Sunday, June 3, 2018

3 Tips For Micro Cap Stock Investing

The world of micro cap stock investing is similar to The Wild Wild West. Many stocks in the micro-cap world and Penny Stock world do not have information... which makes investing in these companies like shooting a gun in the dark. But nevertheless, risk takers and entrepreneurial investors still flock to the micro cap sector and the penny stock world for abnormal returns. I wanted to write this article to go over a few ways that can help early investors in public penny stock companies get an advantage.

The truth is, looking into the financial statements of many penny stocks or micro cap companies will not help you with your investment decision. This is because many of them have not produced any revenue yet or do not have any substantial operations. Many of them are simply a startup on a public company exchange or the OTC markets.

But reading through the filings the company has made with the Securities and Exchange Commission does have its benefits. They can tell you where the company is going. This is the first thing I would do. Look through the company filings and read everything about the company. If the company has a history past 12 months, you should dig deep into that history as well.

The second thing I would do is dig deep into the management of the company. What someone has done before is sometimes an indicator of what they will do again, although this is not always the case. Understanding who the management is and what their goals and objectives are can help determine whether the investment opportunity suits you.

Lastly, I would reach out by phone or email to the company. Keep in mind that some of these firms are small and you may be surprised that the CEO picks up the phone. If you have a hefty amount to invest, many of these CEOs will give you stock at a discounted price.  Bulk orders for penny stocks are commonly heavily discounted, especially when investors buy in the private markets directly through the company. This may lead to some legal ramifications of which you may want to seek the advice of a legal professional. But in general, reaching out to the management team of the penny stock of a microcap company is a good idea.

About the Author: Nicholas Coriano, JD is an Entrepreneur &  Business Consultant.  He has worked at Merrill Lynch, The New York Stock Exchange and is currently a partner at Cervitude Intelligent Relations.  Learn more about him here. He is the author of Rules For Entrepreneurship available now on Amazon.

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. 

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