https://www.youtube.com/watch?v=6lIpwhdWGCk&feature=youtu.be
Also mentioned in stocksandstones on substack.
I'm not totally convinced by the argument here.
This category is about well-established businesses with a track record of revenue growth and profitability. When institutional investors come down the market cap spectrum, these high-quality opportunities tend to attract capital. And if they need to raise capital to accelerate their growth, that's even better as it provides a liquidity window for big money to get in.
Recent examples (with YTD returns) are:
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Kraken Robotics (TSX-V: PNG) + 63%
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Vitalhub (TSX: VHI) + 74%
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Tantalus Systems (TSX: GRID) + 91%
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Zedcor (TSX-V: ZDC) + 112%
These companies all took advantage of their share price increases to announce bought-deal financings in the last two months or so. Some will use the capital for organic growth, while others intend to do M&A. Either way, the capital should fuel more growth, and that’s what investors are looking for in microcaps.
What could be next?
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KITS Eyecare (TSX: KITS): Although the stock had a phenomenal performance in 2023, it's flat in 2024 despite continued execution and revenue growth. Several analysts cover the company, which is clearly on the institutions' radar. Given the high insider ownership, the stock is relatively illiquid. If there's another leg up in the stock, I suspect KITS could raise money and allow more institutions to get involved, fueling further share price increases. It looks like a prime candidate to follow the playbook of the four companies highlighted above.