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We Buy What Wall Street Ignores

Most institutional investors can't invest in microcaps—they're too small, too illiquid, too far off the radar. This creates persistent mispricing that disciplined investors can exploit.
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Our strategy combines principles from Benjamin Graham and Warren Buffett with quantitative rigor, targeting companies trading well below intrinsic value.

Five Measures of Cheapness

Every stock is ranked on five valuation metrics:

EV/EBITDA

Enterprise value to EBITDA

P/E

Price to earnings

P/B

Price to book value

P/CF

Price to cash flow

P/S

Price to sales

We focus exclusively on companies trading at low multiples across these measures—businesses the market has overlooked or misunderstood.

Quality and Momentum Factors

Cheapness alone isn't enough. We rank stocks on additional criteria that identify quality, improving fundamentals, and momentum:

Improving financial metrics (high Piotroski F-Score)

High insider ownership and insider buying

High return on equity (ROE)

Earnings growth

Low or no debt

Positive relative strength (momentum)

Financial Statement Analysis

After quantitative ranking, we examine each company's financial statements to identify:

Non-recurring items that distort earnings

Hidden liabilities not captured in screening

Off-balance-sheet items affecting intrinsic value

We adjust the data and re-rank every stock. Each position receives a combined score that determines portfolio weight.

Portfolio Construction

Each stock in our screen receives a combined score based on all the factors. The highest ranking stocks then become part of the portfolio. There are 10-15 stocks in the portfolio, with each position sized based on the Kelly criterion:

Largest position

15-20% at cost

Average position

8-10% at cost

Typical holding period

3-5 years

We sell when a stock approaches intrinsic value, when our investment thesis is invalidated, or when a much higher ranking stock is available. This concentrated approach ensures our best ideas matter while maintaining sufficient diversification.

Microcap Value Has Decades of Evidence

From 1927 to 2020, equal-weighted microcaps returned 15.8% annually (14% annually if you include transaction costs) versus 10% for large caps. A value screen improves returns by another 2-3% annually, a high Piotroski F-Score improves returns at least another 2-3% annually, and positive momentum should add 2-3% annually.
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This isn't theory. It's documented across multiple studies and time periods—including work by Fama/French, Piotroski, O'Shaughnessy, and Graham himself.

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