Planet MicroCap Podcast | MicroCap Investing Strategies

My guest today is Sage Berryman, CEO of Aluula Composites (TSXV: AUUA). Aluula is focused on revolutionizing material science. Founded in 2019, the company has developed a patented process for producing ultra-high molecular weight polyethylene (UHMWPE) composites without glues—fusing at the molecular level to create materials that are lighter, stronger, more durable, and fully recyclable. This “mono-material” design also enables circularity and addresses the growing demand for PFAS-free solutions.The company first gained traction in windsports through its Ocean Rodeo subsidiary, but following a 2023 RTO and a 2024 strategic refocus under Sage’s leadership, Alula divested Ocean Rodeo to concentrate on becoming an ingredient brand. Today, Aluula is targeting both premium outdoor markets—packs, tents, wind sports—and larger commercial and industrial applications, where strength, durability, and recyclability are key.Aluula will be presenting at our conference in Toronto, the Planet MicroCap Showcase on October 21-23, and I invited her on to discuss:* The science behind Aluula’s glue-free composites* Strategic pivot from Ocean Rodeo to ingredient branding* Long but improving sales cycles for adoption* Differentiation from commodity materials like polyester and nylon* Expansion plans into higher-volume industrial applications* Financial discipline, with recent margins of 40–45%For more information about Aluula Composites, please visit: https://aluula.com/Watch on YouTube:Summary:I. Executive SummaryAluula Composites is a publicly traded company revolutionizing material science by combining high performance and sustainability in a single product. Founded in 2019, Aluula has developed a patented glue-free fusing process that enables the creation of multi-layer composites made from ultra-high molecular weight polyethylene (UHMWPE). These materials are significantly stronger, lighter, and more durable than conventional alternatives.Aluula’s unique mono-material design also allows for full recyclability—offering PFAS-free and circular solutions across diverse industries. Following a 2023 reverse takeover (RTO) and a major strategic refocus in 2024 under CEO Sage Bryman, Aluula is now positioned for aggressive growth, targeting both premium performance markets and high-volume commercial applications.II. Key Themes and InsightsA. Core Innovation and Differentiation“Revolutionizing the material science space where you can combine high performance and sustainability in the same product.” – Sage Bryman* Patented Glue-Free Fusing Process:Aluula’s breakthrough lies in its ability to fuse multi-layer composites at a molecular level without adhesives. This eliminates degradation associated with glues and produces cleaner, more durable bonds.* Superior Strength and Lightness:The glue-free process results in composites that are stronger, lighter, and more durable than traditional glued materials (e.g., DaNeeA).* Mono-Material & Fully Recyclable:Because Aluula products are made entirely from polyethylene, they can be fully recycled at end of life—an essential feature as industries seek PFAS-free, circular materials.* Weldable Construction:Unlike most fabrics that require stitching or taping, Aluula materials can be welded, offering improved waterproofing, strength, and reduced weight—ideal for high-performance gear.* Customization:The technology allows tuning of UHMWPE strength and layering to meet specific needs—ranging from stiffness to ultra-light waterproofing and gas retention.B. Company History and Strategic Refocus* Founded in 2019: Created by two wind-sport enthusiasts—one a chemist, one an entrepreneur—seeking stronger, lighter materials for kites and wings.* Early Validation: Initially commercialized through Ocean Rodeo, where the material proved its superior performance in demanding wind-sport environments.* Public Listing (RTO, 2023): Aluula became public through a reverse takeover.* Strategic Refocus (2024): Under CEO Sage Bryman, the company streamlined and reoriented its strategy:* Stabilized operations and clarified the core value proposition.* Divested Ocean Rodeo to avoid conflicts with customer brands.* Built a strong executive team and transitioned from reactive (“inbound”) sales to a proactive global outreach strategy.* Intellectual Property Estate: Robust IP portfolio of patents and trade secrets protecting both material formulation and construction techniques.C. Market Strategy and Target Customers* Ingredient Brand Model:Aluula functions as a B2B ingredient brand, co-branding with partners (e.g., Arc’teryx) that integrate its materials into premium products.* Premium Product, Premium Price:Positioned at the top end of performance materials, commanding premium pricing justified by unique strength, sustainability, and recyclability.* Diversified Market Focus:* Performance Outdoor (Consumer-Facing): Packs, tents, wind sports, and sailing products—key for brand visibility.* Commercial & Industrial (High-Volume): Larger, higher-growth markets such as wind power and marine cargo applications, where UV and saltwater resistance drive adoption.* Sales Cycle:Typically two years, progressing from sample testing to commercialization. Early adopters like Arc’teryx faced longer cycles, but future integrations are expected to accelerate.D. Competitive Landscape* Main Competitor: DaNeeA (owned by Aviant) – leading UHMWPE supplier for outdoor and ballistic markets.* Other Competitors: Honeywell (body armor) and traditional fabrics (Dacron, polyester, nylon).* Aluula’s Advantage: Offers a high-performance, PFAS-free, recyclable alternative unmatched by commodity producers.E. Financials and Growth Outlook* Q2 2024 Results: Reported revenue growth with gross margins between 40–45%, reflecting operational improvement.* Focus on Margin Discipline: CEO Bryman stresses growth with operational rigor, maintaining sustainable OpEx levels.* Growth Outlook (2025+):* “Right product, right time” for industries demanding sustainable, waterproof, PFAS-free materials.* Aggressive growth trajectory expected as commercialization scales.* 3–5 Year Vision:* Expand manufacturing to meet demand.* Deepen market penetration across consumer and industrial segments.* Reach profitability through a mix of premium pricing and volume expansion.F. Key Challenges and Risks* Lack of Financial Guidance: Makes forecasting difficult for investors.* Product Aesthetics: The distinctive “crinkly” texture differs from traditional nylons, occasionally requiring customer education.* Competing with Industry Giants: With ~$6M in annual revenue, Aluula competes against massive incumbents, requiring strategic positioning.* Customer Learning Curve: Welding-based construction methods require new manufacturing expertise.* Macroeconomic Uncertainty: Global instability and long sales cycles (up to two years) pose potential headwinds.III. Aluula’s Value Proposition — In Their Own Words“Aluula is revolutionizing the material science space where you can combine high performance and sustainability in the same product.”“We have a patent around the product and the process to create composites without glues—fusing at a molecular level.”“Because it’s entirely polyethylene, it’s a mono-material and recyclable at the end of its useful life. That’s a big differentiator.”“With Aluula materials, you can weld seams—creating waterproofness, strength, and lightness by removing extra steps.”“We’re first to market. Building brand equity and sticky customer relationships really matters.”“PFAS-free and fully circular is no longer a ‘nice-to-have’—it’s a need-to-have.”“Commercial and industrial markets may not be sexy—but they’ll drive real revenue growth over time.”This podcast was recorded and is being made available by SNN, Inc. (together with its affiliates and its and their employees, “SNN”) solely for informational purposes. SNN is not providing or undertaking to provide any financial, economic, legal, accounting, tax, or other advice in or by virtue of this podcast. The information, statements, comments, views, and opinions provided in this podcast are general in nature, and such information, statements, comments, views, and opinions, and the viewing of/listening to this podcast are not intended to be and should not be construed as the provision of investment advice by SNN. The information, statements, comments, views, and opinions expressed in this podcast do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or other course of action.The information, statements, comments, views, and opinions expressed in this podcast (including by guest speakers who are not officers, employees, or agents of SNN) are not necessarily those of SNN and may not be current. Reference to any specific third-party entity, product, service, materials, or content does not constitute an endorsement or recommendation by the SNN. 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My guest on the show today is Ben Finser, Founder and Portfolio Manager at Fin Capital Management. In this episode, Ben shares his journey from a decade at Kabouter Management to launching Fin Capital in 2024, and how his entrepreneurial background shaped his passion for analyzing and owning high-quality businesses.We dive into his exclusive focus on international micro and small caps, a “target-rich universe” of some 15,000 listed companies in developed markets outside the US. Ben explains why these overlooked businesses — often with no sell-side coverage and tiny trading volumes — present compelling opportunities for investors willing to dig deeper.Ben also details his boots-on-the-ground due diligence process, including traveling globally to meet management teams, comparing companies to global peers, and navigating cultural nuances when assessing business quality and long-term growth. We talk about his “pseudo-activist” engagement approach, where he works alongside management to improve disclosures, expand investor outreach, and unlock value.Finally, Ben shares a case study of a Japanese procurement software company he helped bring onto investors’ radar, and offers perspective on why US outperformance may be cyclical — and why international microcaps deserve a place in more portfolios.For more information about Ben Finser and Fin Capital Management, please visit: https://fincapitalmanagement.com/Watch on YouTube:Summary:I. Background and Investment PhilosophyBen Finser’s passion for investing began early through entrepreneurial ventures—a mountain bike cleaning business at age 11, followed by a gardening business and a healthy vending machine venture in high school. These experiences sparked a curiosity about business quality and what differentiates high- from low-quality companies.His career path included internships and a decade at Kabouter Management, a firm focused exclusively on international micro and small caps. In May 2024, he launched Fin Capital Management.Finser describes himself as a long-term investor who seeks high-quality businesses to own for years, taking advantage of pricing mismatches created by structural inefficiencies. His concentrated fund emphasizes:* Financial discipline (e.g., net debt/EBITDA * Self-financing growth* Proven business models with resilience across cyclesII. International Microcap Opportunity: A Target-Rich UniverseFinser invests exclusively outside the U.S. in developed markets. He describes this as a “target-rich universe” of ~15,000 listed companies, compared with a shrinking U.S. listed base.Key structural drivers of inefficiency:* Abundance of undercovered companies: Many with zero analyst coverage, especially in Japan, which has as many listed companies as the U.S.* Cultural differences in capital markets: In Europe, for example, wealth is often held in cash, bonds, or real estate, reducing equity market sophistication.* Small cap anomaly: As funds grow, they “graduate” out of microcaps, leaving space for smaller managers.* Global comparison advantage: As a global investor, Finser benchmarks local companies against international peers to find mispricings.He screens for businesses that are too small for larger funds (under $2B market cap or decades of operating history and proven durability.III. Boots-on-the-Ground Due Diligence and EngagementA. Due Diligence Process* Screening: Quarterly global screens to identify small, resilient businesses.* Travel-driven research: Trips are planned around clusters of interesting companies.* On-site meetings: Focused on understanding recurring revenue, low churn, long-term growth themes, and valuation relative to peers.* Thesis testing: Meetings include direct feedback from management, ideally with key decision-makers.B. Cultural NuancesFinser stresses the importance of cultural understanding. Example: In Japan, “yes” often means acknowledgment, not agreement. His European background helps him adapt communication across markets.C. Advantage as a Foreign Investor* Seen as a positive signal by local companies, who admire U.S. investors.* Local investors often disappointed post-IPO; foreign long-term focus is refreshing.* Easier meeting access—management appreciates the effort of international travel.* Builds networks via local investors and brokers.D. Active Engagement (“Pseudo-Activism”)Finser takes a collaborative approach, positioning himself as a shareholder partner to help accelerate re-rating:* Encourage English-language earnings calls and materials* Support international roadshows* Improve investor presentations (e.g., highlight customer stickiness, clarify metrics)* Suggest mid-term targets for clarity* Occasionally advise on M&A or incentive plans when “wallcrossed”IV. Case Study: Japanese Procurement Software Company* Situation: Sub-$100M market cap, ignored by investors, misunderstood due to gross vs. net revenue reporting.* Actions: Finser helped them clarify disclosures, highlight customer retention (no losses in five years), and develop a mid-term plan. Materials were translated into English.* Result: Discovery by both international and local investors, with re-rating potential.He emphasizes that such discovery processes can take years, requiring patience and conviction.V. Macro Outlook and GuidanceA. Macro View* U.S. outperformance since the financial crisis is likely cyclical and overdue to reverse.* International markets remain under-owned by U.S. investors.* Global themes (AI, demographics) create opportunities and risks.* Finser remains a bottom-up investor, focused on resilient businesses rather than macro timing.B. Advice for U.S. Investors Considering International Microcaps* Overcome home bias—recognize quality companies exist globally.* Focus on proven models with resilience across downturns.* Learn and adapt to cultural differences.* Be patient—discovery and re-rating can take years.VI. ConclusionBen Finser’s strategy blends entrepreneurial passion with disciplined research. He targets overlooked opportunities in developed international markets, where inefficiencies and limited coverage create fertile ground. His approach emphasizes boots-on-the-ground due diligence, cultural adaptability, and collaborative engagement with management teams.By focusing on quality businesses in underappreciated markets, Fin Capital Management offers an alternative to U.S.-centric portfolios and highlights the long-term potential of global microcap investing.Planet MicroCap Podcast is on YouTube! All archived episodes and each new episode will be posted on the Planet MicroCap YouTube channel. I’ve provided the link in the description if you’d like to subscribe. You’ll also get the chance to watch all our Video Interviews with management teams, educational panels from the conference, as well as expert commentary from some familiar guests on the podcast.Subscribe here: http://bit.ly/1Q5YfymClick here to rate and review the Planet MicroCap PodcastThe Planet MicroCap Podcast is brought to you by SNN Incorporated, The Official MicroCap News Source, and the Planet MicroCap Review Magazine, the leading magazine in the MicroCap market.You can Follow the Planet MicroCap Podcast on Twitter @BobbyKKraft This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit microcapnewsletter.substack.com

My guest on the show today is Iggy, better known as Iggy on Investing, a deep value investor and blogger. In this episode, Iggy shares how the COVID-19 lockdown gave him the time to dive into investing, turning inspiration from Buffett and Graham into a disciplined deep value strategy focused on small, illiquid companies trading at substantial discounts to book value.We discuss his “Young Buffett”–style approach—seeking firms at 0.3× to 0.5× book with strong ROIC and catalysts, especially in overlooked European markets—as well as the role his blog plays in clarifying his thinking, building conviction, and holding through long, boring periods.Iggy also walks us through hard-learned lessons—from the importance of staying within your circle of competence and scrutinizing corporate governance, to navigating shareholder activism via a “stag hunt” scenario. And he shares how he’s building investor community in Europe, including hosting his 2nd Annual Benelux Investor Event on Saturday, September 27.For more information about Iggy on Investing and to attend his upcoming event, please visit: You can follow Iggy on Investing on Twitter/X: https://x.com/iggyoninvestingWatch on YouTube:Summary:1. Origins of Passion and Early Influences* Iggy’s investing journey began during the COVID-19 pandemic (2020), when he finally had “a boatload of time on [his] hands” to study.* He was already familiar with Buffett and The Intelligent Investor, but the lockdown provided the push to act.* Earlier, while working at a private bank, he observed bankers “gambling their money away in the market,” which reinforced his belief in Buffett’s idea that markets aren’t always efficient.2. Deep Value Philosophy and Strategy* Style: Follows “Young Buffett”-style deep value investing, often in small, illiquid stocks trading at discounts to book value.* Ideal Setup: Companies selling below book where he is confident they can earn a return on capital.* Key Traits of Targets:* Deep discount to book (0.5x or even 0.3x).* Strong ROIC track record (e.g., 19% historically).* Sometimes catalysts, such as real estate worth more than market cap.* Geographic Focus: Primarily Europe, where he sees more overlooked opportunities, but remains open to global ideas.* Acknowledges ignoring large caps in recent years “has not necessarily been the best decision.”3. Writing and Public Learning* His blog, Iggy on Investing, is central to his process. Writing helps clarify his own thinking and invites feedback.* Writing enforces “commitment bias” that aids in holding long-term.* He calls writing his “#1 tip to anybody starting,” as it builds connections, accountability, and learning.4. Lessons Learned in 2.5 Years* Circle of Competence: Losses stemmed from straying outside it. “Any of the stocks that I’ve lost money on…I understood nothing.”* Good People Matter: Echoing Buffett, “You cannot make a good deal with bad people,” learned firsthand in the Anexo case.* Valuation Provides Defense: Buying very cheap (P/E 3 that becomes 6) still offers margin of safety.* Holding Long-Term is Hard: Describes it as “very slow, very boring.” Writing and not investing full-time help discipline.* Governance Matters: Learned to scrutinize boards for true independence.* Private Owners & Buybacks: Large insiders understand buybacks but often only when buying out the whole company.5. Shareholder Activism & the “Stag Hunt” (Anexo Case)* Case: Anexo, a UK company trading below book. Majority owners tried to push through a “terrible deal,” offering unlisted shares/loan notes.* Stag Hunt: From game theory, minorities needed to coordinate to block the deal.* Outcome: Insiders executed a buyback at an “unfair price,” increasing their control to 75.1% and forcing delisting.* Lesson: Painful but eye-opening about governance risks, market mechanics, and the difficulty of activism.6. Avoiding Value Traps* Focuses on track record of ROIC and sensible capital allocation.* Prefers cheap companies that continue to compound, even slowly—“you are sort of sure to earn some form of return.”* This makes holding positions easier and reduces risk.7. Community and Meetups* Organizes investor meetups in Europe, which he sees as “a desert” compared to North America.* Events include ID dinners and guest speakers, with the goal of idea exchange and building community.ConclusionIggy embodies a disciplined deep value approach: prioritizing fundamentals, staying within his circle of competence, and learning from experience. His public writing both sharpens his analysis and fosters community, while his activism lessons underscore the importance of governance and management integrity.Planet MicroCap Podcast is on YouTube! All archived episodes and each new episode will be posted on the Planet MicroCap YouTube channel. I’ve provided the link in the description if you’d like to subscribe. You’ll also get the chance to watch all our Video Interviews with management teams, educational panels from the conference, as well as expert commentary from some familiar guests on the podcast.Subscribe here: http://bit.ly/1Q5YfymClick here to rate and review the Planet MicroCap PodcastThe Planet MicroCap Podcast is brought to you by SNN Incorporated, The Official MicroCap News Source, and the Planet MicroCap Review Magazine, the leading magazine in the MicroCap market.You can Follow the Planet MicroCap Podcast on Twitter @BobbyKKraft This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit microcapnewsletter.substack.com

My guest on the show today is Asif Suria, founder of Inside Arbitrage and co-host of the Special Situations Report podcast. In this episode, Asif shares his evolution from traditional value investing to a diversified, event-driven strategy that includes merger arbitrage, spin-offs, buybacks, insider activity, and more.We dive into his “three-legged stool” process — combining event triggers, a 14-factor quant model, and deep qualitative research — and how it’s helped him navigate both opportunities and challenges in special situations. Asif also walks through real-world examples, highlighting lessons learned from his biggest wins and most humbling setbacks.For more information about Inside Arbitrage and the Special Situations Report Podcast, please visit: https://www.insidearbitrage.com/You can Follow Asif Suria on Twitter/X @AsifSuria: https://x.com/asifsuriaWatch on YouTube:Summary: 1. The Genesis of Event-Driven InvestingSuria's passion for investing began in 2001, a challenging period following the dot-com bubble burst. His early experiences with the dot-com bear market and the 2008–2009 Great Recession bear market (where “indexes decline[d] as much as 50% or more”) led him to seek “a less painful way of approaching investing.” This quest resulted in his pivot to event-driven strategies, starting with merger arbitrage.* Initial Philosophy: Began as a “value investor,” influenced by figures like Ben Graham, Phil Fisher, and Peter Lynch.* Shift to Event-Driven: The desire for a less painful investment approach, particularly after experiencing significant market downturns, led to exploring event-driven strategies.* Merger Arbitrage as a Starting Point: “The first event-driven strategy that I got interested in was merger arbitrage,” which involves profiting from the spread between a target company's current market price and its acquisition price.2. Identifying and Exploiting Market InefficienciesSuria emphasizes that while broad markets are “quite efficient,” “there are pockets of inefficiencies.” Event-driven strategies are designed to capitalize on these less efficient areas.* Pockets of Inefficiency: Examples include “GameStop, the meme stock mania,” and “micro caps,” where “there just isn't a lot of institutional money that can play in that arena.”* Event-Driven Strategies and Inefficiency: “Event-driven strategies potentially gave you an opportunity to participate in a less efficient market.” This inefficiency arises because events like spin-offs create situations where the market needs time to “fully understand what's happening here.”* Spin-offs as a Prime Example: Spin-offs create inefficiency due to a lack of historical data for the new entity and “natural inefficiency built in where if you own a company... you probably don't want the energy company and you're going to sell it off or forget all about it in your portfolio and that creates a certain amount of selling pressure that Greenblatt discussed in his book You Can Be a Stock Market Genius.”3. The “Toolbox” of Event-Driven StrategiesTo navigate varying market conditions and capitalize on different opportunities, Suria advocates for a diverse “toolbox” of event-driven strategies rather than relying on a single approach.* Multiple Strategies: “Certain strategies come in favor and then go out of favor... I wanted to have a toolbox with multiple strategies that I could deploy at different points in times.”* Core Strategies Tracked by Inside Arbitrage:* Merger Arbitrage (M&A): Company acquisitions. Faced challenges in recent years due to “very irrational antitrust.”* Spin-offs: A company separating a division into an independent entity. Currently a “great area that continue[s] to work.”* Management Changes: Appointments or sudden departures of key executives. “Pretty big area that for some reason retail investors and often professionals don't pay a lot of attention to.”* SPACs (Special Purpose Acquisition Companies): Can offer both long and short opportunities.* Buybacks: Companies repurchasing their own stock, signaling management's belief that “the stock is underpriced.”* Insider Transactions: While not traditionally “event-driven,” they are “overlaid against other events” (e.g., a “double dipper screen” when combined with buybacks).* Strategies Not Tracked: Bankruptcies are avoided due to their “complexity and the need for legal talent to be able to analyze that.”4. The Investment Process: A Three-Legged StoolSuria outlines a systematic three-step process for evaluating investment opportunities:* Event (Idea Generation): The initial trigger.* Quantitative Model: A “14 factor model” classifies every US company and assigns a score. A score of “70 or above” typically prompts a closer look, though this is not a rigid rule. The model helps “quickly run through ideas.”* Qualitative Work: In-depth analysis beyond the quantitative score. “There might be situations where the qualitative work might point to something interesting even though the quantitative score might not be quite as high as we would like.”Example – Management Changes (GE vs. Intel):* Larry Culp at GE: Culp, from Danaher (known for its “Danaher business system” combining Kaizen and Six Sigma), was appointed CEO of GE, a “completely broken company.” Suria observed Culp's “playbook of starting to do a bunch of spin-offs” to streamline GE into a “lean aircraft engines company with high margins and high revenue growth and essentially a pristine balance sheet.” An “insider transaction” by Culp further piqued interest. Despite an initial “decline 40%” in stock price, GE subsequently saw significant gains.* Pat Gelsinger at Intel: While Gelsinger was a respected engineer, Intel's “very generous” pay package for him was a red flag. The attempted spin-off of Mobileye did not yield the desired results, leading Suria to “pass on Intel.”5. Portfolio Construction and Risk ManagementSuria emphasizes the importance of portfolio construction, viewing different event-driven strategies as serving distinct roles within a diversified portfolio.* Holding Period: Prefers to hold positions for “at least three years,” unless it's a liquidation scenario.* Merger Arbitrage as Fixed Income Alternative: For Suria, merger arbitrage served as “an alternative to fixed income investing” when interest rates were low, offering higher annualized returns than traditional bonds.* Allocation: Typically “60 to 70% stocks, 30% on the merge arbitrage side.” However, this allocation is flexible based on market conditions, with less allocated to merger arbitrage during difficult periods.6. Case Studies: Successes and Lessons Learned* Biohaven (Success Story): A “completely fascinating situation” where “three different event-driven strategies came together.”* Merger Arbitrage: Acquisition by Pfizer for $148.50/share, offering a modest spread.* Spin-off: Pfizer was only interested in Biohaven's migraines drugs, spinning off the remaining pipeline with significant cash funding ($350–400 million). This added substantial value per share.* Insider Transaction: An insider bought stock just before the deal closed for a mere 50-cent spread, indicating strong interest in the spin-off, not just the merger arbitrage. The new Biohaven stock soared from $7 to $40.* Key Takeaway: “That's the stuff that really excites us when we start seeing different things come together to create a unique signal.”* Capri & Tapestry (Failure Example – Merger Arbitrage): A deal that “did not work out.” Suria highlights the irrationality of regulators blocking this merger, especially when “even Bill Gross was in it,” and it was widely expected to close. This underscored the unpredictability of regulatory intervention.* Lionsgate Entertainment (Failure Example – Spin-off/Activism): Lionsgate Studios was spun out of Lionsgate Entertainment. The situation “hasn't quite worked out” due to:* Overpayment for Acquisition: Lionsgate “acquired Stars for $4 billion just as everybody was cutting the cord.”* Delayed Spin-off: The spin-off “took a really long time to happen.”* Activist Involvement: Despite an activist (Mark Racheski) on the board, the situation remains unresolved, with a second activist (Steven Mnuchin) now involved.* Pinstripes (Key Learning – SPACs and Credit Risk): This company, involved in entertainment (bowling, dining, corporate events), went public via a SPAC.* Red Flags Missed: Suria acknowledged that going public via a SPAC “should have been my first red flag.”* Overlooked Credit Risk: The significant debt provided by Oak Tree to the company was a critical oversight. If Pinstripes couldn't execute its growth plan, Oak Tree could “essentially end up owning the company through the bankruptcy process.”* Key Learning: “It taught me to look at more things on the credit side of things and to be even more aware of companies that go public through a spack route.”7. Event-Driven Strategies in Micro CapsWhile the general principles apply, specific nuances are important for micro caps.* Insider Transactions Nuance:* Market Often Right: “More likely than not, the market is right, the insider is wrong.” Insiders may be biased or anchored to old prices.* Signaling: Sometimes insider buying is simply “buy to signal to you and me saying, ‘Hey, maybe you should look at the stock. I'm buying a bunch of stock and nothing's wrong here.’”* Cluster Buying Across a Sector: The most significant signal for insiders is “not cluster buying just within a company but cluster buying across a sector.”* Examples: Energy companies in 2020 when “crude oil went negative,” and regional banks during the “regional banking crisis” of Silicon Valley Bank's failure.* Significance: This “combination... is something we pay close attention to and then the factor models go out the window.”8. Future Outlook: Biotech as a Potential HotbedSuria identifies the biotech sector, particularly “zombie biotech companies,” as a potential area for increased event-driven activity.* “Nuclear Winter” in Biotech: The sector has experienced a “nuclear winter,” especially for companies with “a lot of cash on the balance sheet” but failed primary products.* Activist Pressure: Investors are “trying to push management teams to do the right thing and return the capital to the shareholders.”* Bottom Fishing: New entities like Concentra Biosciences and Zuma Royalty are “out there fishing at the bottom levels of the biotech thing,” acquiring cash-rich biotechs.* Pharma Company Acquisitions: If “pharma companies start buying on the top end of the things,” combined with insider buying, “you might start seeing the cycle turn on the biotech side of things.”* Key Risk: “The Trump administration really pushing down on prices for former companies.”Planet MicroCap Podcast is on YouTube! All archived episodes and each new episode will be posted on the Planet MicroCap YouTube channel. I’ve provided the link in the description if you’d like to subscribe. You’ll also get the chance to watch all our Video Interviews with management teams, educational panels from the conference, as well as expert commentary from some familiar guests on the podcast.Subscribe here: http://bit.ly/1Q5YfymClick here to rate and review the Planet MicroCap PodcastThe Planet MicroCap Podcast is brought to you by SNN Incorporated, The Official MicroCap News Source, and the Planet MicroCap Review Magazine, the leading magazine in the MicroCap market.You can Follow the Planet MicroCap Podcast on Twitter @BobbyKKraft This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit microcapnewsletter.substack.com

My guest on the show today is Maj Soueidan, Founder, Editor, and Chief Portfolio Officer at MS MicroCaps and GeoInvesting. In this episode, Maj shares a comprehensive update on his investment philosophy, including the performance and evolution of the MSM Quality Index, a passive, factor-driven approach to finding high-quality microcap stocks with multibagger potential.We discuss how the MSM Index blends qualitative and quantitative analysis, what separates it from traditional model portfolios, and the role of occasional rebalancing. Maj also walks us through how the index achieved over 100% returns since inception and why it’s built for long-term staying power.We also dive into the differences between MS MicroCaps and GeoInvesting — one serving as a pipeline of ideas, the other as a deeper research platform — and how Maj thinks about conviction levels, diversification, and information edge. From spotting opportunities in “old boring companies” benefiting from data center and AI trends to reading between the lines in press releases and earnings transcripts, Maj offers a masterclass in info arbitrage and microcap idea generation.For more information about MS MicroCap Cliffnotes, please visit: https://mscliffnotes.substack.com/For more information about GeoInvesting, please visit: https://geoinvesting.com/Watch on YouTube:Summary:1. The MSM Quality Index: A Passive, Qualitative-Quantitative ApproachInception and Purpose: The MSM Quality Index was launched in February 2022 (with active Substack engagement starting February 2024) after a period of private testing. Its core goal is to identify and track stocks that meet specific quality factors while also triggering "multibagger" potential. As Soueidan explains: "It's not just enough to find quality companies. We want to find them when they're hitting multibagger factors."Methodology: The index uses a 10-point quality checklist, blending both qualitative and quantitative criteria. It incorporates multiple factors to isolate companies with high potential upside.Multibagger Focus: A defining feature of the index is its goal to find multibagger opportunities (100%+ returns). Since inception, it has produced 51 multibaggers out of 120 companies, including 9 acquisitions.Passive vs. Active: The index is passive in nature, unlike a model portfolio. It is not actively rebalanced every quarter, which allows for an honest evaluation of stock selection: "We're not actively rebalancing the index every quarter. This approach really tests stock-picking skills without interfering with outcomes."Rebalancing Strategy: While passive overall, Soueidan acknowledges occasional rebalancing as company narratives evolve. A rebalancing in April 2025 removed a few names. One removal, SCX (initially referenced as SVT), resulted in missing out on a significant acquisition pop from $13 to $40 per share.Performance:* 2022 Index: Over 100% return since inception, outperforming the Russell Microcap Index.* 2025 Rebalanced Index: Achieved 22% returns shortly after the April rebalance.Despite underperformance during downturns due to exposure to turnarounds, the index shows resilience and quick recovery.Staying Power Companies: Soueidan describes a core aim of the process: identifying "staying power" companies—those that can weather tough periods without vanishing.2. Differentiating MSM Quality Index & GeoInvestingMSM Quality Index (Pipeline): The index functions as a pipeline of qualified ideas. It includes companies close to being highest-conviction but not yet fully vetted.GeoInvesting (Deep Dive): GeoInvesting is the research platform where deeper dives occur. As Soueidan puts it: “One out of every seven stocks I add to the Cliffnote index comes to GIO at some point.”3. Investment Strategy & Conviction BucketsPortfolio Construction: Soueidan maintains conviction buckets (1–3) in his personal portfolio, weighting investments accordingly. The index, by contrast, is equally weighted.Subscriber Guidance: For subscribers, spotlight videos highlight one index name at a time. He also recently shared 43 liked stocks, with 18 designated as "high conviction" for a simulated portfolio test (70% allocation to high conviction names).Role of Luck: Soueidan embraces serendipity in investing. For example, TSI—a data center play—benefited unexpectedly from AI-driven growth: "I couldn't have predicted that."4. Info Arbitrage and Press Release AnalysisInformational Arbitrage: Soueidan champions deep reading of press releases and filings, especially in nano-caps where the market often ignores key information.Press Release Advantage: He believes most investors dismiss press releases due to assumed fluff. This creates an edge: “Most of them are not focusing in that area.”Golden Nuggets in Language: He cites United Guardian (UG) as an example where a simple dividend release hinted at major upcoming product growth—an insight most would miss.Information Hierarchy:* Press Releases: First-level insights. Valuable for what’s said—and not said.* SEC Filings: Less helpful for assessing near-term growth.* Earnings Call Transcripts: Richest source of qualitative insights. Management often reveals more in discussion than in filings.Talking to Management: While he values management conversations, he believes you can do excellent research without them if you develop a strong quality filter: “You don’t have to talk to management teams.”5. Emerging Trends and "Old Boring Companies"Data Center / AI Trend: Legacy businesses are finding new relevance in sectors like AI and electrification. Companies like TGEN, TSI, PSIX, and PPH are examples.* PSIX: Historically an engine maker, now serving as a data center backup solution provider.AI Surprise: Initially skeptical, Soueidan grew to appreciate the AI theme through real-world examples.Durability of Trend: He believes the data center trend is still in its early innings.Future Themes:* Satellites* Defense* Onshoring/Supply Chain SolutionsTransformative Value: Companies with declining legacies are reinventing themselves. Example: Fuel Tech (FTK) shifted from coal burners to diesel turbine emission solutions—trading near cash and offering high upside.6. Tools and ResourcesPress Release Aggregator: Soueidan uses a custom tool aggregating press releases for companies under $2B market cap, filtered by earnings, price, and other metrics.Educational Initiatives: He offers master classes and virtual training sessions on his investment process.Overall Takeaway:Maj Soueidan’s investment framework relies on blending qualitative and quantitative research to uncover overlooked multibagger opportunities. His emphasis on informational arbitrage—especially through earnings transcripts and nuanced press release reading—sets his strategy apart. He focuses on “boring” legacy companies undergoing reinvention and leverages a disciplined, diversified approach rooted in fundamental research and staying power.Planet MicroCap Podcast is on YouTube! All archived episodes and each new episode will be posted on the Planet MicroCap YouTube channel. I’ve provided the link in the description if you’d like to subscribe. You’ll also get the chance to watch all our Video Interviews with management teams, educational panels from the conference, as well as expert commentary from some familiar guests on the podcast.Subscribe here: http://bit.ly/1Q5YfymClick here to rate and review the Planet MicroCap PodcastThe Planet MicroCap Podcast is brought to you by SNN Incorporated, The Official MicroCap News Source, and the Planet MicroCap Review Magazine, the leading magazine in the MicroCap market.You can Follow the Planet MicroCap Podcast on Twitter @BobbyKKraft This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit microcapnewsletter.substack.com

My guest on the show today is Ryan Telford, Head of Evidence-Based Research at MicroCapClub. In this episode, Ryan breaks down the performance and methodology behind the MC Guts MicroCap Index — a quant-driven benchmark launched by MicroCapClub to track microcap stocks in the U.S., Canada, and Europe.We discuss why Canada and Europe are outperforming while the U.S. lags in 2025, sector rotation, and how Ryan’s “GUTS” framework — Growth, Undervalued, Timing, and Sentiment — identifies overlooked opportunities in the microcap universe.Ryan also shares how the index filters for quality, liquidity, and momentum, and how his research is challenging some of the conventional wisdom around dividend payers, ROIC, and the 52-week low strategy.For more information about MicroCapClub, please visit: https://microcapclub.com/Watch on YouTube:Summary:This podcast summarizes a discussion with Ryan Telford, Head of Evidence-Based Research at MicroCapClub, about the performance and methodology of the newly launched MC GUTS Microcap Index. Designed to track microcap stocks in Canada, the U.S., and Europe, the index applies a quantitative GUTS framework—Growth, Undervalued, Timing, and Sentiment.The index has shown strong YTD (Year-to-Date) performance in 2025, significantly outperforming the broader Russell Microcap Index (IWC), especially in Canada and Europe. The U.S. component has lagged, impacted by geopolitical factors, including tariffs. Resource-heavy segments like Canadian gold miners have driven outperformance, and European markets appear to present underexploited quantitative opportunities.MC GUTS Microcap Index: Overview & PerformanceA. Index Framework* Covers microcaps in Canada, the U.S., and Europe.* Applies four core quantitative factors: Growth, Undervalued, Timing, and Sentiment (GUTS).* Tracked and rebalanced monthly.B. Year-to-Date Performance (as of July 2025)* MC GUTS Microcap Index (Combined): +16.5% YTD (in USD)* IWC (Russell Microcap Index): –1.6% YTD* S&P 500 and NASDAQ: Approx. +8% YTD (referenced for context)C. Regional PerformanceCanada* MC GUTS Microcap Canada: +17% YTD* S&P/TSX 60: +9.4% YTD* Key Drivers:* Heavy weighting in resource stocks, especially gold miners, fueled by high gold prices ($3,400+).* "There is a lot of gold in this strategy right now."Europe* MC GUTS Microcap Europe: +19% YTD* Europe Small Benchmark: Low double-digit returns* Key Drivers:* Diversified sector mix* "Capital moving out of the U.S. into Europe"* Europe's low valuations attracting global investors* "Quant strategies aren’t as popular in European markets," potentially creating more alpha.United States* MC GUTS Microcap US: –3% YTD* Underperformance Drivers:* Tariffs: “More harm done to the U.S. than globally”* Dilution & Stock Offerings: High frequency across microcaps* Earnings Misses: Market punishing weak results more harshly than in previous yearsD. Historical Performance* Since 2015: CAGR of 19.7%* Strategy tends to outperform in down markets—2025 being a prime example.Index Methodology & Portfolio ConstructionA. Core Principles* GUTS Factors drive stock rankings.* Companies are scored 0–100 relative to peers, and top-ranked names are selected.* Sector-agnostic: No sector balancing. If 80% of Canada’s top names are in mining, the portfolio reflects that.* Long-only: No shorts or hedging.* Monthly rebalancing ensures fresh positioning.* Turnover: U.S. (56%), Canada (53%), Europe (74%)B. Liquidity Filters* Price floor: ≥ $0.10/share* Volume floor: ≥ $20,000/day or €20,000/day* Exclusions:* OTC pink sheets* Utilities, financials, REITs (low volume/structural complexity)* Global universe: ~4,000 stocks* Portfolio size: 240 stocks* U.S. (100), Europe (100), Canada (40)* Currencies: Traded in native denominations; performance reported in USD.* No currency hedging is applied.C. GUTS Factors Explained* Growth:* Focus on sales growth and earnings growth* Especially valuable for cyclical microcaps* Undervalued:* Seeks low-valuation stocks* “A low valuation by itself doesn’t really tell you a whole lot… but combined with growth, timing, and sentiment—it can create unique opportunities.”* Timing:* Price and fundamental momentum indicators* “Stocks that already have some interest can be a nice signal.”* Sentiment:* Analyst rating changes* Short interest: Avoid highly shorted stocks* Institutional ownership: Viewed as a proxy for “smart money” discoveryEvidence-Based Research at MicroCap ClubRyan Telford leads MicroCap Club’s quantitative research forum, which features 22+ research articles spanning the U.S., Canada, and Europe.Notable Research Topics:* The MicroCap Road Map: Positioning pre-revenue to mature microcaps* ROIC Drivers: Return on invested capital metrics* 52-Week High vs. Low: "It’s not the low that outperforms"* Institutional Ownership: Signals of quality* Dividends: Good vs. poor yielders* EBITDA vs. Net Income: Metric comparisons for effectiveness* Russell IWC Analysis:* Index is overweight biotech, healthcare, and financials* Includes many unprofitable names* Served as a core rationale for launching the MC Guts Index* New Magic Formula for Microcaps:* Update to Joel Greenblatt’s formula* Replaces traditional quality factor with ROIC group factor* Uses a hybrid value screen for improved performance over 10 yearsThese articles are exclusive to MicroCap Club subscribers behind a paywall.Final Takeaways & Market Outlook* Volatility Defined H1 2025:* U.S. microcaps suffered* Canadian and European microcaps thrived* Tariffs Remain a Key Unknown:* Telford: “We now have a better idea of what tariffs are and what their impacts are… but it’s something to keep watching.”* Earnings Misses Hit Hard:* “Market reactions to earnings misses have been a bit harsh lately.”* 2025 is Unusual:* Telford describes it as “kind of a unique period” without obvious historical parallels.Contact Information* MicroCapClub:* Visit the evidence-based research section or search for Ryan Telford* Twitter/X:* @RTelford_InvestPlanet MicroCap Podcast is on YouTube! All archived episodes and each new episode will be posted on the Planet MicroCap YouTube channel. I’ve provided the link in the description if you’d like to subscribe. You’ll also get the chance to watch all our Video Interviews with management teams, educational panels from the conference, as well as expert commentary from some familiar guests on the podcast.Subscribe here: http://bit.ly/1Q5YfymClick here to rate and review the Planet MicroCap PodcastThe Planet MicroCap Podcast is brought to you by SNN Incorporated, The Official MicroCap News Source, and the Planet MicroCap Review Magazine, the leading magazine in the MicroCap market.You can Follow the Planet MicroCap Podcast on Twitter @BobbyKKraft This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit microcapnewsletter.substack.com

My guest on the show today is Mathieu Martin, Portfolio Manager at Rivemont MicroCap Fund. I've known Mathieu a long time, and he's a regular guest on the show. He's a generalist microcap investor who recently started exploring a sector many investors have written off entirely: Canadian cannabis. After years of avoiding the space due to its speculative excesses, Mathieu has been seeing the potential for a turnaround — with cleaner balance sheets, improving fundamentals, and profitable operators finally emerging.In this episode, we talk about what’s changed in the Canadian cannabis landscape — from rationalized supply and reduced competition, to international export markets and stronger brand differentiation. Mathieu shares how he uncovered opportunities like High Tide, why some vertically integrated players like Cannara Biotech and Rubicon stand out, and how excise tax reform or expanded retail footprints could serve as powerful catalysts for the sector.We also dig into why most investors are still stuck on the legacy LPs from the 2017–2019 bubble — and what they’re missing. Mathieu explains the importance of reading cash flow statements over flashy revenue growth, highlights accounting red flags, and discusses how to navigate this highly regulated, capital-intensive market with discipline.If you’ve written off cannabis or simply haven’t revisited the Canadian names in years, this conversation might just change your mind, and for full disclosure, we discussed a number of companies on today's episode, and I'm not a shareholder in any of them.For more information about the Rivemont MicroCap Fund and the Stocks & Stones Newsletter, please visit: https://stocksandstones.substack.com/You can Follow Mathieu Martin on Twitter/X @Stocks_Stones: https://x.com/Stocks_StonesWatch on YouTube:Summary:I. Overview of the Canadian Cannabis Market ShiftThe Canadian cannabis market is undergoing a significant turnaround after years of stagnation following the speculative bubble from 2017 to 2019. Matthew Martin, who had previously avoided the sector due to its speculative nature, has recently become interested as fundamentals have improved and profitable operators have started to emerge.Historical Context:From 2017 to 2019, Canadian cannabis experienced a massive bull market, which led to excessive speculation. This resulted in a prolonged bust period lasting nearly five years.Renewed Interest:Martin’s interest was reignited in 2023 after an analyst introduced him to High Tide, a cannabis retailer with impressive metrics. Since then, he sees the space “starting to turn around,” with “upcoming winners… starting to emerge.”II. Key Drivers of the Canadian Cannabis Market TurnaroundSeveral factors are driving the renewed momentum and investment opportunity in Canadian cannabis:Rationalized Supply Side* Past Oversupply:During the initial boom, producers built “several times more cultivation capacity than the market demand,” driving wholesale prices down.* Punitive Excise Tax:A fixed excise tax of $1 per gram was originally meant to be 10% of a $10/gram price. As prices dropped to $3–4/gram, this became a 25–40% tax on topline sales, severely hurting margins and pushing many producers out of business.* Bankruptcies and Exits:More than 60 bankruptcies over the past 3–4 years have helped rationalize supply.* Undersupply:Martin notes a “consensus that the Canadian market is now under-supplied,” contributing to rising wholesale prices.Emergence of International Markets* Export Demand:New international markets (Germany, Israel, Australia) lack domestic cultivation and rely on imports. Canada is now the world’s largest exporter of cannabis.* Profitability of Exports:Export sales are “way more profitable” than domestic sales, as Canadian LPs don’t pay excise tax on exports.* Shift in Strategy:Some LPs are doubling down on Canada, while others are pulling product from Canadian shelves and prioritizing exports, reducing domestic supply.Focus on Quality and Consistency* Differentiation:Cannabis is no longer a commodity. Martin emphasizes the importance of flower quality, THC levels, and flavor profile.* Brand Loyalty:Repeat purchasing is growing as consumers begin to recognize and prefer consistent, high-quality brands.* Quality Assurance:Newer cultivators prioritize quality assurance as a core focus and differentiator.III. Investment Focus and Competitive AdvantagesMartin’s investment strategy in cannabis targets profitable, fast-growing companies with strong balance sheets and durable competitive advantages.High Tide (Retail):Martin’s entry point into cannabis. High Tide employs a “Costco model,” offering a premium membership for discounted cannabis and accessories. This makes them the “lowest-cost retailer” and capable of “running their competitors out of business.”Licensed Producers (Cultivation):Initially seen as a commoditized segment, Martin now sees differentiation in quality. He seeks LPs that are “growing 30–40% year-over-year” and are already profitable.Vertical Integration:Martin favors companies that control cultivation, processing, packaging, and branding.* Canara: Fully vertically integrated.* Rubicon: Fairly integrated, continuing to internalize more processes.Barriers to Entry:* Regulatory Hurdles:The industry is highly regulated, making market entry difficult and time-consuming (2+ years to establish distribution).* Capital Intensity:Building large-scale greenhouses requires significant upfront capital, and very little new capital is entering the space today.IV. Industry Challenges and MisperceptionsDespite positive trends, the sector still faces challenges and is often misunderstood.Legacy LP Struggles:Investors still associate the space with legacy names like Canopy Growth, Aurora, and Tilray—firms that continue to struggle with profitability, high debt loads, and shrinking market share.Market Misunderstanding:There’s little awareness of emerging players like Canara and Rubicon that are gaining share, growing revenues, producing high-quality products, and doing so profitably.Accounting Red Flags:Martin emphasizes cash flow analysis over reported earnings. For example, Simply Solventless Concentrate showed rising revenue and net income, but consistently negative cash flow due to inventory build-up. Revenues were booked in cannabis rather than cash, inflating inventory and leading to restatements.* Investor Tip:“Look at the cash flow statement,” examine inventory, and favor companies with “a year or more of clean, audited financials.”V. Potential Catalysts for Future GrowthSeveral developments could significantly boost the Canadian cannabis investment thesis:Industry-Specific Catalysts* Higher THC Limits on Edibles:Canada’s current limits are relatively low. Raising them could expand the addressable market.* Excise Tax Reform:Reducing the “punitive” excise tax would make the industry more profitable.* Quebec Expansion:Quebec has one of the lowest cannabis store densities in Canada. A more open retail footprint could “double the size” of its market.Capital Market Catalysts* M&A Activity:A major acquisition by a tobacco or alcohol company could “wake people up” to the space’s potential.* Fundamental Execution:If profitable players continue to grow, “their fundamentals will become impossible to ignore.”VI. Consumption Trends and Market OutlookIllegal to Legal Market Transition:Since legalization, the legal market has steadily grown, now representing “75–80% of total cannabis sales in Canada.” This growth has come almost entirely from capturing market share from the illicit market.Recession Resistance:Martin sees cannabis as similar to tobacco and alcohol—“fairly recession resistant” with stable demand even in downturns.Ongoing Consumption Growth:Martin expects mid-single-digit annual growth. Younger generations drinking less alcohol may act as a “tailwind” for cannabis consumption.Canada vs. U.S. Consumption (via ChatGPT):Canada has “higher overall prevalence” of cannabis use, but usage intensity is higher in the U.S., where a “larger share of users consume daily or near daily.”VII. Broader Microcap Market TrendsBeyond cannabis, Martin notes several important dynamics in the broader Canadian microcap market:M&A Slowdown:The previously “hot” M&A environment of 2023–2024 has cooled. Monthly deal volume is down from 5–8 to just 1–3 transactions.Reduced Opportunities:Many quality names have gone private, leaving “a big hole in the portfolio” and making it “hard to replace these opportunities.”Valuation Uplift (Non-M&A):M&A helped rerate certain names to higher valuations, meaning not all needed to go private. As a result, “the space isn’t as discounted as it once was.”LIFE Financings:The new “LIFE financing” exemption makes it easier for microcaps to raise capital. It provides a low-cost, immediately tradable alternative to a prospectus offering, reducing cost of capital and increasing flexibility for microcap companies.Planet MicroCap Podcast is on YouTube! All archived episodes and each new episode will be posted on the Planet MicroCap YouTube channel. I’ve provided the link in the description if you’d like to subscribe. You’ll also get the chance to watch all our Video Interviews with management teams, educational panels from the conference, as well as expert commentary from some familiar guests on the podcast.Subscribe here: http://bit.ly/1Q5YfymClick here to rate and review the Planet MicroCap PodcastThe Planet MicroCap Podcast is brought to you by SNN Incorporated, The Official MicroCap News Source, and the Planet MicroCap Review Magazine, the leading magazine in the MicroCap market.You can Follow the Planet MicroCap Podcast on Twitter @BobbyKKraft This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit microcapnewsletter.substack.com

My guest on the show today is Jerome, Portfolio Manager at Uzo Capital. Jerome brings a unique lens to public equity investing—shaped by his experience on the equity trading floor at Merrill Lynch during the financial crisis, his global perspective, and a profitable venture in music royalties.In this episode, we dive into Jerome’s barbell investment approach: pairing stable, cash-generative compounders with higher-risk, venture-style bets in the public markets. He walks us through how he identifies “asymmetric” opportunities—where the upside far outweighs the downside—particularly in companies that are either undiscovered or undergoing transformational change.Jerome also shares how his music royalty business, which generates steady, recurring cash flow, provides the emotional and financial runway to take bold swings on high-risk, high-reward ideas. He discusses how this foundation enables him to withstand volatility and dig deeper into ideas that others may overlook.We cover a lot in this conversation—from PLBY, McCoy Global, and Comstock, to his thesis around durable, capital-light growth businesses and the importance of identifying "free call options" within complex situations. Jerome also lays out a thoughtful framework for due diligence and portfolio sizing that helps manage both risk and conviction. And for full disclosure, we discussed a number of companies during today’s podcast. I am not a shareholder in any of them.For more information about Uzo Capital, please visit: https://uzocapital.substack.com/Watch on YouTube:I. Executive SummaryJerome, portfolio manager at Uzo Capital, shares a deeply personal and analytical look at his investment philosophy, shaped by a formative stint on the Merrill Lynch equity trading floor and the 2008 financial crisis. His strategy blends stable “compounders” with high-upside microcap bets, supported by an uncorrelated income stream from a successful music royalty portfolio. His goal: identify asymmetric risk-reward setups through rigorous due diligence, thematic clarity, and forward-thinking analysis.“I will very much focus on what this company looks like in two or three years. How much am I paying today—and what is that really worth in the future?”II. Core Investment Philosophy: Finding Asymmetry1. Undiscovered MicrocapsJerome hunts for under-the-radar companies, often microcaps ($50M–$1B), that institutional investors overlook.* These may be newly listed, under-covered, or misunderstood.* He actively attends conferences like Planet MicroCap to meet management teams in person.“Every single microcap conference I’ve been to, there’s always been a company I wasn’t expecting to be interesting—but was.”2. Companies Undergoing Structural ChangeHe targets businesses going through major inflection points—spinouts, recent issues masking long-term strength, or new business model transformations.* Examples: IWG (franchise model), PLBY (royalty growth), McCoy Global (recurring revenue from new tech).“The business on a forward-looking basis is going to look really good.”3. High-Margin, Capital-Light CompoundersHis favorite hunting ground: businesses with durable, cash-rich growth that’s underappreciated by the market.“All the growth is coming from high margin, high cash conversion... it transforms the financials of the entire company.”III. Investment Buckets: Barbell Strategy1. Core CompoundersStable, high-quality businesses with predictable growth and free cash flow.* High conviction positions* Easier to size large initially2. High-Risk, High-Reward ("Listed VC")Small, speculative bets with massive upside potential but elevated risk.* Often unprofitable today but have strong unit economics or disruptive potential* Includes warrants, litigation plays, and “free call options” embedded in multi-part businesses“If there’s a 30% chance you make 30x your money—that’s a great payoff. I’ll take that every day.”3. Emotional Stability via RoyaltiesHis passive music royalty income cushions volatility, enabling unemotional decision-making in public markets.“It takes out the emotional swings… you can be a lot more relaxed about the volatility.”IV. Due Diligence and Risk FrameworkDeep Research & Stress TestingEvery position starts with detailed analysis and scenario planning.“You’ve got to understand it well enough to poke holes in it.”Framing Risk-RewardHe seeks setups where the downside is covered by hard assets or core businesses, and upside is a “free option.”* E.g., Comstock’s land + recycling business covers valuation; Biolum is upside.Insider & Strategic ActivityLooks for clues from informed parties—insider buys, strategic investors, or partners making above-market investments.“What are the signals you’re getting?”Team & Capital AllocationJudges management’s thought process, discipline, and alignment.“Do I trust that capital is going to be managed appropriately?”Position SizingRisky positions are sized small to maintain psychological stamina through volatility.“If it halves, are you going to be emotional—or are you sized for staying power?”V. Global Focus and the Music Royalty EngineGlobal ExposureWhile based in the U.S., Jerome allocates globally across developed markets (Europe, Canada, Australia, Israel).“I’m not looking to get caught off guard in an emerging market curveball.”Music Royalties: Passive, Scalable IncomeHe buys royalty rights directly from creators—like songwriters or producers—not labels.* Compares it to real estate: stable, recurring income; passive once acquired.* Uses industry giants (Sony, Universal) for administration and monetization.“Almost like buying real estate… but there’s no Rightmove or Zillow.”Lessons LearnedMistakes include underestimating regulatory risks (copyright law, royalty rates), overpaying for unsustainable spikes (posthumous artist spikes), or misjudging rights structures.Personal wins: early Misfits publishing deal and an overlooked 1980s Bollywood catalog.“I bought the rights without realizing how big culturally it was. That was a nice surprise.”VI. Conclusion: A Flexible, Thoughtful FrameworkJerome’s process blends deep skepticism, sharp pattern recognition, and creative structuring. His “barbell” approach allows him to compound steadily with quality while swinging for the fences with optionality-driven microcaps. Anchored by personal cash flow from music IP, he takes a dispassionate and opportunistic lens to the market.“There’s always something drastically changing or misunderstood—if you’re willing to look hard enough.”Planet MicroCap Podcast is on YouTube! All archived episodes and each new episode will be posted on the Planet MicroCap YouTube channel. I’ve provided the link in the description if you’d like to subscribe. You’ll also get the chance to watch all our Video Interviews with management teams, educational panels from the conference, as well as expert commentary from some familiar guests on the podcast.Subscribe here: http://bit.ly/1Q5YfymClick here to rate and review the Planet MicroCap PodcastThe Planet MicroCap Podcast is brought to you by SNN Incorporated, The Official MicroCap News Source, and the Planet MicroCap Review Magazine, the leading magazine in the MicroCap market.You can Follow the Planet MicroCap Podcast on Twitter @BobbyKKraft This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit microcapnewsletter.substack.com