Hitchhiker's guide to investing?I will speak to the title of this post at the end....
Microcaps are necessarily affected by large downswings in the market regardless of their fundamentals. This is simply because investors in microcaps tend to engage in margin investing and when they have margin calls in other holdings, the first stocks that are forced sold by the broker will be the least dollar volume of securities that will satisfy the margin. For example, to satisfy a $1000 margin call, they will choose to sell $1000 worth of a security that itself has no loan value in the account before they choose to sell $2000 of a security that has a 50% loan value in the account.
The current downturn means nothing in terms of fundamentals or the long term story. VMD does not need a high share price because they don't need to raise any financing.
The upcoming microcap presentation by Hoyt might reveal whether VMD has been successful in hiring more sales and patient care coordinators. Their careers page suggests that they are trying to hire https://www.viemed.com/career-opportunities/ They also advertise on ziprecruiter https://www.ziprecruiter.com/c/VieMed/Jobs Just like there is a turnover of patients, there is a turnover of staff as the company grows. I would be curious whether the market for respiratory therapists is a potential barrier to maintain a 40% year over year growth. Add to that, say 10% departures of existing staff, it might amount to a 50% hiring rate.
I believe Hoyt said that they have 100 RTs. So in year 1, they need to hire 50 RTs. In year 10, they must hire 1000 RTs which would equal about 13% of the new graduates in the profession. The average annual salary of an RT is $60K with about 100,000 working at hospitals. https://www.bls.gov/oes/current/oes291126.htm#(3)
So VMD's strategy will ultimately have to include recruiting experienced RTs from Hospitals using attractive wages/working conditions. I wonder if VMD plans to attend the RT conferences to create a reputation of being a good employer. Maintaining a good reputation would be essential for this model to work. I did see one small concern posted on Glassdoor: "commission pay structure makes it very difficult to make decent money. I would ask what the average sales rep makes per month. You often just hear what the top rep makes which is misleading". Generally, however, VMD has a good reputation. Their innovative model will serve them well in this area.
RTs can certainly discover VMD in a job search however, I do wonder how many RTs actually consider searching for this kind of position and are even aware of Viemed's existence. Once a critical mass of RTs become aware of VMD, I expect VMD will benefit from that both in recruiting and in sharing their story amongst the potential patient population.
It is an intriguing story.
Perhaps VMD is a better buy at $4 than at $3? It will mean that they are on their way rather than trying to get on their way.
Back to the title of this post....If you are hitchhiking trying to catch a ride to another city, you must get out to the highway first to catch a car ($4 stock) that is on its way rather than stand in a busy downtown parking lot hoping to find a car ($3 stock) that will take you to your destination. For a lot of funds, they apply a hitchhiker's logic and prefer to wait. In other words they hitchhike on the highway (look for a $4 stock) to their destination rather than in the downtown parking lots (hoping to find a $3 stock that will become a $4 stock).
Good luck to everyone.