DW8 Growth, page-1430

Institutional investors are definitely following the firm and have been showing interest during/since the last cap raise, with some building stakes already judging from the top 20 shareholder list and how it's evolved over the past 12 months (https://www.marketindex.com.au/asx/dw8). Reckon that two of the nominee accounts in this list are representing institutional investors considering both of the referenced firms are primary PBs/custodians for institutional asset managers. So yes, the cat is definitely out of the bag -- at least partially -- but that does by no means imply the return opportunity is gone. Not by a longshot in my view.

Considering DW8's current micro-cap market cap and that it is still a (relatively) early stage of the business -- despite all that Dean has accomplished since joining in 2018, especially in the past 12 months -- risk management and DD frameworks prevent a lot of institutional investors from investing in listed companies below certain mkt cap thresholds. A $100M market cap is one of the hard limits in the industry for many (on top of concentration risk). Once the SP breaks 6.5 cents (i.e. $100M mkt cap) that adds DW8 into the investable universe of a number of funds (that may already be following the firm but cannot invest yet due to mkt cap restrictions), which combined with the momentum in sales, revenue and product development we are seeing should be highly accretive in my opinion. The scalable business model, zero debt, cash levels vs. revenue vs. costs, and innovative value proposition that actually solves a real financial problem for clients (and consumers, by implication) make this a fundamentally interesting investment idea with substantial potential to (at least) consider.

Forward pricing of the SP will make it quite interesting over the next 3-12 months I reckon as we roll out the marketplace (see comment by mrmonopoly89 above) and considering the momentum we are already seeing in the legacy business, especially now with WDA being integrated and contributing. The firm's transparency is also a positive from an insto point of view. Also important to remember that the acquisition will not just be a bolt-on in terms of revenue, but actually improves the overall DW8 value proposition to clients, so its impact over time is not just 1+1=2, but rather a factor of 2. All things considered (IMHO), while holders from 12 months ago are already substantially up, there's a significant probability that new/recent holders will look back in 12 months' time at their purchase price from a new high (usual Hotcopper disclaimers apply). So yes, there is still time to build out positions in my mind but as past experience shows, sometimes the price can move quickly and if it doesn't retract the opportunity to buy at a certain level may be gone. Building a business takes time and you don't go (very often) from zero to hero in 12 months as a shareholder (read: zero to overnight millionaire, unless you've got an outsized stake to begin with), and from a life cycle perspective I consider this firm to be still within its first 12 months, meaning the accomplishments so far vs. the starting point and growth expectations are very attractive. That means there's plenty of upside left to exploit as the business expands and the SP with it.

Warning -- some more general musings ahead: A lot of times investors are too myopic when evaluating companies, more often focusing on the SP rather than the underlying business and even doing that too short-sided which as the old guys from Omaha keep correctly pointing out may not be that highly correlated over a short time horizon, but over the long-term....and that offers opportunity. US-listed Monster Beverage Corp is a former micro-cap example of a real-life company that is a not tech stock (read: tech stocks are subject to slightly different sets of assumptions and expectations but tend to skew investors' relative return expectations) and dealt with real supply/demand issues that is worth taking a look at from an educational perspective. Each rolling 5-10 year period offered various opportunities for investors to earn 5-10X (+) in returns while holding since its low in 1996 at 1 cent to now would have generated 8,979X. It's a classic rags to riches example micro and small-cap investors drool over that holds tons of lessons for investors willing to dig deeper. Sometimes it pays to be objective, take a step back and refrain from short-term impulses and focus on being rational (i.e. recognizing that time is the biggest compounder -- assuming the business continues to grow and is managed well over time). Just to be clear, I am not forecasting that DW8's SP to go $90 (though I will be very happy if it does), rather use this as an example to illustrate the most basic principles of investing to remember: Risk and return are correlated, i.e. one hopes to get compensated over time (!) for the level of risk assumed with a certain amount of $ one puts at risk. Ergo, if one wants outsized returns, one needs to take an outsized level of (or asymmetric) risk - either via the investment pursued (aka risk of loss) or the size of one's stake if thinking in $ terms) - or be prepared to be a long-term owner in the business like the dudes from Omaha (i.e. this is more closely related to opportunity cost perception/risk). Either approach can work very well as long as one knows exactly which one applies and continues to remember that as time passes.

Simply knowing my approach meant that as I added to my holding this week at prices above the most recent low did not leave me frustrated as my focus is not on scalping a 25-50% return over the next week to 2 months. I am pursuing multi-baggers, in which case a buy-in at 0.1 or 0.2 cents higher than the low washes out in the end anyway. That said, in my opinion getting in below 6 cents will look for sure like a smart call in 12 months' time based on how the firm is growing and delivering on its targets, and that's without even factoring in the marketplace upside potential. I am using a 12-month measure for my time horizon, but would also feel comfortable making a shorter-term call on the upside based on where I place the current SP vs. my FV estimate. Just some perspective in case it adds value to anyone how to think about their own approach and decision making. Anyway, DYOR and GLTAH.