Monday, August 7, 2017

How WhatsApp Founder Jan Koum Went From Startup To 1 Billion Users

The founder of WhatsApp Jan Koum tells how he went from startup to a billion dollar company which eventually got purchased by Facebook for $20 billion.  As I've mentioned before on this blog, if you are aspiring to change the world and need a billionaire mentor; here he is:


-Nick Coriano

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About the Author: Nicholas Coriano is a Business Consultant.  He is a graduate of The University of Connecticut Business School and the John Marshall Law School in Chicago.  He has worked at Merrill Lynch, The New York Stock Exchange and is currently a partner at Cervitude Intelligent Relations, which specializes in Investor Relations for companies valued under $1 Billion USD.

About MicroCapCompany.COM: MicroCapCompany.COM (The Blog) is a blog focused on providing articles, news and information on the micro cap sector and start-ups.  The Blog is a free service offered by Cervitude™ Investor Relations - a micro cap investor relations firm for micro cap companies and penny stocks.  If there is a particular topic you would like to see covered on The Blog, email us. If you would like to advertise on The Blog, click here. 

Monday, July 31, 2017

The 2 Books That Every Stock Investor Needs To Read

I was recently asked a question about what my favorite value investing books. I had two that popped into my head immediately. Here is a little back story to my foray into the world of value investing and my life would never be the same after I read these books. I have never said in my life that a book was fucking life changing, but these books have made investing more fun than I could ever have imagined. So much so my pit bull has one's name.

When I first started off my career at the stable and wonderful Bear Stearns, I reread the quintessential value investing book that I had read when I was 13 or 14 years old. That book is written by Benjamin Graham and David Dodd and called, The Intelligent Investor and it was like I was a child again learning that fire was actually hot when you touched it. I wish I would have understood what I was reading 7 years earlier because I felt cheated. Reading this book again on a whim was the catalyst that put me on the path of only being a value investor. Where literally no other type of investing mattered any longer. Not that University taught me anything about investing, but this book taught me everything that Graham had taught Warren Buffett at Columbia University. Graham, who after he lost almost everything in the Crash of '29 become what he is now referred to, "The Father of Security Analysis", sadly many people do not listen to what he has to say any longer, mainly because the companies in his book are no longer around and the economic situations are long out dated also value investing is not fancy or sexy so many investors want to focus on the sexy growth stocks that seem at first glance to make a lot of money, yet you never will catch a falling knife as these stocks usually fall like a boulder. See Graham preached patience and buying quality companies with solid earnings, high moats, and a large margin of safety. He mentioned buying companies in industries that you know and not just buying the hottest trend.  You don't buy companies that may or may not grow at a very quick rate, but have no revenue, EBITDA, or any type of profit since they will be the first ones that investors will capitulate from in any form of market weakness. Graham, in his infinite wisdom, preached buying bonds and preferred stocks due to the added security of having a coupon and being first and second in the worse case scenario of the company going out of business, whereas common stockholders were last and usually left with no compensation at all. The worst mistake that Graham made after the crash was to not hire Warren Buffett right away. YES, you read that right. The only pupil to receive an A in Graham's class at Columbia.  Graham said no to Buffett on multiple occasions. He saw the value in Warren yet he Wall Street was less diversified back then and he wanted his fund to look a certain way.

I digress, anyway, I was the only one in the office to read the book, well at least on my team and that book and his Security Analysis "Bible" as well as his financial statement book helped me establish myself at a young age as someone to go to that would put the effort and patience into my stock picks with a large amount of research to back up my picks or more often than not my non picks. I moved from just going to university and being a wealth manager to all of that plus the team of seven senior financial advisors research analyst. I would have to put together "fund" type portfolios for our clients that would keep our teams clients expenses down.  That book taught me that I didn’t need to pick a new stock everyday or always have an idea. I was rather boring because it showed that a great company could be a terrible investment and a mediocre company bought at a wonderful price could be a great investment.  Intelligent Investor showed me the parameters of what a great company was and also what a great stock of a good company looked like, as well. Graham, who I named my rescue pit bull after, said "This past ability to earn in excess of interest requirements constitutes the margin of safety that is counted on to protect the investor against loss or discomfiture in the event of some future decline in net income."

My second favorite book was and still is Seth Klarman’s Margin of Safety. I used to walk down to the NY Business Library on Madison Ave every single day for a month to read and take a ridiculous amount of notes of that book. I was only allowed to do so behind the desks at an hour at a time. After a few weeks my new friends would give me two hours and that is how I spent the month of July in 2008. I had so much gratitude to the NYC public library because they were the only ones who had that book from Maine to the Carolina's and it was going for $2,000+ for a used copy.

That book was sort of like an extension of The Intelligent Investor and also a much updated version. They both are about the basis of value investing and why having a margin of safety is key to a good investment. They both also showed you how to actually invest using the techniques, but Seth’s were companies and time frames that I actually knew such as the Savings and Loan Crisis and not the years after the Great Depression. The main difference in The Margin of Safety was that Klarman used a relatively new technique of discounting the cash flows of the company. However, it allowed you to understand that if you didn’t do your due diligence over and over again that you could lose your complete investment since things change much faster these days then they did during Graham's hey day, but buy and hold was the key to large capital appreciation. Klarman explained VaR and DCF along with patience, buy and hold, and the margin of safety.

All of these books has made me a much better investor since reading them, rewriting them, and rereading them and I believe that those books are the reason that I was one of a few people in my office to beat the Dow and S&P 500 in the 2008 market crisis as well as beat the indices handily from 2007-2017. Again, it really showed me that I didn’t need to invest in everything new and hot. They showed me that stocks that look cheap monetarily, more often than not, are the most expensive yet even worse the most dangerous to your portfolio. It also pounded home that you need to have that substantial margin of safety as well as the book value being half of terminal or enterprise value.  Graham showed me that the margin of safety helps against Mr. Markets bipolar mood swings and shows you to buy when a stock hits the parameters and Mr. Market is really depressed about the future of the company prospects even though Mr. Market was very happy about those same prospects just the day before. Therefore, you are now buying at a discount and nothing has changed except the sun went down once.  So, by waiting for Mr. Market to be depressed for no good reason you end up getting a good company at a great price. This is where patience comes in handy because the market can be very inefficient because growth investors may not be happy for a moment that the growth hasn't happened as quickly as Mr. Market would like it to be. So, they sell it to you at a very discounted price. Same goes the other way when Mr. Market gets excited and wants to buy the company from you at an inflated price that is way over-valued and that is great for the investor.

Warren Buffett once said, "If you understood a business perfectly and the future of the business, you would need very little in the way of a margin of safety. So, the more vulnerable the business is, assuming you still want to invest in it, the larger margin of safety you’d need. If you’re driving a truck across a bridge that says it holds 10,000 pounds and you’ve got a 9,800 pound vehicle, if the bridge is 6 inches above the crevice it covers, you may feel okay; but if it’s over the Grand Canyon, you may feel you want a little larger margin of safety." That is the margin of safety in a nut shell.  Klarman mentions in his book, "By always buying at a significant discount to underlying business value, and giving preference to tangible assets over intangibles. (This does not mean that there are not excellent investment opportunities in businesses with valuable intangible assets.) Since investors cannot predict when values will rise or fall, valuation should always be performed conservatively, giving considerable weight to worst-case liquidation value as well as to other methods.”

What I took from the book was this tidbit "What then will we aim to accomplish in this book? Our main objective will be to guide the reader against the areas of possible substantial error and to develop policies with which he will be comfortable".  For indeed, the investor’s chief problem and even his worst enemy is likely to be himself. And, “The fault, dear investor, is not in our stars – and not in our stocks – but in ourselves” We use the margin of safety as a way to protect our investments from our human behavior and greed. This has given me a heads up against a lot of my colleagues because I am never, ever chasing any stocks and sometimes I may leave money on the table and value investing is a very lonely endeavor, but just look at the richest investors and you shall see that they are all value investors.

Daniel Wachtel


Monday, July 24, 2017

Start with Insider Intelligence: 10 Tips for Your New Startup

(1) Presell Your Product -  Before you manufacture/ produce your widget, make sure you and your team give a 120% effort on trying to presell your product on initial interest contracts to your target audience.  This gives you two advantages: one, it forces you to identify and zoom in on your target customer before you take the leap of faith into business; and two, it increases your confidence levels about how to make “the sale.”  Any entrepreneur's dream situation is to know in advance of production where, to whom, for how much and the quantity of product is being sold. This is a guaranteed return on investment.  For example, if on turn number one you intend to produce 10,000 widgets, then your TEAM should try its very best to have 10,000 units pre-sold by the time you release payment to your suppliers to begin production.

(2) Build a Minimum Viable Product - At first, if you must choose between your product being high quality or low price, then always choose lower price (also known as a minimum viable product).  Your product’s highest quality / perfection comes later. Potential buyers will try something new especially if their cost is low, because it is low-risk for them. Plus, if you must give away a few as demos, or first purchase “bonuses”, you'll be better off when your production cost per unit is low. Let your product age like fine wine, its quality will come over time. Once you build up an increased demand for your product, then you can increase price, and then you can justifiably get that sexy label you’ve always wanted, or that impressively colored (or shaped) product packaging.

(3) Your Job is to Sell – Do yourself a favor and never categorically turn down a sale, even if it doesn't make profitable sense immediately. As a startup, your cash flow is very important, especially at the onset.  If there is money in the bank, then you can afford to continue to learn, and the longer you are in the game, the better your chances are of survival (or thriving).  Remember that what was unprofitable today may become profitable tomorrow.   As your sales increase, you can press your suppliers to have production costs decrease.  Also, as sales increase, you can ship more at once so logistics costs decrease and in addition an empty warehouse is a decrease in risk too.

(4) Avoid Overproduction – When you start out, only pay to produce/ manufacture the amount (or just a bit more than) you know you already have pre-sold or the amount you know you can sell in a reasonable amount of time.  On a first turn/ iteration, try buying 1000 or 5000 widgets, not 50,000 or 100,000, unless you already have buyer(s) lined up.  Overproduction and warehousing fees are often the poison pill for a startup.

(5) Your Customer Knows Best – If you do nothing well in business except one thing then let it be that you listen extremely closely to your customer complaints, compliments, and comments. Whatever you do, don't let your ego (or intellect) get in the way of a good business decision. Trust me, you do not know what's best for your business - your paying customers do.  Your job as an entrepreneur is to add value to your paying customers, where it did not exist before. Your customer will often tell you exactly what he/she is looking for, and why, and how much he/she would pay to get it.  Just keep reverse engineering what your customer demands, it gives you the leverage in business. Use consumer feedback as key data to make justifiable business pivots or tweaks.

(6) Fundraise 3x - When raising funds for starting your company, from investors, always aim to raise triple the amount that you think you absolutely need to get started.  It is impossible to see all the costs associated with doing business, and as a first-time entrepreneur you will be surprised at all the initial hurdles.  G-tins, LLC fees, paying yourself, buying a domain name, advertising at a trade show, and other ritual events will not always be foreseen or foreseeable.  You'll be best served by having extra cash on hand.  This does not mean you need to spend 3X, but use the surplus wisely.   In case you need to make a power move, or in case you hit especially hard times (sometimes your product is seasonal in so far as when the majority of your customer base buys). At times, you may have to be patient, and bleed out a bit. Try to stop the bleeding with your preselling efforts, and by creating and communicating incentives for your customers to "buy now" as opposed to later.

(7) Leverage Your Anchors - Find an anchor customer or two or three as soon as possible.  An anchor customer is someone who regularly buys a large amount of product from you, consistently, and is happy to continue buying.  Once you find one, two or three anchor customers, you can begin to breathe, and start focusing on the bigger fish.  Leverage your relationship with your anchor customer by using your anchor customer's testimonial as living proof your product works. You can incentivize your anchor customer to spread the word by making his buying experience better (either by lowering his cost or by providing something else of value). Every time he gives you a warm lead, or a buyer-referral, then give him a bonus.

(8) Embrace the Love – Treasure and cherish the people who help you in your business pursuits.  Whether it is your actual business partners, your family and friends' support, an investor, or a teacher or mentor's wisdom.  Not everyone you meet in life genuinely wants you to win, but those who do are your lifeblood, and your motivation to succeed.  Use their desire to see you win as the wind beneath your wings.  Share all your joy with them, as there is no better feeling in life than to share your success with others. Feed off their energy, they are an endless source of fuel for your entrepreneurial desire.  Give back, share often, and rejoice collectively.

(9) Partner Wisely – As a startup, you must choose your business partners, investors, and initial hires very astutely.  You need those first team members to be as impassioned, excited and eager as you.  Partner with people who are like-hearted, not necessarily like-minded.  More importantly, look to select people who have complimentary skills sets that you lack, and give them the authority and responsibility to become a master of their domain. Your job is to hire and surround yourself with people smarter than yourself, always, and in all capacities of business.  Truly the best CEO is the person who is willing to hire people smarter than himself and step aside. A CEO's function is part visionary, part cheerleader, part mentor, part fundraiser, and part culture officer. Build a team culture of respect for others, always be ethical and moral, and incessantly applaud innovation.

(10) Resilience - Give yourself a chance and another.  Life is about learning from your mistakes and gradually improving after each failure.  No one is perfect, you will fail, more often actually than you succeed.  Every no gets you closer to yes. Every dark night is followed by a bright day.  Keep your calm, be persistent, be patient, and never stop improving.  Measure your success based on how you deal with each failure.  Renew yourself every day, reinvent your enthusiasm each morning, and keep focused on the end goal.  Be tenacious to add value to others so much that your presence becomes their necessity.

--Jarrett Rumoro

Monday, July 17, 2017

What is a REIT?

The term REIT is actually R.E.I.T. an abbreviation that stands for real estate investment trust. 

"A REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate. Modeled after mutual funds, REITs provide investors of all types regular income streams, diversification and long-term capital appreciation. REITs typically pay out all of their taxable income as dividends to shareholders. In turn, shareholders pay the income taxes on those dividends." - REIT.com

A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges like a stock. REITs provide investors with an extremely liquid stake in real estate. They receive special tax considerations and typically offer high dividend yields. -Investopedia


A real estate investment trust (REIT) is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and timberlands. Some REITs engage in financing real estate. The law providing for REITS was enacted by the U.S. Congress in 1960. The law was intended to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks.  REITs are strong income vehicles because, to avoid incurring liability for U.S. Federal income tax, REITs generally must pay out an amount equal to at least 90 percent of their taxable income in the form of dividends to shareholders. _Wikipedia

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Monday, July 10, 2017

Most Common Investing Mistakes We All do Without Knowing

When it comes to investing in the markets, there are many mistakes that people can make. Some of these can occur without our even realizing it. That's why it's important to pay attention to what's going on in the market. Here are some mistakes that are easy to make.

Reaching For High Yields

Sometimes, stocks that offer a high yield can be good investments. Most dividend payers that are strong investments will tend to have smaller payouts that grow on a regular basis. When a company offers an unusually large yield, there's generally a reason. Perhaps the company used to be a solid business that has run upon some difficult times and seen the price of their stock drop.

Eventually, many of these companies that see their yields go up quickly because of a price drop will have to cut their dividends or even eliminate them altogether. Be sure to look for growing income and growing revenue for safety. 

Ignoring Fees

When investing in individual stocks, there will generally be a fee that goes along with each purchase. If an investor decides to make many small investments, the overall cost of investment will go up. This will lead to lower returns over the long term.

Likewise, mutual funds and exchange traded funds will usually have a management fee. These will tend to be higher for funds that are actively managed, and they will also tend to bring down the overall return unless they beat the market by more than the management fee.

Those who forget to pay attention to fees will not see their portfolios grow as much as they might otherwise. The lost money will tend to go to their brokers rather than their wallets. 

Not Watching Fundamentals

There are many companies that have solid histories both in the US and overseas markets. They might have a nice level of earnings per share and attractive prices. They might have dividend payout ratios that are low with growing revenues and net income. These are great characteristics to look for when choosing a company to buy. 

However, market conditions can change. What was a great investment 10 or 20 years ago might not be so great today. One major example might be
Eastman Kodak. This company was the leader of the pack when it came to cameras and photography accessories.

Then the digital revolution hit. Those who stuck with Kodak to the bitter end really lost a nice chunk of their investments. Those who kept up with the fundamentals of the business would have been able to see the changes taking place. This would have made selling a good idea. 


Selling At The Bottom

When a company is on the downhill slide to extinction is a good time to sell. However, many times, investors will sell good companies just because there is a market correction.

Unless you are in dire need of cash and have no other way to access it, this is a really bad move. It's likely in this instance that you bought at a higher level. You can only realize a loss on stocks when you sell.

As long as the revenue and income can support continued profitable operation over time, it's probably a good idea to hold onto a company. 

Buying At The Top

A comparable mistake to selling at the bottom is buying near the top of a market high. This occurs when there is a great deal of exuberance about the market. People who would never have thought about buying stocks decide to invest at this point. This is a good way to make very little, if any, money.

When the market hits a high, price to earnings ratios tend to get very high. This leads to lower returns over the long run because money is made from buying low and selling at the top.

Warren Buffett gave sage advice when he said to be fearful when other people are greedy and to be greedy when other people are fearful. Many people tend to do the exact opposite.

Not Getting Started

One of the biggest mistakes that people can make when it comes to investing is not getting started at all. Those who do not invest will probably never get beyond the state of living paycheck to paycheck. Investments can grow over time. Savings accounts will not even keep up with investments. The earlier you start investing, the more time you have to see your money grow. 

Investing for the future is an important step to take toward long-term financial independence. There are many mistakes that can lead to problems.
By knowing which mistakes to look out for, it's easier to avoid them so that you can start watching your investments grow.

Monday, July 3, 2017

Cynthia Le Sueur-Aquin, CEO of TSX & OTC Traded Laurion Mineral Exploration Inc. Interviewed by MicroCapCompany.com

A while back we published a blog post asking any micro cap ceo's whom want to be profiled to send us some information.  In my movement within the micro cap public company world I previously ran into Cynthia Le Sueur-Aquin, CEO of Laurion Mineral Exploration Inc.  Here is a quick write up about her:

Who are you? (include name, title, background, etc)                
Cynthia Le Sueur-Aquin has been a director and the President of the Laurion Mineral Exploration Inc since April 7, 2003 and engineer by background.

Ms. Le Sueur-Aquin has 38 years of mine management experience in the precious metal mining industry. She has been involved in global exploration and production operations including the development and project management of many mines, sand and slimes recovery sites, and gold recovery plants throughout the world. Her postings have provided her with direct exposure to cultural, political and regulatory issues in Indonesia, South Africa, Zimbabwe, Canada, Mexico, Mozambique, Zambia, Botswana and other North African States. She also has experience in project financing, mining property acquisitions, corporate legal work and negotiations, company administration and investor relations.

Ms. Le Sueur-Aquin worked for Randgold and Exploration Corporation Limited, Rand Leases (V) Gold Mining Corporation Limited and Gold Fields Limited prior to coming to Canada in 1995. She was also Senior Vice-President, Exploration and Mining Projects for Antares Mining and Exploration Corp. Since 1999, Ms. Le Sueur-Aquin has been working as a consultant in Huntsville, Ontario with Quaere Strategia Inc. and has completed numerous mineral valuations, evaluations and fairness opinions for planned mergers and acquisitions in connection therewith.

What does your company do? (include business activities, company name, stock symbol, how long has the company been publicly traded, etc.)
Listing on the TSX Venture Exchange (LME.V) and the OTCPINK (LMEFF). Traded on the TSX since April 1945, likely one of  the oldest mining companies still listed.
Ishkoday Project located in the Onaman Tashota Greenstone Belt , 220km northeast of Thunder Bay, 28km northeast of Beardmore.

Laurion is an exploration/discovery companies with one project, one focus. The project hosts two past producing high grade gold mines and a significant base metal (Au-Zn-Ag-Cu) environment and a highly prospective gold environment associated with the two past producing gold mines.

The 100% owned Ishkoday Property north of Beardmore, offers highly 4,627 ha prospective gold-rich VMS land package

Where is the business located? (include location of offices or business activities)
The registered off of Laurion Mineral Exploration Inc. is located  at Bay and Adelaide Centre, 333 Bay Street, Suite 2400,P.O. Box 20,Toronto, Ontario M5H 2T6

Why should people invest or partner with your company? (include competitive advantage or what's in the future for your company, etc.)
  • Ishkoday, proximal to well recognized industry players
  • Straddles two well established high grade gold* and VMS* Archaean mining camps, on the cusp of an upswing
  • Hosts two past high grade gold producers - Sturgeon River and Brenbar Mines (surface and underground resources and expansion potential)
  • Revenue generation opportunity from Shaft, surface stockpiles, quartz veins and 40 implied gold targets at depth
  • VMS deposits occur in clusters – focussed development on three, 3km long NE structural corridor hosting gold-rich and base metal mineralization, persisting to depth**  
  • Ishkoday gold-rich and VMS environment defined by 40,729m of substantiated drilling and exploration fieldwork
  • Deposits can range from under 1 to over 100 million tonnes – Target deposit of 4.0 to 6.0 million tonnes of 1.5 to 3.0 g/t Gold, 20 to 30 g/t Silver, 2.5 to 3.5% Zinc and 0.25 to 0.50% Copper.
  • Mix of gold-zinc-silver-copper-lead, excellent hedge against fluctuating metal prices 
  • The 100% owned Ishkoday Property north of Beardmore, offers highly 4,627 ha prospective gold-rich VMS land package
  • Large VMS lenses of high value ore with proximity to surfaces enables  rapid development and cost-effective mining operations
  • Proximal to major regional breaks, characteristic of known mining camps
  • Ishkoday  project is de-risked, more value unlocked for shareholders. 
  • Investors attracted to potential gains with discoveries in attractive merging regions and mining camps.
  • Ideally located – Traversed by Highway 801 off Highway 11, Ishkoday is located 25 km NE Beardmore, 60 km west of Geraldton  - proximal to all services

Note*
    (i.)            Onaman-Tashota polymetallic northern volcanic belt, and
  (ii.)            Beardmore- Geraldton gold dominant northern sedimentary belt).

**         Ishkoday analog Agnico–Eagle La Ronde Mine @ 3km depth)

Where can they find out more information about your company? 
Laurion Website is a highly technical website catering to the Geological community who are the “gatekeepers” to the investment community. For the investor, the corporate presentation and other presentations may be found on the website www.laurion.ca

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