5 Stock Pitches From MS Microcaps’ Starting Five Virtual Conference #2 [GeoWire Weekly No. 162]

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Highlights Shout Out to GeoInvesting Contributor Andrew Ing: Kelly Partners Group Holdings (KPG.AX) year 26% CAGR investing thesis return. Summarizing MS Microcaps’ 2nd Installment of the Staring Five Virtual Conference, moderated by Maj Soueidan. Pitches & Investment Strategies Featured: Maj Soueidan, Co-founder GeoInvesting, Founder of MS Cliff Notes (by MS Microcaps). Andrew Sather, Co-host of the Investing For Beginner’s Podcast. Kyle Adams, Private Investor with growing social presence. Ryan Telford, Quant Investor. Rich Howe, Founder Spinoff Stock Investing.

Before we get into a review of the Starting 5 Virtual Conference, hosted at MSCliffNotes, in this issue of GeoInvesting’s Weekly GeoWire Newsletter, I’d like to give a shout out to GeoInvesting contributor, Andew Ing.  He picthed an Australian microcap stock on GeoInvesting back in March 2022, Kelly Partners Group Holdings (KPG.AX). It has had a measured march upward from the price at which it was pitched to our community, at about AU$5.13, to this past Friday’s high of AU$9.41. That’s about a 26% compounded annual growth rate (CAGR) on your investment if you chose to hop in—not bad for a 2.5 year run., although most of that performance came in 2024, with a year-to-date performance of 93.54%, more proof that timing is hard in microcap land.

By the way, even though I loved Andrew’s write up and the company’s competitive position, I remember passing on the idea, since I thought the valuation was appropriate at the time.  This is a reminder that sometimes it’s worth paying up for quality companies with large competitive advantages and predictable revenue. 

Andrew posited that KPG.AX represented an undervalued, compounding opportunity in the mature accounting industry, ripe for consolidation. Ing highlighted Brett Kelly, the company’s CEO, as a key driver of its success. In Andrew’s view, Kelly’s model of acquiring underperforming accounting firms, improving their operations, and avoiding equity dilution made it stand out.

He also emphasized the company’s alignment with macroeconomic trends, such as increasing tax complexity and an aging workforce of accountants, which create a vast and recurring revenue base. Andrew believed that with the company’s strong governance, above-average client retention, and Brett Kelly’s shareholder-focused leadership, KPGH was a compelling tier-one microcap opportunity.

The CEO expressed confidence in the company’s growth trajectory and belief that the firm was on track to achieve a market capitalization of AU$500 million to AU$1 billion. Given the stock’s price, and current market cap of just over AU$400 million it’s on the cusp of achieving that lower range.

So, we’d like to say congratulations to Andrew for bringing us a great investment thesis! So far, this has been Andrew’s only article he’s published on GeoInvesting…but as the saying goes…it only takes one.

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Now, onto another spotlight—replays of MS Microcap’s second installment of The Starting 5 Virtual Conference held on November, 13, 2024 and hosted by MS Cliff Notes. So, we’ll get right into the videos which include bios, strategies and pitches of all the event’s participants.

• Maj Soueidan, Founder GeoInvesting & MS Microcaps

• Andrew Sather, Co-host of The Investing For Beginners (IFB) Podcast

• Kyle Adams, Private Investor 

• Ryan Telford, Private Investor

• Richard Howe of Stock Spinoff Investing

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As I was going to be busy hosting conversations throughout the day, I decided to lead off the event with a chat about my evolution as an investor to using a balanced portfolio management approach that combines short-term and long-term strategies around quality, sprinkled with speculative bets.

In order to drive the point home that quality matters more than ever these days, I stressed that stocks that are added to the MSMqi must possess quality traits AND be experiencing growth inflection points.

I also highlighted the performance of the MS Microcap Quality Index (MSMqi).

..and the performance of the screen showing the highest returns at GeoInvesting:

GeoInvesting Infrastructure Screen Presentation Slide:

I also reflected on market cycles, emphasizing a return to quality-focused investing as tighter monetary policies demand greater financial discipline from companies and challenge lower quality businesses that need to continually access capital.

The microcap space, particularly nanocaps under $50 million, offers significant opportunities for high returns due to lack of interest by the masses. Drawing from historical trends that reminded me of my early investing days, I continue to believe that the current environment is fueling a long-term bull market for smaller caps.

I particularly enjoyed talking about my growing preference for diversification as a pathway to concentration, a strategy that lets winning stocks naturally take up a larger share of my portfolio.

Being 54, and experiencing sharp ascents and drawdowns in my portfolio over the years, has also helped me shape my current microcap strategy. But I can say this–I am investing with more confidence than I have in a long time due to my belief that we are in the midst of a generational smaller-cap bull market that will last for years.

My  Pitch

If you are interested in listening to me ramble on more about these topics and my NEW multi-bagger infrastructure pitch, my full presentation can be accessed by signing in:

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Andrew Sather Pitch

Next up was Andrew Sather, co-host of the Investing for Beginners (IFB) Podcast, who shared his own investment journey, methodology, and insights into building wealth through the stock market. 

Over  the last few years I have been a guest on Andrew’s podcast. So It was a nice change of pace for me to be on the other side of the microphone speaking with Andrew. 

I also loved learning how, as an engineer, Andrew comes from a non-financial background and about how his passion for investing led him to create educational resources that resonate with beginner investors. In fact, a  good deal of investors in the GeoInvesting community are engineers, including my brother.

Sather’s journey from self-education to managing a real-money portfolio underscores his focus on practical, approachable investing. It’s a reminder that great investors come from all walks of life, just like Chuck Akre, once an English teacher.

About Chuck Akre Chuck Akre founded Akre Capital Management in 1989 after 21 years in the securities business at NYSE member firm Johnston, Lemon & Co. At Johnston, Lemon & Co., he managed various parts of the business, including branch management, research, and asset management. Beginning in June of 1993, Chuck operated the firm under the umbrella of Friedman, Billings, Ramsey & Co. Taking the business private again in 2000, he moved the firm to the rural village of Middleburg, Virginia. (Source: Wikipedia, https://akrecapital.com)

Andrew outlined his guiding principles for investing:

• Avoiding High-Risk Speculation: Andrew prioritizes companies with predictable performance and avoids chasing moonshot opportunities or highly speculative plays.
• Fairly Priced Quality Businesses: He seeks companies that are either fairly priced or trading at a discount, placing less emphasis on deep undervaluation in favor of sustainable, long-term growth.
• Long-Term Mindset: Andrew emphasized a commitment to holding investments for five to ten years, focusing on consistent compounding over time rather than short-term gains.

Andrew also came to the Starting Five with little twist, pitching a big cap stock to our audience. It was fun diving into industry analysis and the key performance indicators pertinent to his pitch.

See more on this below by signing in.

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Kyle Adams Pitch

Third on the docket was Kyle Adams, a private investor and software sales professional from Athens, Georgia. He has quickly made a name for himself in the microcap investing community. With a unique journey into the world of stocks, Kyle’s background is anything but traditional. Diagnosed with idiopathic chronic pancreatitis, he found himself back home in Athens, recovering and reassessing his life. What began as a search for a productive way to use his savings turned into a passion for investing, leading him to explore small-cap stocks through Seeking Alpha and platforms like Breakout Investors. Today, Kyle balances his career in software sales with a growing portfolio of microcap stocks, bolstered by his active engagement on X, where he has built a following of over 8,000 in just seven months.

He initially maintained a diversified portfolio of 30 positions but soon realized the value of a more concentrated approach, narrowing his holdings to 10–15 core stocks. For Kyle, social platforms like X and communities such as Breakout Investors have become key sources of discovery, allowing him to unearth compelling ideas and collaborate with seasoned investors.

Kyle’s first significant investment was in the stock Alarum Technologies Ltd. (NASDAQ:ALAR). He shared that he bought it around $14 per share and rode it to $40, making it a pivotal success in his early investing journey, a 186% return. But he also discussed the challenges that come with investing in microcaps, highlighted by ALAR reversing course, now trading at $14.27.

Sign in to see See Kyle’s Favorite Pitch below:

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Ryan Telford Pitches

The Fourth Starting 5 presenter was Ryan Telford.. you guessed it, a mechanical engineer, project manager in the mining consulting industry, and a private investor with a passion for quantitative investing. Using a systematic, evidence-based approach, Ryan has carved out a niche in the microcap and nanocap universe. His investing journey has spanned over a decade, with a refined focus on leveraging quantitative models to exploit inefficiencies in small and illiquid stocks.

I had spoken with Ryan on GeoInvesting before, learning about his “G.U.T.S.” strategy.

Ryan’s quantitative approach centers on using financial and technical data to develop systematic strategies that minimize subjectivity. His core G.U.T.S. strategy focuses on four key factors:

• Growth: Sales and earnings growth are critical for driving stock performance.
• Undervaluation: Identifying stocks with attractive price-to-sales or price-to-earnings ratios.
• Timing: Entering stocks at optimal points in their growth or momentum cycles and exiting before declines.
• Sentiment: Monitoring indicators like institutional ownership and analyst estimate trends.

Ryan’s strategies leverage tools such as Portfolio123 to back test and implement his models, focusing on microcaps and nanocaps for their inefficiencies and growth potential. Over the past five years, his quant models have delivered an impressive 40% compound annual growth rate (CAGR).

Ryan pitched 3 stocks. Which can be viewed by signing in below, and also revealed quant scores on 5 stocks I gave him.

As luck would have it, they all carried high G.U.T.S scores. I was both pleased and surprised that  the stock I pitched earlier in the event had the highest score, at 99.5.

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Rich Howe Pitch

The Starting 5 conference’s final guest, Richard Howe, is a seasoned investor and founder of Stock Spin-Off Investing. He has carved out a niche in the world of special situations, focusing primarily on spin-offs.

Rich is a Boston native with deep roots in finance. His career began at Eaton Vance as an equity researcher while attaining his CFA at the firm, later moving to Citi Private Bank, where he delved into private equity research. Armed with a CFA and a wealth of experience in top-down and bottom-up analysis, Richard decided to transition from traditional finance to the entrepreneurial world six years ago, founding his platform to analyze and capitalize on opportunities in the spin-off market.

Richard’s investing philosophy revolves around a concentrated portfolio, often holding 10–15 positions at a time. He’s searching for value in overlooked or mispriced spin-offs. For a new idea to make it into his portfolio, he must have had a high enough conviction to warrant at least a 10% allocation. His approach to spin-offs falls into three categories:

1. Indiscriminate Selling Pressure: Exploiting market inefficiencies caused by forced selling, often from index funds or investors uninterested in the spun-out company.
2. De-merger Arbitrage: Identifying clear value that can be unlocked before the spin-off occurs, based on sum-of-the-parts analysis. This approach often involves investing in the parent company ahead of the separation.
3. Microcap Spin-Offs: Seeking high-potential, underfollowed companies with strong growth prospects or tangible catalysts.

Sign in to continue to the pitch on a stock that selling near cash for share on CA$18.1 million:

MS Microcaps’ Second Starting 5 Featured multiple Clips from respected Investors in our network. To access Them and our expanded coverage on This & More, Subscribe below.

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GeoInvesting is a premier research platform for microcap investors, dedicated to uncovering high-potential stock ideas in undervalued companies across various sectors. With over 30 years of investing experience, GeoInvesting has covered more than 1,500 equities, providing often actionable proprietary research. The platform has been instrumental in identifying 200+ multibagger stocks, and offers investors exclusive access to over 600 management interview clips, allowing for deeper due diligence and understanding of the microcap stocks, many of which make it to market-beating premium Model Portfolios. Join the GeoInvesting community for the best stock research and microcap insights to help you stay ahead in the market. To learn more about our Premium Services, go here.. (https://geoinvesting.com/premium-research/)

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