# Micro cap specs



## springhill (27 July 2012)

What is the market appetite for them?
What catalyst would see micro caps come back into favour?
Are you holding any? What is their status?
Are you watching any with intent to buy?
Does an event like SIR yesterday whet your appetite for higher risk and that elusive multi-multi-bagger?
If you would never ever ever touch them, why not?

I know I post on them ad nauseum, but I have an appetite for research and discussion of them, so let's discuss!


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## Bushman (27 July 2012)

Micros are starved of capital at the moment. So rule number one is screen out those needing to raise capital due to low cash levels. 

Top-down is not good for alot of the minerals micros, especially bulks, nickel, rare earths etc. Only concentrating on copper/gold plays and only hold one 'greenfield' explorer. Rest are 'soon to be' producers or producers trading at silly valuations. Great time to buy them as long as funding is secured for the next 12 months.  

In terms of my preferred micros, I am looking for a quick path to self-funding of future large scale mine developments. So always looking for high grade zones etc that can be brought on-line for limited capex and then the free cash used for lower-grade/higher volume open pits or underground. 

You don't want to be stuck with a deposits like Rex that has massive, low grade tonnage but needs +$600m in capex to get the mine up. Crazy numbers in this environment. 

Nice thread. I love the micros the most even though it has been a tough, tough market over the last few years.


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## tigerboi (27 July 2012)

*Re: Micro cap specs,BCT is a sure thing 20 bagger imo...TB*

BCT is a micro cap i have been following for a few months now they are not a miner which is a plus as it wont take long for them to be cash positive.

BCT have a product with no competitors so they have the market to themselves so imo this is

a serious 10 bagger from 20c price or from its 25c listing price.

i have spoken with management regarding an investment & they know their product & market...

so its just a matter of time.

micro caps to about $250m has had my interest for all of 2012 as i believe they are an undervalued area of 

investment many investors overlook.

the appeal for me is the opportunity to get in right from the start or close enough to get yourself a

10 or 20 bagger & be there while the company grows as it attracts the big hitters...TB


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## springhill (16 August 2012)

With the extreme movement of micro caps in the last couple of weeks, lead by SIR and then closely followed by MAT, SBR, AOC, PDZ, HOR and PEX just to name a few off the top of my head.

Would it be safe to say there is more interest in micro caps lately? 
Has this pricked your interest to look at a few when you haven't been of late?
Do you expect things to continue along this path, or are they the result of a few really good announcements?

I know I have been flat out like a lizard drinking of late and have compiled a list of 15 stocks I see as having real promise. Near term and down the track a little.


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## burglar (16 August 2012)

springhill said:


> ... Has this pricked your interest to look at a few ...




I didn't mean for you to stop, when I posted that I could not keep up.

Still interested, still looking at speccy stocks.
I have found that I like to revisit old friends. Reduces homework!!


Keep on cherry picking!!



> Definition of CHERRY-PICK
> intransitive verb
> : to select the best or most desirable


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## springhill (16 August 2012)

burglar said:


> I didn't mean for you to stop, when I posted that I could not keep up.
> 
> Still interested, still looking at speccy stocks.
> I have found that I like to revisit old friends. Reduces homework!!
> ...




Out ATM when i get home i will post my shortlist


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## suhm (16 August 2012)

BCT looks interesting but won't it need to raise more money in the next 3-6 months given the current cash burn it looks like it is running out of cash


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## springhill (16 August 2012)

So far I have run through over 800 quarterlies. 
This is the best of what I have found so far and the increase/decrease since identification and addition to watchlist.
Criteria is based on MC:Cash position, micro cap, chart positioning (a downward trend toward cash backing is preferable), project potential.

PVD +25%
CQC +5%
SKM +16.7%
PRE  + 9% (Thanks to burglar, and once consolidation & cap raising is completed)
FRC 0%
GBE -5%
BGH 0%
ESR +10%
STK +9%
PRA +7.7%
ZTA -4%
XCD 0%
ATU +15%
AXE -3%
MTN +6.4%
MDA +3.5%
MEP +3%

On a secondary watchlist I have these, which dont exactly fit all my criteria, but come pretty close.
LGM, PDZ, GPH, WAL, BNR, SNY, LIN, PUN, JAL, EPC, MSR, MGL, JRL, IRM, IKW, MRQ, MGV.


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## springhill (21 August 2012)

My hand selected Micro Specs performing admirably ATM.

PVD +18%
CQC  0%
SKM +30%
PRE + 11% (Thanks to burglar, and once consolidation & cap raising is completed)
FRC +22%
GBE -5%
BGH 0%
ESR +10%
STK +14%
PRA +10%
ZTA +4%
XCD -4%
ATU +22%
AXE -6%
MTN +28%
MDA +10%
MEP +15%

I have since added
PTS 0%
LMR 0%


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## Synergy (21 August 2012)

Good work on the selections. That's got to be more than a lazy afternoons work...

My micro stocks system has been painfully lying dormant since April but kicked back into gear last week.

The XSO is up more than 10% in less than a month so the bottom end of the market is certainly showing some signs of life.
I'd be more than happy if things just trundled along like this for the rest of the year!


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## springhill (21 August 2012)

Synergy said:


> Good work on the selections. That's got to be more than a lazy afternoons work...
> 
> My micro stocks system has been painfully lying dormant since April but kicked back into gear last week.
> 
> ...




Thanks mate.
IMO this is where the project selection element of Low Caps is critical. The other criteria set the base for the announcement induced/speculative purchase SP rises.

Do you mind running through your system criteria and the stocks you are watching ATM?


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## So_Cynical (21 August 2012)

For anyone interested, Contango Microcap Fund (CTN)  seems to be lagging the XSO index a little, even though it went up 3% today...dividend to come.


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## Synergy (22 August 2012)

springhill said:


> Thanks mate.
> IMO this is where the project selection element of Low Caps is critical. The other criteria set the base for the announcement induced/speculative purchase SP rises.
> 
> Do you mind running through your system criteria and the stocks you are watching ATM?




It's a sub 50c breakout system and I dont look at the fundamentals at all. There's plenty of criteria but I'm generally looking to catch the moves early. Recent market conditions (2 years nearly) have not been kind though and it's been quite useless. I think it at least requires a bit of optimism if not a rising market.


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## springhill (23 August 2012)

Latest status

PVD +17%
CQC -10%
SKM +20%
PRE + 9% (Thanks to burglar)
FRC +33%
GBE -6%
BGH -20%
ESR +10%
STK +14%
PRA +4%
ZTA +22%
XCD -1%
ATU +30%
AXE -3%
MTN +28%
MDA +17%
MEP +15%
PTS +20%
LMR +9%

To your point Synergy, yes a rising market probably means you can loosen the criteria a little, a falling market your criteria must be set in stone.


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## prawn_86 (24 August 2012)

Hi SH,

I was just wondering what your exit criteria is for this 'project'? With specs being notorious for the first ones to drop when the market turns to the downside, do you have any criteria to lock in potential profits?


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## Gringotts Bank (24 August 2012)

prawn_86 said:


> Hi SH,
> 
> I was just wondering what your exit criteria is for this 'project'? With specs being notorious for the first ones to drop when the market turns to the downside, do you have any criteria to lock in potential profits?




I was thinking the same thing.  Wouldn't want to ruin that very nice set of numbers.  Needs an index filter maybe.


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## springhill (24 August 2012)

prawn_86 said:


> Hi SH,
> 
> I was just wondering what your exit criteria is for this 'project'? With specs being notorious for the first ones to drop when the market turns to the downside, do you have any criteria to lock in potential profits?






Gringotts Bank said:


> I was thinking the same thing.  Wouldn't want to ruin that very nice set of numbers.  Needs an index filter maybe.




Good morning fellas thanks for the interest.

First thing is that my 'system' is completely manual. The only filter I have is the criteria in my head. Labour intensive, yes, luckily I enjoy this kind of work.

Exit criteria. I honestly cant throw a blanket over the lot and say I will exit after X, Y, Z.
Each stock has its own strengths and weaknesses, including a little niche reason why I enter in the first place. It could be cash position v MC v Cash burn, an announcement I am anticipating arriving, a cap raising, major investment, dilution etc etc.
Exit reasons for each stock vary and timing varies.

With entry based on MC:Cash, constant review is important to see if you are getting value for spend.

I have got it very right and also very wrong in the past, but have learnt from both and have reduces my profit expectations and risk accordingly.

Sorry I cant define it in a more clear way

The pro/con of a manual system, I suppose.

Thoughts?


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## prawn_86 (24 August 2012)

springhill said:


> Sorry I cant define it in a more clear way
> 
> The pro/con of a manual system, I suppose.
> 
> Thoughts?




I entered AJQ recently based on cash:MC and good prospects for drilling. I then sold out my initial portion plus a 10% profit when it (virtually) doubled enabling me to free carry the rest.

Surely a say 50%+ gain would prompt taking some off the table?


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## springhill (24 August 2012)

prawn_86 said:


> I entered AJQ recently based on cash:MC and good prospects for drilling. I then sold out my initial portion plus a 10% profit when it (virtually) doubled enabling me to free carry the rest.
> 
> Surely a say 50%+ gain would prompt taking some off the table?




Absolutely, but with the caveat of how quickly it got to +50%.
Every now again its obvious it will blast past 50%.


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## prawn_86 (24 August 2012)

OK makes sense i guess.

Is there any on that list that you are considering sell all or part of your position at this stage?


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## springhill (24 August 2012)

prawn_86 said:


> OK makes sense i guess.
> 
> Is there any on that list that you are considering sell all or part of your position at this stage?




I wish that was my purchase list!

This was a list I was compiling while going through every spec miner on the ASX. I am 3/4 of the way through. To be honest did not expect these results this quickly. 

This was meant more as a test of my criteria, as specs had been performing abysmally lately. Wanted to see if where I was at was still relevant in this market.
I will have to run a review on the list again soon.

Hypothetically I would not sell any of those at this point, there is still alot of unrealised potential in each one


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## springhill (26 August 2012)

PVD +20%
CQC -10%
SKM +20%
PRE +9% (Thanks to burglar)
FRC +44%
GBE -4%
BGH -20%
ESR +10%
STK +14%
PRA +4%
ZTA +4%
XCD -1%
ATU +25%
AXE -3%
MTN +28%
MDA +24%
MEP +15%
PTS +21%
LMR +15%

Take that XEC (S&P/ASX Emerging Companies Index)!!


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## prawn_86 (26 August 2012)

Up over 200% assuming equal position sizing, no slippage and no brokerage.

Good work


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## springhill (28 August 2012)

PVD +18%
CQC -10%
SKM +20%
FRC +78%
GBE -6%
BGH -20%
ESR +10%
STK +14%
PRA +6%
ZTA +13%
XCD +0%
ATU +28%
AXE +14%
MTN +28%
MDI +24%
MEP +18%
PTS +27%
LMR +15%
RCF +20% (formerly PRE)

Average portfolio percentage gain/loss =  +15.6%


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## springhill (1 September 2012)

PVD +29%
CQC -10%
SKM +20%
FRC +78%
GBE -6%
BGH -40%
ESR +0%
STK +55%
PRA +6%
ZTA -4%
XCD +7%
ATU +0%
AXE +0%
MTN +17%
MDI +38%
MEP +18%
PTS +27%
LMR +5%
RCF +8% (formerly PRE)

Average portfolio percentage gain/loss = +13%


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## buick23 (13 September 2012)

springhill said:


> Good morning fellas thanks for the interest.
> 
> First thing is that my 'system' is completely manual. The only filter I have is the criteria in my head. Labour intensive, yes, luckily I enjoy this kind of work.
> 
> ...




I really enjoy reading your threads, its come at a good time, I picked up JIN as a micro cap a few months back
they recently expanded into the US market, do you know it?

like to here from you about new micro caps and how do you get onto them so early
what is your main source of research?


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## springhill (14 September 2012)

buick23 said:


> I really enjoy reading your threads, its come at a good time, I picked up JIN as a micro cap a few months back
> they recently expanded into the US market, do you know it?
> 
> like to here from you about new micro caps and how do you get onto them so early
> what is your main source of research?




Hi mate, thanks for the kind words. I am not familiar with JIN, I try to stick to spec miners at this point in time, but the chart is heading in the right direction over the last few months, so well done you.

The short answer is constant research. I review the ASX announcements each day, but am most active at Quarter/Half/Yearly reporting time. I can get the most accurate figures in regards to share allocation and cash position, as well as upcoming activities.
Something I think is a piece of trash during one quarter, can become a perfect opportunity a quarter or 2 later. That may be by means of share consolidation, project sale, change of management, project acquisition, cap raising etc, etc.

There is nothing too complicated about it, you just have to know what you are looking for.


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## Crows (18 September 2012)

You should do an update on where that little list has gone so far. I noticed some have made a considerable change since you last posted. Interesting to see, I must say.


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## springhill (18 September 2012)

Crows said:


> You should do an update on where that little list has gone so far. I noticed some have made a considerable change since you last posted. Interesting to see, I must say.




PVD +76%
CQC -10%
SKM +20%
FRC +83%
GBE -3%
BGH -40%
ESR +27%
STK +41%
PRA -21%
ZTA -48%
XCD +11%
ATU -5%
AXE -3%
MTN +21%
MDI +17%
MEP +36%
PTS +28%
LMR +19%
RCF +8%


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## Crows (18 September 2012)

Only 3 stocks at 20%> in the red and the rest are either close to neutral or way in the green. I'm interested to see what happens in the next few months when more money gets spent.


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## springhill (18 September 2012)

Crows said:


> Only 3 stocks at 20%> in the red and the rest are either close to neutral or way in the green. I'm interested to see what happens in the next few months *when more money gets spent*.




Hit the nail on the head. If MC:Cash is a consideration in purchase of a stock, then they must be a quarter by quarter proposition. 
Taking the upcoming quarterly spend into account is important, and will give a heads up on short term financial position.

If I was to go through the entire ASX quarterlies for spec explorers next quarter, that list would look quite different. Some, or quite possibly all, of the stocks in this list may have moved outside the criteria. This list as an investment trial could be obsolete in less than a month.


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## Gringotts Bank (18 September 2012)

springhill said:


> PVD +76%
> CQC -10%
> SKM +20%
> FRC +83%
> ...




Very impressive springhill.  Better than The Speculator whom I used to follow in the BRW.
Are you able to replicate this sort of performance with stocks of higher turnover?  It would be very hard to take a position in a lot of these companies.


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## springhill (18 September 2012)

Gringotts Bank said:


> Very impressive springhill.  Better than The Speculator whom I used to follow in the BRW.
> Are you able to replicate this sort of performance with stocks of higher turnover?  It would be very hard to take a position in a lot of these companies.




I could not answer that question in all honesty. I don't really pay much attention to high turnover stocks. More variables that have to be taken into account as well.
My aim is to try and keep it simple.

Of course repeating it consistently over many quarters and varying types of markets is also a factor.


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## tech/a (18 September 2012)

> It would be very hard to take a position in a lot of these companies



. 

There in lies a *big* problem.
Take PVD traded $9000 worth today.
FRC hasnt traded!
Nor has MEP.


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## Gringotts Bank (18 September 2012)

springhill said:


> I could not answer that question in all honesty. I don't really pay much attention to high turnover stocks. More variables that have to be taken into account as well.
> My aim is to try and keep it simple.
> 
> Of course repeating it consistently over many quarters and varying types of markets is also a factor.




Say your stocks that had a minimum average of $100000 turnover per day, that's a very simple filter to add.  It would encourage anyone who follows this thread to maybe take a position here or there... making springhill rich!


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## springhill (18 September 2012)

Gringotts Bank said:


> Say your stocks that had a minimum average of $100000 turnover per day, that's a very simple filter to add.  It would encourage anyone who follows this thread to maybe take a position here or there... making springhill rich!




I only own 2 of them GB 
Just testing my system and bringing lesser lights up for discussion.


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## Crows (15 June 2013)

Hi mate,

It'd be interested to see how these companies turned out with the whole market glaring down any small cap in sight. Most small caps I've been watching over the past 6 months, have taken a solid beating even though some have had quite good news!


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## pods (1 August 2013)

I've held many Microcaps over the years and lost a hell of a lot of money, but I figured I would be learning a long the way.

TTV - I had high hopes for them and especially their TV Wagering product but I think Mobile kinda killed it or lessened it's impact. However now I hold shares in a casino in Vietnam. Lots of risks there, but i'm hopeful. At least, when was the last time a casino went bankrupt?

My current Darling is MBE - Mobile Embrace. I've been pumping money into them. Even as recently as a month or 2 ago I sold the RFL which I had bought at 8.8c for 15c. I used that money to buy more MBE.

Recently MBE have gone from 2c to 5+ cents in about 3 weeks or less. Its been good and its about time. They're in exactly the sort of industry that you'd want a micro-cap to be in to make a lot of money - Mobile Commerce & Advertising, and recently there has been a lot of news about the mobile advertising market.

They reached a high of 5.7c, at which point they were trading at 17x their EBITDA - which may be a little too much and why they have come back a little bit (They dropped to $0.045 and are now at time of writing back to $0.052c).

What I wouldn't mind know is what is a good EBITDA multiple to be trading at for a high growth stock like MBE?

There's a thread for MBE: https://www.aussiestockforums.com/forums/showthread.php?t=5906


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## pods (1 August 2013)

Also i think COM And STE are fantastic byes at 1c and 2c respectively if you can get them.


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## barry c (6 August 2013)

What price do you define a micro-cap at nowadays?  I have one share that is just under 8c (I paid a lot more for it unfortunately).  Is that a micro-cap now?


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## Vixs (6 August 2013)

barry c said:


> What price do you define a micro-cap at nowadays?  I have one share that is just under 8c (I paid a lot more for it unfortunately).  Is that a micro-cap now?




It's not price that matters for micro/mid/large cap. The cap is short for capitalisation, so a micro-cap is a company with a relatively small market capitalisation.

If CBA had 6500x as many shares on issue and was trading at 1c per share, it wouldn't be a micro-cap it would just have a lower individual share price.


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## burglar (13 September 2014)

Where to post this?:

I have a theory that the chase for dividends is slowing/ending!
Money seems to be flowing into the resources sector.

I thought that a comparison of the XSO to the XAO would be illustrative!!


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## Miner (15 September 2014)

springhill said:


> PVD +20%
> CQC -10%
> SKM +20%
> PRE +9% (Thanks to burglar)
> ...




Hi Spring Hill

As there are now lesser and lesser no of posts on ASF so I have been searching quality posts and posters previous years.
Looking into your post in 2010, what do you say against the performance of those emerging companies ?
I know how PVD was favoured by many brokers and my investment has reduced to half . The share behaved opposite (just MCE did) to what market hype predicted.
Way back all on hindsight when FMG before the split was 8 cents and then $2 no one believed it (that includes me). Even when it was $36 before split even I was working at FMG - did not believe it. Today it is different. All emerging chips will be mighty chips in some day s unless M & A snared them 

Regards


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## finicky (25 December 2021)

Thought I'd put up Tony Locantro's 2022 specs list if anyone wants to sniff around them.
I hold MBK on the list - without much conviction these days; stale bull. However MBK have recently done another mega dilutive capital raising and have bought a new project. A factor of x26 would consolidate the current 2.55 billion shares @ 0.007 down to ~100million shares @ 0.18. Arguably cheap. Not a recco from me.
I hold Red Metal (RDM), recent purchase
I see 1AD has made a reappearance.
MKG, CHM and NYR could tempt me if I get to a strong cash position and they haven't taken off.


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