pessimist fears this is true"

"What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom." Adam Smith

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kiril
post Posted: Aug 18 2016, 09:59 PM
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In Reply To: nipper's post @ Aug 18 2016, 02:50 PM

Wow I use to love this thread back in 2007.

K1 was going to track these stocks for 10 years.

Looks like most of the contributors are MIA 9 years later.

My pick FSA is still around, but so many aren't.

Must say I have learned so much since those days by investing in small and micro caps.

I certainly miss the contribution K1 made to this site.

Kiril.



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nipper
post Posted: Aug 18 2016, 02:50 PM
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reviving this thread, (and why not)
Had a read through it... in the days when SS was a contender for serious discussion. Its testament to the good , bad and ugly, with Kahuna trying to steer it towards practical and REAL insights, with money attached, while a bunch of dufi (pl. of dufuses) feel they have to add 2 bobs worth. And so it goes.

Anyhow, there is much commentary about the differential performances of sectors in the ASX. Mostly run by those talking up their own book, but some is insightful.

Frankly, Fast-growing small caps at a super-cheap price is the hardest of all to find, and thus that's where the 10 baggers can be found. I don't know too many, but have done well with some over the last 5 years. BLA and, recently, PGC come to mind. MVP is there but I sold too early. (+ I try to sell the dogs)

The Conventional Wisdom
QUOTE
The ASX is one of the largest 15 stock markets in the world, with a market capitalisation of $1.5 trillion. What investors might not be aware of, however, is how top-heavy it is. The largest 20 stocks account for 60% of the S&P/ASX300 Index, while financial and mining companies comprise more than two-thirds of the top 20. Banks and miners dominate the local market. These companies are facing challenging times. Banks are now required to retain more capital on their books, crimping credit growth and putting pressure on returns. At the same time, interest rates are on a downward trend, which has negative impact on their margins. Additionally, they will need to set aside more money in provisions for bad debts, which can only rise from historic lows. All this will cut into their profitability. Meanwhile, mining companies are being hurt by the decline in commodity prices and a slowdown in the economic growth of China, Australia's largest trading partner.
This makes a strong case for investing in the mid- and small-cap companies that comprise the remaining 40% of the ASX and that derives its earnings from more varied sources. This diversity is important, because you don't want all your stocks exposed to the same growth drivers, nor do you want your returns to be highly correlated. If we consider mid-caps alone, they generally have more developed governance and risk frameworks than small companies, their cash flows are more stable and replicable, and their share prices less volatile.

https://cuffelinks.com.au/australias-mid-caps-fertile-territory/

But for every view, there is an alternative one
QUOTE
One of the defining characteristics of this market is the under performance of large caps. What's your take?

They've missed what's really happening. You won't hear people talking about this but it's almost like there has been a shadow bull market running behind the scenes. The large caps have reached a plateau and the only thing holding them up has been the payout ratios. There's no growth so investors have lost interest. They will be supported by their yield but that's it.

What's happened is that investors have cast a wider net. They've started to look outside the top 50 and outside the top 100. So there has been this huge rally in small caps.

How big and where exactly is the action taking place?

The Small Ordinaries has outperformed the ASX 200 by around 18 per cent over the last 12 months. It's the biggest outperformance by the Small Ords ever.

What's interesting is that the ASX 200 and the Small Ords have about 100 stocks in common. Stocks from 101 to 200 are in both benchmarks. So the fact that the Small Ords has outperformed by so much shows that the returns have been from the stocks at the tail end, ie those stocks from 201 to 300.

This is where the growth has been because these companies are more concerned with double-digit EPS growth and less interested in dividends. Most clients and institutions have portfolios jammed with large caps delivering them income but what they need, as well, is some growth.

So investors are paying up for growth. But that's not unusual, is it?

No, it's not but it can become a problem when that trade gets crowded and that wonderful double-digit growth stars to decline.

Many years ago Harvey Norman was rolling out stores and traded at a massive premium to the market and the sector. But when the growth slowed down the premium went from 25 times earnings back to 12 times and that hurt – it was still a great stock but reality finally caught up (as it always does).

Some of these growth stocks have been bid up to excessive valuations and that's a worry because the value traded in Small Ordinaries is now around 20 per cent of the total market value. Back in 2012 it was 10 per cent. In 2001 it was 5 per cent.

What's happened is that the large cap managers who traditionally avoided this end of the market have come in and started buying these growth stocks (because there is so little in the majors) and pushed the valuations.

These stocks now have to perform, they have to continue growing. Going from a PE of 18 times to a PE of 25 times is like walking on a tightrope. The fall is a long way down, they are priced to perfection. If they ever fail to deliver or have just a small trip up – the fall will be nasty.

So they miss earnings and get sold down in the aftermath. What about the rebound?

If you look at the last reporting season those stocks that disappointed fell 7.9 per cent on the day but they continued to fall after. The average move down was 20 per cent between then and now. Those stocks that rallied rose 1.8 per cent on the day but a total of 28.2 per cent over the next five or six months.

Those numbers are compelling and tell you that if it's a bad result and you are thinking of selling – then exit immediately – everyone else is thinking the same thing.

This time it will be just as bad because these trades are so crowded, if a stock comes out with a miss and is down 10 per cent on the day of the result it could be down another 10 or 20 per cent before too long. Stocks that disappoint on earnings will continue to disappoint. This is an invaluable lesson to know.

Where to now for the small cap rally then?

There's no reason this trend can't continue. It could go on for another six or 12 months. But, at the same time, it means that the bubble in some of these stocks just gets bigger and there will be a correction somewhere down the track. It could be six, nine or 12 months away – but it will happen.

After looking at markets for 30 years, I know one thing – it will come when no one expects it and it will be a lot worse than anyone expects. You cannot predict when but all you know is that it will happen one day. At that point some of the big caps stocks are likely to come back into focus – they were the growth engine for much of the last 20 years – so their time will come again.

Resource stocks, for instance, are now starting to look very interesting. The analysts have been downgrading their numbers for four or five years now so they have been in perpetual downgrade mode.

The problem for analysts is that they were way too bullish on commodities when they were falling and were continually having to adjust forecasts lower for the last few years. Now the opposite is happening – a number of brokers have commodity price forecasts that are well below current spot prices.

So what we are seeing is the first leg of the resources rally – the one where no one really believed it at first but now everyone accepts that the lows have been seen and they won't be revisited.
Coppo Report



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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Brendan
post Posted: Jan 5 2009, 09:48 AM
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In reply to: datum on Wednesday 30/07/08 06:57pm

"i think PPP should pay large dividends then liquidate the company when the oil runs out "

6 months on and it's still going, currently at 0.290. Which isn't great but when comparing to the rest of the market it's held up well.

New year, time to review the portfolios.. anyone got anymore suggestions on fast-growing small caps at a super-cheap price ?

 
datum
post Posted: Jul 30 2008, 06:57 PM
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In reply to: andy20020 on Tuesday 29/07/08 11:10pm

i already have Pan pacific (PPP) shares.
I bought them on the 19th june 2007 @ 26.5cents

the only way i think we will profit from PPP is a large capitial
return , such as 15 cents or more.

PPP is almost like RHG limited (the former rams home loans)

In the fact that RHG are running off their loan book, PPP are running
down their oil reserves.
i think PPP should pay large dividends then liquidate the
company when the oil runs out



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This is not a bottom draw stock. This is a stock you take to the grave with you.
 
 


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