Right now with the world tittering on the brink of war, collapse and currency deflation, I believe like never before the balance sheet has become dominant.
The balance sheet will be investors:
1/ Insurance 2/ Catalyst 3/ Fortress 4/ Value creator
How can we choose the right small cap companies in a sea of small cap companies?
Finding value requires common sense, if the price is lower then the value of the dirt in the ground then that is hidden value. Buy enough companies for .50 that are valued over a dollar and wait, it is that simple.
MRF controls its destiny, has low capital requirements to get the Graphite out of the dirt, cheap exploration costs and invested management. Not to bad in my opinion.
Why Small Caps are the Best Investment https://www.eagledailyinvestor.com/14571/why-small-caps-are-the-best-investment/
1. Small investment / Potentially high returns - Volatility aside; true value always emerges to the top.
2. Time has proven one thing; Small Cap stocks consistently outperform Large Cap stocks Longer term.
3. The Small Cap Effect: Economic theory suggests it is either a matter of market inefficiency or it is compensation for additional risk - University of Chicago’s Eugene Fama, Ken French. "Between the bottom of the U.S. stock market in June 1932 and the end of 2006, the return of U.S. small caps rose 159,000-fold. That compares with to, say, a return of 19 times principal for “safe” U.S. government bills."
"The Small-Cap Effect: All the Time, Everywhere?
Recent experience in the U.S. market confirms both the power and lockstep rigor of the “small cap effect.” Since the U.S. market bottomed in March 2009, the Russell Top 50 index of the largest U.S. companies has risen 111%. The Russell 1000, covering the 1,000 largest stocks, has gained 150%; The Russell 2000, covering the next 2,000 stocks, is up 197%. The Russell Microcap index — the smallest of the small — is up 220%.
What’s more, the small-cap effect seems to be global. You can find evidence for it particularly in other developed economies. Since 1955, a U.K. small-cap index offered an annual return of 15.8%, compared with 12% on a broader index.
This 3.8% gap compounded over time makes for spectacular out-performance. Since 1955, the small-cap index has returned 11,605%, compared with 811% for the broader market — a more than 14x difference.
The same research also compares the relative performance of small-cap indices in 30 other countries. It found that going back to 2000, small-caps, on average, have outperformed large-cap indices by 6.7% each and every year.
If you appreciate the power of compound interest, that is a mind-boggling difference and confirms that you should forget about U.S. small caps and go “all in” on global small-cap stocks."
Why is MRF so strong?
MRF has not got allot of competition for us. We are not competing with large amounts of cash / Fund Managers at first pricing us out.
Because of the fewer runners in the race our chances of market error increases mispricing companies with intrinsic value. This inefficiency is our growth and returns.
Short sellers cannot hold the small cap down forever, that is why successful small caps attract down-rampers like a dog attracts flea's.
Wider Bid/Ask spreads and lower volumes create higher costs to get in and out, this exposure to poor liquidity is also a huge advantage, when a Small Cap moves with clear direction bias it ranges much higher and lower then the average investor expects. This is how I expected and predicted that BBR if it broke .40 would range up to .70 (Did not quite make it)
Short Sellers are a blessing in disguise; Short Sellers use the low volume to drop the price and buy back at a lower price. As we know long term, Juniors are king world wide, (assuming the value is in the dirt, structure, balance sheet and management)
What these scalpers do is allow accumulators to achieve massive compounding returns, in this way going up doesn't get the heart racing but going down makes us pay close attention. In the same token buyers can pressure it up explosively making it frustrating for long-termers who want the largest pie possible.
MRF is very strong and resilient because it is a one product company in an explosive strategic material. Rapid Technological change either can destroy you or make you. Certainly the price and demand for this material is blowing open not closed, everyone especially governments can see this.
MRF has a short cash flow timeline that is attractive to end-users. Smaller targets = faster revenue, this is highly attractive to long-termers who think nothing of a year or two.
Because of the extreme macro-economic forces, China, energy demands, Moore's Law, Space and Graphene Vein Graphite producers are being snapped up now by the big fish. This is not as good as it sounds. Investors in MRF may find to get shares they may have to pay more then .50 like BBR any time soon depending on the expectations of the market and news flow.
IBM Unveil first workable graphene chip - This is REAL Genius http://www.youtube.com/watch?v=IWxn_a0dEKI
The announcer made fun of this chip but if anyone understands the pace of development they will understand that it is a short road from here to paper thin Ipads and wearable computers and so much more. For Example:
Samsung promises a game changer in chip design http://www.itworld.com/science/413480/samsung-promises-game-changer-chip-design
Kind Regards
PS - All my thoughts and opinions are my own and could be completely wrong. Do your own research; I share this for fun and intellectual discussion and interest only, what do you think?
MRF Price at posting:
4.6¢ Sentiment: LT Buy Disclosure: Held
