You are invited to the Starting Five Virtual Conference on Tuesday, October 27, beginning at 10:30 AM ET, held by MS Microcaps.

The event is exclusively open to the Premium Skull Sessions subscribers, as well as Cliff Notes Substack and GeoInvesting subscribers.

Join the event as four microcap companies join the spotlight along with one exclusive stock pitch from Diego La Torre, an analyst for both MS Microcaps and GeoInvesting.

Event Lineup (All Times ET):

• 10:45 AM – Stock Pitch | Diego La Torre (@Diego_La_Torre_)

• 11:45 AM – Covalon Technologies Ltd. (OTC:CVALF) (TSXV:COV) | Fireside Chat

• 12:45 PM – Cdti Advanced Materials, Inc. (OOTC:CDTI) | Fireside Chat

• 1:45 PM – Corero Network Security Plc (OTC:DDOSF) (AIM:CNS) | Company Presentation Co-hosted by Ben Brostoff (@bmb21)

• 2:45 PM – Clearsign Technologies Corporat (NASDAQ:CLIR) | Fireside Chat Co-hosted by Jev (@MicrocapDr)

Each 45-minute session will offer an opportunity to explore company fundamentals, growth opportunities, and potential risks, with time for your questions.

With the market correcting in certain corners of the microcap world, this is a great time to hunker down and do more research to be ready for when the market rebounds.

For a closer look at the companies and topics we’ll be covering, read the full event preview:

Four Microcaps and a Stock Pitch – Event Preview

Event Details (Invite Link Included)

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I recently came across Matheus Lonning while perusing “X” at 1 AM, sitting and having a few drinks at the El Camino Restaurant on Las Olas Boulevard in downtown Fort Lauderdale. El Camino is Spanish for “the path”. Like many young investors these days, Matheus’ path reminds me of the one I took when I was fortunate enough to discover the world of small and microcap investing and the ROI that came from hard work. Matheus has built a following through his Substack and X by digging into obscure microcaps, reading filings, talking directly with management teams..

Matheus’s approach is pretty straightforward. He looks for companies with strong balance sheets, limited coverage, improving fundamentals, and a valuation that does not seem to reflect the opportunity. He is also comfortable making an initial investment before doing every piece of research, then digging deeper as he learns more about the business. This is extremely aligned with how I invest. That willingness to act independently comes through throughout the interview, especially when he talks about how headline-driven market reactions can create opportunities in small, thinly followed companies. Interestingly, one of his first exposures to the stock market was through a stock contest, similar to my journey.

We get into several of those situations in the Q&A below, including Table Trac, Trio-Tech, SCIA, and a few aerospace and defense names Matheus is watching. He also explains what he looks for when speaking with management, how he tries to distinguish a genuinely misunderstood company from a stock that is simply cheap for a reason, and how some of his ideas played out after he first wrote about them.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

1. How did you first get into investing? Tell us about your journey before and after investing. What is your investing framework and research process like today and how has it evolved over time? When a new idea enters your radar, what does your process look like before you’re willing to invest?

I started investing when I was in High School. There was this “stock contest” where we were paper trading for the entire school year and eventually crown a school champion. Most people just bought something like Apple or Microsoft and forgot about it for the whole year. I was super into it though. I did start by buying whatever company I felt was cool, like Lockheed Martin or Nvidia or Dell, but eventually I started to just buy whatever names were trending regardless of whether I knew the “brand” or not, it was a fun contest and although I was not the winner, it was a great experience.

Nowadays I have graduated from buying whatever is trendy or well-known to buying as obscure businesses as I can. Ideally, these businesses have no analyst coverage and very little chatter on social media.

I usually start with a screener, or sometimes I see a stock go up after earnings and dig deeper. I look for downside protection initially. Is there any debt? What does the balance sheet look like? I prefer businesses with a fairly large cash pile and no debt, but not having that is not automatically a deal breaker. Then, I look at growth, sector tailwinds, peer comparisons and whatever info I can find. With that being said, a lot of these small companies have limited information available online. That is where speaking to management teams can have an advantage. A big part of investing in these lesser known companies is figuring out whether you can trust management or not. That makes or breaks a thesis.

I am a “buy first, ask questions later” person. My best returns have resulted from when I did little research initially and just bought and understood the company later. Overthinking is a bitch. Usually a good pitch is a few sentences long and goes along the lines of: lots of cash, no debt, growing faster than peers but at a lower multiple. Bang.

2. If someone asked what makes you different as an investor, what would you say is your edge?

I am not going to sit here and tell the world I have an untouchable edge when it comes to investing. I do not. What separates me from the average investor, is the ability to think for myself and reach conclusions where there is not a consensus already formed.

I am willing to read filings, speak to management teams and then decide for myself whether or not this is a good investment. I don’t need MS or GS to have a buy rating and high price target to place my money. Usually when analysts start to put out high targets on specific companies it is already too late and the bulk of the returns have already been made.

In short, my willingness to make decisions based on my own reading of a situation allows me to target companies where few others are looking at and that is how you outperform the broader consensus markets.

3. What kinds of companies or investment opportunities are catching your attention right now? What are up to three stocks you’re particularly excited about today, and what do you think the market is overlooking?

I think the aerospace/defense sector is attractive and overlooked even as the US gov pleads to restock ammunition stockpiles, I think the whole sector is going to over earn soon and it is not priced in. My top picks in the sector are: $BUKS, $TAYD, CVU.

4. You’ve written about several companies where the market appears to be focusing on the obvious negative, while you’re focused on an underlying inflection. How do you determine when the market is missing an important change in a business versus when you’re simply rationalizing a cheap stock that deserves to be cheap?

The market has become over fixated on headlines. It has overreacted to both upside and downside without seeing the whole picture. By reading an entire press release or 10k/q one can find real alpha.

Recent examples are overreactions on TAYD, SIF, or even PPIH BUKS. Reactions were quickly corrected and there was fast money to be made by understanding the entire picture.

OK, now let’s talk about stocks. I noticed that there’s a bunch of companies that you talk about that I recognize.

5. In your recent Table Trac ($TBTC)piece, you wrote that speaking directly with management allowed you to learn things that simply weren’t available in the filings, particularly because the company has essentially no analyst coverage. After doing this repeatedly, what are the specific things you listen for in a management conversation that can materially change your investment thesis? What did you particularly learn about TBTC that piqued your curiosity and gave you differential insights? Can you give us an idea of what’s changed in the model and why activist, Chuck Gilman, might have just got involved?

I am basically looking to learn if I can trust them or not, usually promotional CEOs can not be trusted and will line their own pockets before those of shareholders. When a CEO focuses on the business and not the stock that is when I become even more interested.

TBTC chatter with CEO Randy Gilbert was delightful. He gave me an in depth description on how their machines work and what their plan is for the future. I also learned that their actual moat comes from cybersecurity within their software systems. Now I value the company as a SaaS business with high margin recurring revenues, instead of focusing on lumpy system sales.

Chuck Gilman is not involved with the company, it was a mistake proxy transaction causing some confusion. With that being said, I think TBTC will be a long term compounder and find shares attractive even after the recent run.

7. Your Trio-Tech ($TRT) thesis relies heavily on the idea that at a company this small, winning even one additional meaningful semiconductor customer could have a disproportionate impact on revenue and EPS. How do you model that kind of nonlinear upside without falling into the trap of building a valuation around hypothetical customers that may never materialize? Also, from my own experience with the company for three decades, I’ve really never seen their ability to expand margins. Does that concern you? Or is the set-up just more of one, where revenue scales so that even at current margins, the company becomes profitable? .

At the time of my article, TRT was trading around $4 a share. I projected that receiving just one extra order could have a meaningful impact, they received two massive orders in the subsequent weeks/months causing the stock to reach over $20 a share after a strong earnings report. It was a massive realized winner for my book this year.

With TRT I was more worried about revenue growth and taking advantage of the semiconductor boom. They did just that. I honestly don’t expect margins to trend any higher than 15% for SBS segment and near 18% blended, but with sales north of 100m those margins are more than enough to justify the current valuation. At ~$10 a share this is not a home run opportunity anymore, but there is still room for outperformance.

8. I noticed that you are following $SCIA and that you’re quite bullish on the company. I share that optimism with you. The stock is actually in our MicrocapQuality Index as well as covered at GeoInvesting. What does the company do and what are you excited about? Can we really trust that the company has now inflected? Or will they go back to inconsistent growth?

I am impressed with management’s ability to identify new growth opportunities and do not think the market has priced in the fact that they are about to have a couple new revenue streams come online in the coming quarters. Their core business will continue to be lumpy and they are currently overearning from the higher input costs, but these new revenue streams should help normalize growth.

9. Please give us one more person you would like to see us interview.

Jeremie Boyer from Aurelion Research or Jonah Lupton from FirstWave Fund.

Stocks Discussed

• Butler National Corporation (OTC Markets: BUKS) An aerospace and defense company Matheus believes is positioned to benefit from increased U.S. defense spending and ammunition restocking.

• Taylor Devices (Nasdaq: TAYD) A defense and aerospace name where Matheus sees opportunities created by headline-driven market overreactions.

• Table Trac (OTC Markets: TBTC) Matheus sees the company as a potential long-term compounder, with its cybersecurity capabilities and recurring, high-margin software revenue making the business more attractive than its lumpy hardware sales suggest.

• Trio-Tech International (NYSE TRT): A semiconductor-related idea where two major customer orders drove a sharp increase in revenue expectations and sent the stock from around $4 to above $20.

• SCI Engineered Materials (OTC Markets: SCIA): Matheus is bullish on new revenue streams coming online that could help offset the lumpiness of the company’s core business and normalize growth.

• CPI Aerostructures (NYSE: CVU): An aerospace and defense name Matheus sees as an overlooked beneficiary of increased U.S. defense spending.

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This week, Sidecar Investor ( SidecarCap on “X”) brings an interesting perspective to our Investor Notebook Q&A conversations. He is a private investor, but his background spans trading, fund management, institutional asset management and wealth management, and he is also runs Sidecar Partners, an investment firm built around “partnering with exceptional business operators for the long run.”

He has a simple approach to investing: find good businesses, back great management teams and give the best ideas enough time to play out. He is especially interested in smaller companies where the financials may still be messy, businesses going through a change in capital allocation, and situations where the market may be underestimating how far a company can go. His comments on management, concentration and the advantages individual investors have over large funds are particularly relevant for anyone investing in microcaps.

We also get into some of Sidecar’s biggest wins and mistakes, including why he has held Amazon since 2015, why he wishes he had never sold Winmark (Nasdaq: WINA), and why Sears Holdings (formerly: SHLD) remains a reminder of the dangers of making an investment more complicated than it needs to be. He also discusses Happy Belly Food Group (CNSX: HBFG) and Innovative Aerosystems (Nasdaq: IA), explains why some asset-sale situations are not really turnarounds, and shares the books and investors that have influenced his thinking.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

Standard Questions:

1. Tell us about your investing journey. What is your investing framework and research process like today and how has it evolved over time? I see that you actually come from a finance background.

I have been investing since I was 12, starting with money earned from cutting grass. I have always been fascinated by the game and the independence it can provide. In school, business and investing were the only subjects that held my interest which showed in my grades.

I have never been the smartest person in the room but found myself in a variety of roles including operations, trading, fund management, institutional asset management and wealth management. This helped me understand how the machine that drives the market works, and perhaps how to take advantage of its mistakes. Outsiders may be surprised at how many decisions are driven by career risk and benchmark-awareness and trying to keep different stakeholders happy at the same time.

I also noticed that many legendary investors put more weight on management as they gained experience, so I implemented that immediately, before really appreciating its power. How fantastic is it that with the push of a button, you can hire an exceptional CEO to work for you? And stock prices fluctuate wildly, creating the opportunity to do it at prices that would never be available in private markets.

My goal is to do a few simple things very well. It’s hard to overstate the advantage individual investors have by just playing a simpler game. It is absurd that one person at a desk can outperform billion-dollar funds but it happens all the time.

2. How long will you hold a stock and what have you learned from being a concentrated investor? Do you have an example of a stock you hung on way too long that did not work? And one that is currently playing out well? What is a stock you sold too soon that you wish you still owned? I’m particularly interested in understanding what you learned from the ones you held too long and the ones you sold too early.

It’s not unusual for me to buy a starter position then if I don’t develop the confidence to make it larger, sell within 6 to 12 months.

What works for me is building 5-10% positions then letting the portfolio concentrate itself. I have found the strongest returns don’t come from lottery-ticket investments. More often, they come from situations where a low double-digit annualized return seems likely, then management pulls a few rabbits out of their hat which drives the fundamentals significantly higher.

Sears Holdings (formerly: SHLD) is the stock I held too long. I still own it and keep the shares as a reminder to look for simpler ways to make money. Too many things had to go right and even if they did, it was never going to be a great business.

On the other hand, I have owned Amazon (Nasdaq: AMZN) since 2015. It’s fascinating that the same long-term focus that led to the Sears disaster also helped me own Amazon through lots of ups and downs. Maj - you recently had a tweet about forgetting that you own a stock that just keeps executing. I feel that way about Amazon which has delivered a 25% annualized return for more than a decade. They just keep building on new opportunities and I don’t have any plans to sell it.

Winmark (Nasdaq: WINA) is the one that got away. I sold it for around $35 on valuation, to book a quick profit. Investors should study John Morgan who is a talented entrepreneur and a straight-shooter. I invested based on reading a single article about him. The rationality just jumped off the page. Winmark’s model was certainly understandable and also a good example of how a great business can become far larger than anyone, even those who are building it, expect. If you ask 10 investors what their biggest mistake was, the answer is often selling a great business too soon.

Sam Walton said “I believe the folks who’ve done the best with Wal-Mart stock are those who have studied the company, who have understood our strengths and our management approach, and who, like me, have just decided to invest with us for the long run.” My goal is to be this confident in every investment although only a few will earn/deserve this level of commitment.

3. What types of companies or situations are you actively looking for right now? What are up to 3 stocks you’re excited about today, and what is the market missing?

I am most interested in early stage companies where the financials are still messy or more established businesses where I expect the way they allocate capital to shift, usually because management has changed. I am very comfortable with the uncertainty these situations come with.

Happy Belly Food Group (CNSX: HBFG) is a good example. When I invested, the company was a hodgepodge of assets and an unfocused business model. Shawn Moniz and his family controlled the company and brought in restaurateur Sean Black to help chart a new direction, first as CIO and eventually as CEO. From a near standing start, they have acquired about 10 brands and have grown the business to about 100 units, with a pipeline of roughly 700 and counting.

The business model is crossing into profitability and has the potential to generate excellent economics. The market seems to understand the geographic footprint in Canada but may be sleeping on the opportunity in the United States, where I expect franchising deals to be lumpier but larger. This is not management’s first rodeo as Black built several other restaurant brands with exits to MTY and Fairfax-owned Recipe. This experience significantly reduces execution risk. The company is also at the size where institutional fund managers may get more involved, potentially creating additional demand for the shares.

An example of capital allocation shifting is Innovative Aerosystems (Nasdaq: IA) , which makes flight controls and avionic equipment. Unfortunately, the founder and CEO passed away suddenly in 2022. He ran the business well but conservatively. The new CEO, Shahram Askarpour, has been with IA for more than 20 years and has jump-started the acquisition engine, including several opportunistic deals. Importantly, there has been little dilution.

The economics are very good, and other companies in the industry have created tremendous value for shareholders. The valuation is fair, which is about as much as you can ask for with a company of this quality and with this long of a runway.

If I had a time machine, I would go back and cancel the meeting where the style-box was invented. You can probably sense I am a go-anywhere investor and over the past five years have found the most compelling opportunities in microcaps.

Personalized Questions

4. You seem drawn to smaller service businesses; companies with recurring revenue and strong customer relationships. What characteristics make you believe a “boring” service business can become a great compounder? What are the red flags that tell you a service business is not a good fit, even if the numbers look attractive?

Exceptional operators are often drawn to mundane yet essential businesses because of the stability they create. Decisions on how to allocate capital are easier when you are confident 95% of this year’s revenue will come back next year. There also seems to be a glitch where the market often understands the near-term growth potential but underestimates the durability of that growth. In any given year, these companies are also unlikely to be among the best performers, perhaps putting a ceiling on the valuation. There is always something more exciting to do.

When it comes to red flags, I’ve found it’s best to trust your gut. If something doesn’t feel right, it’s often because a dozen small things don’t quite add up. Even if you can’t pinpoint what’s wrong, that feeling is a good reason to not buy or to sell. This has helped me avoid several investments that would have turned out very poorly.

5. When you invest in a company, how important is the relationship you build with the owner or management team? What are you looking for in that relationship?

I rarely talk to management and put most of the emphasis on how they engage with shareholders and their track record. People give themselves away through subtle clues and I am ultimately looking to partner with CEOs who are candid about the company’s potential and risks and are looking for like-minded shareholders, not trying to please everyone. The paradox is these companies rarely need outside capital and are not promotional, which can make them hard to find.

6. You have some great posts on X. I would say even a sort of a master class presentation. Let’s talk about a few of your posts on “X”.

● One of my favorites is about turnarounds because I invest in a lot of turnarounds, especially when there’s asset sales involved. But you don’t call these turnarounds. You said: “Some of the lowest risk, highest return investment opportunities come when management sells secondary assets that have been a distraction to go all-in on a strong core business. While often confused with a turnaround, it’s the exact opposite.” Maybe you can talk a little bit about what you mean here, and maybe give an example of some of your best “not a turnaround” asset sale wins.

○ I am building a position in one that perhaps we can talk about at another time. The point is that even management teams with solid businesses can get bored and look for new things to do, sometimes in the name of diversification. It takes a lot of discipline to stay in one’s lane and if the business produces more cash than it can intelligently reinvest, return it to shareholders. Special dividends and tender offers can be a strong signal management is thinking about this rationally.

● Here’s another one I love. It kind of reminds me of people taking Peter Lynch’s “buy what you know mantra a little too literally.”
“A company I own acquired a business that more than doubled its size. I had never heard of it before, and the temptation, and traditional route, is to dig in and see if I ‘understand’ it. While that may make me feel better, this level of precision is usually an illusion.”

○ I suspect a lot of fundamental research, especially on large companies, is collecting anecdotes that create a false sense of confidence about the future. A lot of what people see is a movie set and if they knew how messy companies are on the inside, they’d probably never invest. Smaller companies are different. They are simpler and it’s possible to pick up pieces of information and develop a unique perspective about its future. They are also going to come with surprises, and the whole point of partnering with exceptional operators is to try to skew them toward being more pleasant than not. I try to be realistic about what I can know about a company or its future and remember that Black Swans can also be positive.

This may sound extreme to people with a more traditional investment approach, but one of my largest holdings has been and will continue to be acquisitive because they have a huge NOL to take advantage of. To me, the crucial question isn’t whether I think the businesses they buy are attractive. It’s whether I trust their ability to assess those businesses correctly. Public market investing is ultimately about outsourcing capital allocation to someone else, and I try not to be an arm chair expert.

● And finally: “Legendary investors like Fisher, Price and Lynch never talked about mental models or variant perception. Suspect there’s a lesson there.”

○ The investment industry likes to dress things up with advanced math and fancy language. Stripping it away is liberating. Unlike supercomputing or flying a fighter jet, there isn’t a fundamental reason investing has to be complex. Many investors have a phase where they are exploring ideas and trying to apply what they learned in other domains. I certainly did. It’s important to get through this as quickly as possible. The goal is to be rational and pragmatic and complexity can make the truth harder to see.

7. Are there any off the beaten path books you would recommend?

The Power Law by Sebastian Mallaby, which is about venture capital, is especially relevant for microcaps. It is filled with case studies of how great investors like Arthur Rock were able to back some of the world’s largest businesses early, before their success was obvious and when there was little data to analyze. It is also very candid about how, by definition, the best founders are going to be eccentric, and some things that are often viewed as turn-offs should instead be seen as turn-ons. I plan to spend the rest of my life trying to find them, and it’s incredible that partnering with just one early and having the courage to hold can change the trajectory of an investor’s life.

8.Please give us one person you would like to see us interview.

Scott Felsenthal who has a unique combination of experience running private and investing in public businesses.

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After publishing our first written Skull Session with Tim Heitman on September 4, I wanted to keep the series going with some stock picking conversation.

For now, I’ll be calling these chats: Investor Notebook…

So, for the second edition, we’re featuring Sergi Mascaro, an investor who has been involved in the markets since he was a teenager and has developed a differentiated approach to finding small companies, early.

Over the last several weeks, I’ve been doing a good deal of communicating with Sergi. So many of his X posts talk about stocks I own, or are being covered at the Microcap Investing Cliff Notes Substack and GeoInvesting, like and $SCIA.

Sergi has built his process around finding companies going through early inflection points. His background in physics and CFA studies gives him a pretty analytical mindset, yet he’s not interested in making investing complicated. He talks a lot about knowing companies for years and how that helps him to move quickly when the facts change.

There’s a lot in this conversation that should resonate with microcap investors. We get into his research process, how he thinks about stock price action versus the underlying business, what he looks for in management, why he likes site visits, and how he handles a stock that falls sharply even when the business continues to improve. He also shares stocks of he finds particularly interesting right now, including Manitowoc (NYSE: $MTW) and Guerrilla RF (OTCMKTS: GUER.

Here’s the full conversation.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

Standard Questions

1. Tell us about your investing journey, before and after investing. What is your investing framework and research process like today and how has it evolved over time?

I will try to make this long story as short as possible without losing the essence of my investing journey.

I started moving in the market when I was 15, in 2010. I was curious about the market before, so I don’t know if there is a “before investing” moment. I had some money saved and wanted to grow it, so my dad introduced me to the stock market at that time. I was very young, but I spent a bit more than one summer trading and trying things like shorting banks, so I lost 50%, or $1,500, and when my mum discovered that loss, she prohibited me from touching the stock market ever again.

A few years later, when I was studying physics at university, I came back to the market and mainly read a few Technical Analysis books from gurus, and nothing made sense to me, especially when comparing it to Quantum Mechanics theories that I was studying back then. Even so, I had to try again and lost some more money, obviously.

Finally, when I was 22, I started studying for the CFA Exams, and at that time the real party began, because it was when everything started to make sense in my mind. I am almost 31 now, so I am a very young investor with a lot to learn still.

2022 was a big hit for me mentally, because in 2021 (a very strong year for my PF) I came into too many unprofitable stories with untrustworthy management teams. At that time, I was just getting introduced to the formal and professional investment community, working in a hedge fund for the first time, and everything imploded very fast, including my personal account. In addition, during those 2 years I started following a few more experienced investors as if they had God’s word, which was a very significant mistake. Since then, profitability, track record, trustworthy management running the business, and thinking independently have been very important aspects for me.

Currently, my investment framework or research process is about going after companies that are going through an early inflection process, and trying to make it easy and simple. I don’t want to fight the market at all. Many of my top picks right now are from companies that I know well and have been following for 4–5 years, and this experience allows me to identify and aggressively act on the inflections earlier than others, enjoying early the also-known-as discovery process. Of course, I am every day checking new candidates to add to my long list of followed companies, but this is usually a slower process, even though I have recently made some improvements to my idea-generation flow that have allowed me to increase the number of new discoveries.

2. If someone asked what makes you different as an investor, what would you say is your edge?

My analytical mindset, the way I was introduced to investing, and how my process was built. The ability to act very fast and aggressively or to change my mind overnight if necessary, including elevated turnover. Having a very long list of companies that I know very well and have been following for years.

All of those can be edges versus other investors.

3. What kinds of companies or investment opportunities are catching your attention right now? What are stocks you’re excited about today, and what is the market missing?

I will try to surprise the reader with unknown stocks that I like very much.

1. The Manitowoc Company (NYSE: $MTW).

Manitowoc manufactures and sells cranes. The company experienced a strong cycle in 2008 and, since then, there has been no cycle, but the proportion of sales from services is increasing, coming at an increased margin.

Recently, their backlog has improved 40%+ and the company should be a beneficiary of tariffs, including a positive ruling on anti-dumping from Japanese competitors. Manitowoc is also seeing demand from data centers, and at some point a cycle of renewing the cranes bought during the 2008 boom will start, given that most of them are 15 years old versus a 9 to 10 year normal life. The thesis sums up noticing some significant improving demand factors. If the company grows from the current $2.4B in sales to their target of $3.0B, it would be trading below 4x EBIT. Plenty of upside in that case, coming from just a small improvement.

2. Guerrilla RF (OTCMKTS: $GUER).

Guerrilla is a radio frequency chip supplier that shifted from low-margin telco and auto markets to higher-growth catalog markets. Catalog serves drones, military, test and measurement, and satellite telecommunications. At a recent interview, management shared that the demand signals they are observing in the UAS and counter-UAS segment are something that they have never seen before.

The company is increasingly exposed to the higher-growth, higher-margin verticals that now represent more than 60% of the company and are growing in excess of 140% in Q2. This shift allowed Guerrilla to move to profitability, printing $1M in EBIT in the last Q2 (important to note that the company has some significant warrants and preferred stock), but I suspect there is a lot more to come, given that backlog more than doubled to $13.6M, against $8M in revenue in Q2, up 49% YoY. Guerrilla is currently traded on the OTC market, but it recently shared that they are working to uplist to the Nasdaq, which I expect could be a strong catalyst in addition to the underlying inflection in the business, coupled with accelerated profitability.

4. When a new idea enters your radar, what does your research process look like before you’re willing to invest?

The best ones I know I have to buy in just after 5 minutes. This is because if they are coming from the list of companies that I have already followed for years, it means that something big changed or happened. Maybe a surprise, maybe something I was hoping to happen. And suddenly, an ugly duckling becomes very attractive. A recent example of that is Camplify Holdings (CHL.AX), which I have been following since 2021. I sold all my shares years ago because management was unable to run the business at profitability, which was a red flag. Also, they made a large acquisition that I didn’t like and it finally imploded. Now, suddenly, they turned the business around and did $2M net profit in one half against a $10M EV, after cutting costs significantly and improving the M&A integration issues that they had.

If the new idea is a new discovery, I like it very much when it is obvious just from researching for a few minutes.

Investing is not like a Quantum Mechanics model. The easier it is, the better, because it will make sense to more investors and it will attract more capital faster. The easier part is when the discovery process starts and you are just there before others. That said, most of the process begins after buying. Talking to management again, researching deeper into previous company cycles, understanding expectations, the type of investor owning the stock at this moment, the macro tailwind, what is driving the change, talking to competitors, customers or former employees. In summary, understanding what is going on, and starting to dream of what can materialize in the future.

Personalized Questions

5. You’ve written about stocks experiencing very large drawdowns even after positive business developments. Also, sometimes a company reports a great quarter and the stock still falls. When that happens, how do you figure out whether it’s just market noise or a sign that your investment thesis needs to change? How do you decide when a falling stock is a great opportunity versus a sign that the market knows something you don’t?

This is a good question because part of my investing framework is making it simple. Don’t fight the market. When the market is going against me I am paranoid, as I respect it too much. But even so, sometimes it starts simple but… the market is changing every day and it suddenly gets more complicated for a company that you now know very well… So, what to do now?

An example of that is $OCC, a stock I bought for the first time at $2.5 in December 2024. The progress made here has been tremendous and the last report was an outstanding achievement that was almost a dream for me. Even so, the stock is at a 50%+ drawdown after reporting Q2 and I don’t think at the peak the valuation went too high; it was still well below peers.

The way I go through this challenge is the following:

1. Selling to protect the capital and mental wellbeing is always a possibility, but this comes at the cost that maybe you will need to rebuy everything higher and very fast, suddenly. And the anchoring bias is very real.

2. Researching further. Talking to competitors, customers and former employees. Visiting the company if necessary. Understanding if this is only an issue with your stock, the peer group or the industry is also helpful. Every three months a new report comes that can change the picture and the narrative again.

3. Diversifying from investing. My day-to-day bills are not paid using investing money; I have another job or profession. But, if lucky, investing can be a very strong boost.

Coming back to OCC, which fits the question, what was going on with this company is that management sold some stock after the report, affecting the momentum. This has been further accelerated by the AI bubble fears and drawdowns in AI stocks. But everything I am finding here is positive… So this is challenging because I have no reason at all to sell, but I respect the market very much, and for now I am not looking to sell. At the end, it comes down to sizing a bet, with luck, timing and patience also playing a role.

6. You’ve said that a great investment analyst needs to also be a great stock analyst. What do you mean by this?

Writing an investment thesis is a great task, but sometimes when you finish it you can start reviewing it again because things changed fast.

I would never look at the investing process while taking away the understanding of the stock moves, what is driving it and why. My personal view is that the market tends to know things and is in general very clever, so the stock price and its variations are variables that I respect very much. For me, it is equally important to analyse the investment case well versus analysing well what is driving the stock moves or the trading dynamics, and this has little to do with technical analysis but with understanding expectations, the type of investor inside it, and previous stock and business cycles.

7. A lot of your X posts break down the numbers behind a business rather than just the story. When you’re researching a company, are there go-to metrics you find yourself coming back to the most, and why?

It depends on the sector, company and moment of the cycle.

For cyclical companies, at the top, valuation multiples are worthless (this is where being a good stock analyst makes an extra difference).

For hardware companies, I like to watch the incremental gross margin and inventories over a few sequential quarters as leading indicators.

But if you are looking for inflections to the better, usually the first sign is called by the management team in the commentary section, which tends to be the first signal of an inflection to the better… but rarely the first signal of a top.

8. You seem to enjoy digging into companies that aren’t getting much attention. What’s usually the first thing that catches your eye and makes you think, “I need to learn more about this business”?

I don’t tend to do theme investing, but this can happen naturally. As a new theme emerges, I tend to find more inflections there. The first thing I like to see in a new stock is a very strong move to the upside, which means a significant surprise happened. Then I want to know what the surprise was, why it happened and if it opens a new door.

It can also happen that I find a bigger company, which will always move earlier, and then try to find a close and smaller peer.

For the companies that I already know, one quarter or one press release can be enough to reassess the full case.

9. When we last spoke, you were on your way to the United States to do some site visits. Have you done site visits in the past? Do you find them useful? What are you looking for?

What I can say here is that when you invest in a company, you are partnering with its people and management team. Knowing well how they think, what their interests are, and whether you can trust them or they will end up lying to you is very important. One of the best ways to discover that and understand the business better is through a site visit. And this makes more sense when the market is going against you.

10. Please give us one person you would like to see us interview.

I would like to know more about Simeon Research.

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Welcome to the first post of our Investor Notebook Skull Sessions: Written Q&A Sessions.

We’re trying something a little different with Skull Sessions. Over the years, I’ve had the opportunity to speak with a lot of experienced investors who have spent decades studying businesses, markets and a myriad of strategies - from deep value to GARP to special situations. They have had incredible insights to share, but between managing portfolios, doing research and running their own businesses, finding the time for a video interview isn’t always easy. And some would just like to remain anonymous.

So for some of our upcoming Skull Sessions, we’ll be sending a handful of investors a set of questions, partly tailored to their investing journeys and giving them the flexibility to answer them on their own time.

I first experimented with this format by curating some of our video Skull Sessions we do into Q&A format, but I was not extremely happy with the outcome.

I got a front row seat of the written Q&A format when I participated in Edwin’s Dorsey’s Sunday’s Idea Brunch interview series.

I found that many of my answers were a little better thought out, and that I could dive deeper into some areas, where It might seem that I was just rambling on and on during a video interview.

Even though it took me an entire weekend to get it done, I loved it and here is the great thing that happened. It really helped me see my journey in an entirely new light… a sort of therapy session. In a way, it was actually kind of nostalgic.

Tim Heitman is a great person to kick off this format, who I consider a friend, as much as I do a colleague. Tim has been part of the GEO Investing community for some time and has joined us for Video Skull Session interviews in the past, so many of you may already be familiar with him.

This time, rather than doing another video conversation, I wanted to give Tim the opportunity to go deeper on some topics and experiences that have shaped his approach.

He’s been investing for decades and has developed a thoughtful framework around fundamental research, what he calls “time arbitrage” and investing in smaller companies. He loves talking stocks and is great at breaking down businesses and building models. We had our original Skull Session with Tim back in August 2023, before we launched this Substack. You can watch the video at Geoinvesting along with our take on the conversation here or you can watch it on this Substack, here, where we just published the video yesterday.

There’s a lot here for investors at any stage of their journey. Enjoy…

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

Interview Questions: Tim Heitman

1. How did you first get into investing? Tell us about your journey before and after investing. What is your investing framework and research process like today, and how has it evolved over time?

I was fascinated with business and companies from the time I was a teenager. My dad worked at John Deere in national sales and marketing, and he would have other managers over to the house. I was the oldest child, so I was allowed to stay up late and talk to the guests about business. I’d also go through the business section and look at the net price changes from the day before and wonder how all that happened. I even bought the board game Stocks and Bonds and played it for hours. I think I still have it. I was so obsessed with business and investing that many of my friends told me that I reminded them of the Michael J Fox character Alex Keaton from the TV show Family Ties.

I started my career at Fidelity, which was, and maybe still is, one of the most respected investment research firms in the business. I was on the retail side and not the investment side, but I was still exposed to all the philosophy and culture. Research focused discipline has been my focus ever since. I used the S&P tear sheets and Value Line back then, and I still use Value Line today.

The market itself has changed more than my process has. In the ’80s, ’90s and 2000s, most volume on the exchanges was driven by fundamental investors buying and selling for what they perceived to be fundamental reasons. Today, it feels like 80–90% of volume comes from quants, momentum, retail, leveraged ETFs, zero-dated options and other technical, non-fundamental order flow. Daily, weekly, even monthly stock movements are much less driven by actual human fundamental investors than they used to be.

The practical result is that larger-cap stocks are now driven more by themes and momentum than by changes in fundamentals, because passive money flow is setting the price for the incremental buyer. Small and microcaps have little exposure to that order flow. It takes much longer for improved fundamentals to show up in the stock price, which is exactly the advantage for investors who focus there. There is also research showing that once a company moves from roughly $100 million in market cap to $500 million, it lands on the radar of all the flows I just described.

Moving down the market cap scale also changes what you have to pay attention to. The smaller the company, the more the business, the management team and the board matter. It is genuinely hard for someone to run McDonald’s badly for very long before they get replaced by someone better. It is much easier for someone to damage a small restaurant chain so badly it never recovers.

One other thing has changed. I never used to go to investor conferences. In the last five to ten years, I’ve started going to several of them. In-person conversations with management teams and with other investors are still enormously valuable. Idea generation has never been easier. Managing the information overload is the actual problem now.

2. If someone asked what makes you different as an investor, what would you say is your edge?

I agree with Maj’s information arbitrage strategy and find it valuable, but I still think one of the biggest edges available is time arbitrage. Turnover rates for funds have certainly compressed from the 1980’s until today. Investor investment time horizons have shortened.

What that means is that because most investors have such short time frames, you get something close to a zero-coupon bond effect. The value accretes to the long-term investor over time. Even if enterprise value never changes, free cash flow builds and the buildup of cash eventually shows up in a higher stock price.

A lot of investors are still only interested in a ticker and a story. If you actually understand the business, its competitors, its management team and its products, you can use short-term volatility to add alpha. I know that sounds like the opposite of what I just said about time arbitrage. It isn’t. If a stock declines significantly due to what is most likely short term issues (orders pushed out, but not cancelled, temporary decline in gross margins for transitory reasons like tariffs) knowing this provides an opportunity to acquire shares at a very good long-term value.

3. When a new idea enters your radar, what does your research process look like before you’re willing to invest?

1. Start with the available work. There are a lot of good resources for a starting-point fundamental read: Substack, GEO Investing, VIC, Microcap Club, Yellowbrick, Buyside, etc.. Idea generation isn’t the constraint it was 15 to 40 years ago, and there are far more detailed company presentations available. You can get up to speed faster than you used to.

2. Talk to management, either at conferences or on Zoom or through an email. I like doing it in an outline form so they can fill in the answers.

3. Read the SEC filings. Not optional.

4. Use Claude to go through transcripts. Go through last 6 earnings transcripts. Look for forward looking statements and evaluate how good management has been at achieving them. Change in the number of analysts on the call (if any) and what are the most common questions. Also look for any macro or industry comments that can be helpful in understanding the business.

5. Maybe build a model to tinker with, but I don’t treat it as the definitive step. Models are helpful, but getting earnings estimates and prices targets correct to the penny is not as important and just having general ranges of outcomes. I also do them by hand.

You need to be comfortable with 70–80% of the story. You are not going to get to 100%, and waiting for it costs you the opportunity.

4. What kinds of companies or investment opportunities are catching your attention right now? Are there any you’re particularly excited about today, and what do you think the market is overlooking?

Preferred stock on hotel REITs. Hotels and New York City real estate generally. Real estate developers. Small food companies. I’ve also been interested in utilities, industrials and defense companies since well before they all became part of the AI / data center / reshoring / Iran trade.

5. You spent many years investing in larger companies before moving into micro and nanocaps. What surprised you most about investing in smaller companies?

How wide the range of quality is in management teams, and in boards.

The bigger surprise was how often independent board members fail to act within their fiduciary responsibility to protect shareholder interests. It happens far more than I expected. I think part of it is the lack of a deep bench of successful activists in the space. Large-cap funds have firms like Starboard, Elliott, JANA Partners and ValueAct keeping boards honest. Down here, there just isn’t the same pressure because they are fewer sheriffs to keep management teams and boards in line.

6. You’ve studied a lot of special situations and turnaround companies. What separates a real turnaround from a company that is simply a declining business trying to tell a better story?

Leadership, and specifically the skill set of the new management team.

If a company has underperformed for a long stretch, it may be because it’s been under-managed… or it may be because the business is inherently poor. Those look similar from the outside and they end very differently.

The piece people underrate is culture. It is incredibly important that the company culture can actually absorb the new ideas and actions the new management team thinks are necessary. And sometimes the answer is simpler than a turnaround at all: the company has finally finished being an R&D development story and the product is genuinely ready to sell. Or many times in the oil and gas space or industrial space, a long-term depressed cycle has changed and now there is a real opportunity to grow the company.

Turning around a small or microcap company is much harder than turning around a large one. Less access to quality management. Less liquidity. Fewer cheap financing options. More competition.

7. You’ve mentioned using conference calls and transcripts as part of your research process. What are you listening for that most investors miss?

A couple of things. I’m mostly interested in what management says about why they’re doing something. I also want their comments on competitors and on the industry. That tells me what they think is important.

Honestly, about half the call is someone reading the press release out loud, which is a waste of time. Another 30% is analysts asking what’s happened since quarter-end so they can fill in their models. Most of the prepared remarks and most of the Q&A focus on the short term, and that is simply not where I’m interested. Which brings it back to time arbitrage.

The best recent example: hotel REIT and NYC office REIT management teams spent more than a year telling investors on calls that conditions were far better than the general perception, and they gave tangible examples. Nobody cared. The narrative was too compelling and the stocks hadn’t performed in years. In spite of the constant news flow about how the consumer is weak or weakening, hotel REITs have gone up 50-100% in the last year.

8. You’ve said that management plays a huge role in your investment decisions. What are some of the qualities you look for in a management team before you’re willing to invest?

Humility. Honesty… meaning they’re willing to own up to past mistakes. Transparency, which usually shows up as being detail-oriented about their own business.

And a successful track record, but with a caveat: they have to be able to show it was their skill set and not just an industry-wide turnaround that carried them. Also, not all CEOs that were successful at large companies are successful at smaller ones. Sometimes it was the team they worked with, the financing that was available, advertising spend, etc. Also, CFOs that become CEOs are generally less successful.

9. Some of the best opportunities can take months (or even years) to play out. How do you stay patient when you believe in the business, but the stock isn’t moving?

Good question. It is very hard to know the difference between wrong and early, and anyone who tells you otherwise hasn’t held enough dead money.

The way I handle it is to separate the stock from the business. The stock not moving is not evidence of anything. In small and microcap, there’s almost no flow-driven buyer, so improved fundamentals can sit there unrecognized for a long time. That’s the whole reason the opportunity exists in the first place. If I let a flat stock price talk me out of a position, I’d be giving away the exact edge I went looking for.

So the question I ask isn’t “is the stock working.” It’s “is the business doing what I said it would do.” My framework is to understand the why, follow the cash, determine the value. Patience comes from re-running that, not from conviction or stubbornness.

Mostly,I follow the cash. Earnings are an opinion; cash is a fact. If the thesis said this business would generate cash and the cash is showing up, I’m early. If the receivables are building, inventories are growing faster than sales, or the earnings keep getting explained rather than converted, I’m probably wrong.

The other half is management. Did they do the things they told me they were going to do? Not “did the results come in,” because timing slips for reasons nobody controls, but did they take the actions they laid out. Capital allocation tells you most of it.

It helps enormously to write down at the beginning what would prove you wrong. Then you’re checking against something you decided when you were thinking clearly, instead of re-arguing the position after it’s gone against you.

Also do what is called a “pre-mortem”. This is figuring out if the company did not achieve their goals over 3-5 years what were the most likely things in management’s control that they failed to do? This gives you benchmarks and signposts to use along the way to continue to evaluate if the original investment theme was correct, or if you are just moving the goalposts or the investment thesis.

10. Seems like you have invested in a good deal of retail and restaurant stocks. Any reason why?

Simple business models that don’t change much over time, which makes them easier to analyze. And you can look at 20 or 30 companies all exposed to very similar fundamentals at once.

That’s the real value. When everyone faces the same conditions, you can actually distinguish between the quality of management teams in the same industry, and you can tell when a company genuinely has a competitive advantage versus when it’s just riding the same wave as everyone else.

11. You worked at Fidelity when Peter Lynch was managing the Magellan Fund. Any good Lynch stories? Were you ever part of any pitch sessions?

I was on the retail side in Dallas, not the analyst side, so I wasn’t in the pitch sessions. But a couple of things from that era have stuck with me.

SCI: One of Lynch’s biggest winners was Service Corporation International, the funeral company. It rolled up the funeral and cemetery business and was a 30x winner from 1976 to 1990. Lynch’s view was that the ideal stock had a boring name, did something disagreeable, and operated in an industry nobody wanted to discuss at a cocktail party. A funeral-home company was almost perfect.

The two-minute drill: Before buying a stock, Lynch made himself explain in two minutes why he was interested, what had to happen for the company to succeed, and what could go wrong. His line was that if you couldn’t explain the story to your family, or to your dog, you probably didn’t understand the investment.

Dunkin’ Donuts, and why customers can out-research analysts: Lynch pointed to Dunkin’ as the kind of opportunity an ordinary investor might spot first. A customer could see that the stores were busy and that new locations kept appearing long before a Wall Street restaurant analyst formally initiated coverage. His argument was never “I like the doughnuts, therefore buy the stock.” It was a sequence: notice the product, determine whether other customers share your enthusiasm, investigate the unit economics and the expansion runway, then check the valuation. The line worth retelling is that by the time the restaurant analyst discovered Dunkin’ Donuts, the customer might already have watched eight stores open in his neighborhood.

The lesson is that local knowledge is valuable, but only when it’s connected to rigorous financial work.

12. Please give us one person you would like to see us interview.

Andrew Rem

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That approach becomes especially interesting in microcaps and nanocaps. Tim argues that this is still one of the most inefficient parts of the market because there simply aren’t enough investors paying attention. The information is public, but that doesn’t mean it is being processed. A company can put something important in an SEC filing or press release and have virtually nobody react to it. That creates a very different opportunity set from large caps, where thousands of analysts, funds and algorithms are watching every quarter. The trick is identifying the change before the broader market catches up. Some of the things he looks for include:

• A new CEO

• A better sales process

• Improving margins or capital allocation decisions

One of Tim’s favorite ideas is the “one hour analysis.” The goal isn’t to become an expert on a company in 60 minutes. It’s to consistently look at the same important things so you can quickly decide whether there is enough here to warrant deeper work. He starts with cash flow, works through the financial statements, looks at the proxy and ownership, then spends time understanding how the business actually gets customers and makes money. When he talks to management, he likes asking simple questions such as, “What problem are you trying to solve and why did you choose this way to solve it?” He focuses on what he refers to as the pre pre-mortem: if we come back three years from now and the stock is still sitting at the same valuation, what probably went wrong? Those questions can tell you far more than another 20 pages of management talking points.

The challenge with microcaps is often not finding the opportunity, but having the patience to wait for the market to recognize it. A stock can sit at 20 cents for two years while the business quietly improves, and then suddenly move to 60 cents when the market finally cares. As Tim put it, “it doesn’t matter until it matters.” That is both the opportunity and the frustration. You can do the work correctly and still have to wait for the incremental buyer to show up. But that’s exactly why I continue to think the smallest companies are worth studying. When you can identify a real change before it becomes obvious in the numbers, you are not competing on the same playing field as everyone else.

Thanks for reading! This post is public so feel free to share it to help us find more great investors to interview.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

Key Takeaways

• Cash flow is more important than ever. A good business can still be a bad investment if its balance sheet and financing needs create too much risk.

• Always look at the capital structure. A decent business with a terrible capital structure can still make for a terrible stock.

• Separate business risk from balance-sheet risk. Rising rates or a weak economy do not affect every company in the same way. Debt levels, cash balances and financing needs matter.

• Management ownership means something. CEOs with meaningful ownership have more incentive to think about the long-term value of the stock.

• Don’t let the macro story overwhelm the company-specific facts. The market often treats entire industries as if every company has the same exposure, even when balance sheets and business models are very different.

• Be careful with valuation precision. A valuation is ultimately an opinion about what multiple the market will assign to future earnings or cash flow.

• Think in scenarios rather than exact price targets. The more useful question is whether a company can become substantially larger over the next three to five years and whether today’s price gives you enough room for error.

• Gross profit dollars can tell a better story than margins alone. Falling margins are not necessarily bad if they are part of a strategy that produces much faster growth in gross profit dollars.

• Look for identifiable business fixes. Changes to sales systems, distribution, logistics and operating processes can create significant improvements in a small company.

• Catalysts can come from execution, not just headlines. A new management team that actually fixes a broken business can be enough to change the investment story.

Stocks Discussed

• MOJO (OTC Markets): Discussed as an example of overlooked information in a nanocap, including stock buybacks, a reduction in authorized shares, its coconut water business and a planned energy drink line.

• FCNE (OTC Markets): Discussed as a tiny Texas bingo-card business with a strong market position, recurring cash flow and a sizable dividend.

• AMZN (Nasdaq): Used as an example of why investors should focus on gross profit dollars and the economics of growth rather than simply reacting to declining gross margins.

• TACT (Nasdaq): TransAct Technologies was discussed in the context of a new CEO and the potential for a sales-force overhaul after years of weak sales execution.

• MMTRS (OTC Markets): Mentioned as an obscure, illiquid royalty investment that was eventually revalued as investors recognized the value of its recurring royalty stream.

• MAR (Nasdaq): Marriott was used as an example of how a larger, cash-generating business can have very different balance-sheet and macro risks than a highly leveraged microcap.

• MAMA (Nasdaq): Mama’s Creations was discussed extensively as an example of a microcap where improving gross margins and operational execution could materially change the earnings power and valuation of the business.
  
  
  

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I chatted with Kevin in December 2024, and I really wanted to get this throwback chat published here on Skull Sessions.

Yup, another engineer turned investor. It’s a common theme we see all the time. As you’ll see, his engineering mindset shows up in the way he breaks problems down and builds an investment process.

Like a lot of us who talk about quality, Kevin believes quality actually means something in investing.

As you know, our Microcap Quality Index (MSMqi) at the Microcap Investing Cliff Note Substack is built from underfollowed smaller cap companies that meet a minimum level of quality factors that are also meeting multibagger factors.

That naturally led us into a discussion about what he calls his “Yin and Yang” strategy: balancing established quality compounders with overlooked microcaps, spin-offs, and turnaround situations where the odds can become skewed in your favor.

Why do I love this? Because the MSMqi also, from time to time, will identify early stage turnarounds that have a high probability of success of becoming quality companies.

Along the way, we also dug into topics that every investor wrestles with, including pattern recognition, building repeatable checklists, handling volatility, concentration versus diversification, and why understanding your own behavioral weaknesses may be just as important as analyzing a company’s financial statements.

I think you’ll find this Skull Session especially worthwhile.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

Key Takeaways

• Quality is important, but so is valuation.

• The best opportunities often exist where few investors are looking.

• Microcaps remain one of the market’s most inefficient areas.

• Pattern recognition is built through years of reading filings and transcripts.

• Great investing combines analysis with behavioral discipline.

• Volatility is a feature of microcap investing, not a bug.

• Concentration should match an investor’s personality and temperament.

• Turnarounds work best when the business changes structurally.

Stocks Discussed

• Innovative Food Holdings (OTCQB: IVFH): Specialty food distribution company undergoing a management-led turnaround and restructuring.

• Adyen (AMS: ADYEN): High-quality global payments processor Kevin bought after a major market selloff.

• Silicon Valley Bank (Formerly SIVB): Mentioned as an example of market-wide panic creating opportunities in regional banks.

• Kroger (NYSE: KR): Referenced because IVFH’s CEO previously held a senior role there before joining the company.

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Hugo is looking for companies where the market’s narrative has become disconnected from reality. As he put it, every idea starts with one simple question: “Why does the market believe one thing, and why do I believe something different?” From there, he digs into the financials, speaks with management teams, does primary research, and looks for situations where investors have become overly pessimistic. Many of the companies he follows trade at less than five times free cash flow, but they’re usually operating in industries most investors have given up on.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi)

We also talked about how his Substack unexpectedly opened doors. What started as a place to publish research while he was still in school eventually attracted fund managers, company executives, and now an opportunity to help manage capital professionally. It’s a reminder that consistently sharing thoughtful work can create opportunities you never planned for. Hugo also emphasized that building credibility takes time. He spent years publishing research, tracking his ideas publicly, and letting the results speak for themselves before any of these opportunities came along.

The second half of our discussion shifted into several stock ideas, including CareCloud (Nasdaq: CCLD), Enterprise Group (TSX: E), SED Energy (OSE: ENH.OL), an offshore energy company listed in Norway, and Oriola (XHEL: ORIOLA.HE), a pharmaceutical company based in Finland. While the businesses operate in completely different industries, the common thread was the same. Hugo isn’t simply looking for cheap stocks. He’s searching for companies where temporary issues, misunderstood catalysts, or forced selling have created prices that no longer reflect the underlying business. Whether every thesis plays out remains to be seen, but I enjoyed seeing how disciplined his framework has become at such a young age. Thanks for reading! This post is public so feel free to share it to help us find more great investors to interview.

Key Topics Discussed

• Looking Where Others Aren’t: Rather than chasing popular stocks, Hugo explains why he spends his time searching for companies the market has written off or misunderstood.

• Finding the Market’s Blind Spots: Every investment starts with a simple question: Why does the market believe one thing, and why do I believe something different?

• Doing the Extra Work: Going beyond the numbers by speaking with management teams, conducting primary research, and developing conviction before investing.

• When Cheap Really Is Cheap: A discussion on CareCloud and why low valuations alone aren’t enough. The key is understanding whether the business is actually improving and the hidden risks that might justify depressed valuations.

• Overreactions to Short Term Problems: Hugo explains why some of his favorite ideas come from companies facing short-term setbacks that investors may be overreacting to.

• Why He’s Bullish on Offshore Energy: Hugo walks through his thesis on the offshore energy sector and why he believes several companies are trading well below their value despite improving industry fundamentals.

Stocks Discussed:

• CareCloud (NASDAQ: CCLD): Hugo explains why he believes the market is overly focused on slowing organic growth, while overlooking the company’s cash flow generation, acquisition strategy, and turnaround under new management.

• Enterprise Group (TSX: E): A Canadian energy services company that Hugo believes is poised for a rebound as customer activity returns, new contracts ramp up, and investors reassess the business after a disappointing 2025.

• SED Energy (OSL: ENH.OL): Hugo outlines a high-yield offshore energy play trading at a steep discount to peers, arguing that forced selling and a misunderstood industry cycle have created an attractive opportunity.

• Transocean (NYSE: RIG): Mentioned as one of the larger offshore drilling companies that provides context for Hugo’s bullish outlook on the offshore energy cycle.

• Valaris (NYSE: VAL): Referenced alongside Transocean as another major offshore drilling company, with Seven Energy discussed as a lower-valued alternative.

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Deiya made a compelling argument that poker may be one of the best training grounds for becoming a better investor because both require making decisions with incomplete information. You’re never going to have perfect certainty. Instead, you learn to think in probabilities, control emotions, and avoid becoming attached to any single outcome. It’s a skill set that translates surprisingly well to investing, especially in a world where investors constantly battle overconfidence and recency bias.

We also spent time discussing an idea that’s become increasingly popular online: concentrated investing. Deiya offered a balanced perspective here. While concentration can absolutely create outsized returns, he cautioned against turning it into a religion. Sometimes investors become so focused on finding one massive winner that they overlook the value of repeatedly stacking smaller successful investments over time. Building wealth doesn’t always require home runs. A long career filled with disciplined decisions and consistent winners can be just as powerful.

Another area we explored was how rapidly research itself is changing. AI, alternative data, and better access to information are creating opportunities that simply didn’t exist a few years ago. But technology alone isn’t an edge anymore because everyone has access to many of the same tools. The real advantage comes from asking better questions, connecting information faster, and understanding where the market may be missing something.

The conversation eventually circled back to something I think all investors can relate to: adaptability. Markets evolve, industries evolve, and investing frameworks need to evolve too. Is there really a permanent playbook that works forever? Whether we were talking about software businesses, information arbitrage, or portfolio construction, Deiya kept coming back to the same principle: stay curious, stay humble, and continuously refine your process.

This ended up being one of those Skull Sessions that wasn’t necessarily about finding the next stock idea. It was more about understanding how a great investor thinks. I also enjoy these because the lessons are transferable no matter what part of the market you’re investing in.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi)

Key Topics Discussed:

• Broad diversification (even hundreds of names) can work when the investor’s “hunting universe” is high quality and structurally tilted toward favorable outcomes.

• Portfolio breadth can compensate for lower per-name conviction by relying on statistical hit rate rather than deep fundamental certainty in every position.

• The main edge is often the selection of the opportunity set itself, where quality filtering upfront matters more than intense monitoring of every holding.

• Diversification benefits tend to plateau quickly around ~15–20 holdings, with additional names adding limited risk reduction but increasing complexity.

• Risk control is driven more by position sizing than by continuous surveillance of all holdings in detail.

• Micro/nano-cap markets can create inefficiencies where liquidity constraints, attention gaps, and slow information diffusion generate mispricing.

• The highest returns often come from misunderstood or temporarily impaired businesses where downside is sized, not eliminated, and catalysts unlock re-rating.
  

Stocks Discussed:

• GetBusy (LSE: GETB): A UK software company mentioned as an example of gradually expanding the research universe beyond North America.

• Dell (NYSE: DELL): Discussed not as an investment idea itself, but as a critical customer relationship that underpinned TSI’s growth story.

• Salesforce (NYSE: CRM): Used to illustrate that TSI’s apparent customer concentration risk was actually diversified across Dell’s end customers.

• BlueLinx Holdings (NYSE: BXC): A billion-dollar revenue company trading like a microcap that became a multi-bagger after debt reduction and ownership changes.

• Firan Technology Group (TSE: FTG): Mentioned as an aerospace and defense beneficiary positioned to capitalize on long-term industry tailwinds.

• CPI Aero (NYSE: CVU): A beaten-down aerospace supplier with backlog concerns that may be interesting if operational execution improves.

• LinkedIn (former LNKD): Used as an example that even large-cap stocks can suffer massive one-day declines, proving liquidity alone doesn’t eliminate risk.

• Capstone Energy Inc (OTCMKTS: CGEH): Discussed as a high-conviction nanocap investment, explaining how its post-Chapter 11 refinancing, insider support, and reduced balance-sheet risk created an overlooked opportunity.

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We then stayed in the short selling world, but this time focused on some big news in the short selling world: the Andrew Left conviction, what it really means, and how much of the outcome was based on law versus perception.

Joining us was attorney John Sutter, along with GeoInvesting research collaborators Lucas Milosic and , who brought in some practical, investor-focused questions around research, blogging, and regulatory risk. One theme that we covered in the conversation was how quickly uncertainty in enforcement can change behavior across the entire market, especially when the underlying rules haven’t actually changed.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi)

A quick background on John: I’ve known John going back to my whistleblowing days, when I was writing short selling reports and exposing fraud at Geoinvesting. At that time, John was deep in the whistleblower business, working closely with short activists. Over time, as whistleblowing has become a tougher and less predictable business, he also been focusing on representing short sellers and market participants more directly, effectively acting as legal risk counsel in a space where research, opinion, and enforcement exposure often overlap.

We dove into all of this, and more in our conversation.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi)

Key Takeaways

• The core issue in the Andrew Left case is intent… whether statements were believed at the time they were made.

• Short selling risk is structurally asymmetric, and normal exits can be misinterpreted as something more problematic in hindsight.

• The biggest near-term impact is behavioral: people are becoming more cautious about written communication.

• There is still no clear legal standard emerging from the trial. The appellate court will define that.

• “Scalping” theory is controversial because it implies duties that may not actually exist in most market interactions.

• Disclaimers only matter if they are actually seen in context, not just posted somewhere.

• The market reaction is driven more by fear than by any finalized legal precedent.
  
  

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Given my past history of writing research exposing pump & dumps and China Frauds at Geoinvesting, I couldn’t wait for this one.

We dug into where Sean is seeing opportunity right now, what he’s avoiding, and what he’s learned the hard way running a long-short book for years.

and co-hosted alongside me. Both are definitely great stock pickers to follow. If you’d ever like to cohost a skull session with us, just let us know in the comments. Thank you.

Sean runs roughly 80–90% net long, so shorting is a tool he uses carefully, not a constant exposure. A lot of this conversation centered on discipline: the mechanics that make shorting fundamentally different from being long: borrow costs, timing risk, market cap and liquidity constraints, and how easily a short that looked like a winner on paper can actually have lost money once you account for everything.

We also worked through his read on the current bubble environment. He has clear views on quantum, where the first leg has already deflated and he’s recently re-opened positions on IonQ (IQNT) and Rigetti (RGTI). He also walked us through how he’s thinking about the AI supply chain: the optical, semiconductor, and memory names that supply the hyperscalers… where real revenue growth makes timing any unwind extremely difficult right now. The parallels to the 2022 EV bubble came up several times. One idea kept resurfacing through the whole conversation: shorting is almost entirely a timing game, and identifying overvalued companies is only step one.

Toward the end we touched briefly on the Andrew Left’s criminal conviction and what it might mean for both the short selling environment and long-side investors who write publicly about their positions. Right after my chat with Sean, we recorded an Expert Insights session with securities attorney John Sutter, where we cover that case in much more depth. Get alerted on the availability of this conversation by subscribing, for free, to this Substack;

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Sean also got into the secondary benefit of spending so much time studying the short side: occasionally a low-quality company sets up for an asymmetric squeeze that’s playable from the long side. Sean writes about both halves of that on his Substack. We talked through how he thinks about those setups, what makes some workable, and why most of them don’t fit his criteria.

Again, a special thanks to Lukas Milosic from Pixel Research and JEV from for joining the conversation and pushing on several of these topics.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi)

Key Takeaways

• Shorting is almost entirely a timing game. Identifying overvalued companies is only step one. The hard part is finding the exact right moment when the market turns on them.

• Borrow costs can quietly destroy short returns. Many “winning” shorts actually lose money once you do the math, which is why Sean caps annualized borrow at 30% before he’ll take a position.

• The AI supply chain has real fundamental growth, which makes the timing of any short hard to call. Most names in the cycle won’t be shortable until at least 2027 or later, when hyperscaler spending growth eventually reverses.

• The quantum bubble has deflated once and is starting to inflate again. The 2022 EV bubble is the closest parallel… it trailed out over multiple years rather than crashing in weeks.

• Spending time studying shorts occasionally surfaces asymmetric long opportunities through squeezes, but they’re rare (one every couple of months) and involve low-quality companies, not high-conviction longs.

• The best squeeze candidates combine extended drawdowns (~90% over three years) with public name recognition. No-name microcaps rarely move enough to play.

• Activist short reports vary wildly in quality. Hindenburg-style research that engages directly with companies is closer to a real edge; many others are smash-and-grab. Even well-substantiated reports sometimes don’t move the stock at all.

Stocks Discussed

• IonQ (NYSE: IONQ): Quantum computing name Sean has recently re-opened a short position on, following the bubble’s initial deflation and a partial rally back.

• Rigetti Computing (Nasdaq: RGTI): Another quantum name in Sean’s current short basket, treated as part of the same industry bubble setup.

• Avis Budget Group (Nasdaq: CAR): Cited as an example of a recent short squeeze in a low-quality, low-float setup.

• Beyond Meat (Nasdaq: BYND): Discussed as another squeeze-prone name fitting the “down significantly with public recognition” profile.

• Virgin Galactic (NYSE: SPCE): Squeeze setup Sean wrote about and traded, though noted he was a day or two late on the move.

• Groupon (Nasdaq: GRPN): Used as the canonical example of a battered, well-recognized name that can run dramatically on small narrative shifts.

• Energous (Nasdaq: WATT): Example of a name with stubborn short interest that eventually pivoted into a real operating business.

• New Era Energy (Nasdaq: NUAI): Discussed as an example of a “fake” AI company, built around repurposing a small oil and gas footprint into an AI data center narrative.

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So for this Skull Session, I invited Dean, alongside Lukas Milosic, for a conversation that went well beyond stock pitches. We spent a lot of time digging into how Dean researches companies, builds conviction, uses AI tools, and thinks about identifying strong businesses before the they look pretty.

Dean comes from a chemical engineering background, but is not “spreadsheet-only way investor.” He doesn’t treat investing like a static exercise. Instead, he thinks in terms of systems that are constantly in motion: management decisions, customer behavior, competitive pressure, and broader industry shifts all interacting at the same time.

The core idea behind what he calls “Motor Investing” is really about tracking that movement, whether a business is gaining momentum or losing it before the financials fully reflect it.

A big part of our discussion also centered on how investing research itself is changing. Dean is already using AI tools for idea generation, screening filings, and mapping industries faster than traditional workflows allow. At the same time, we talked through the parts of the process that AI can’t replace… things like understanding management quality, deciding when site visits actually should occur, and learning how easily you can talk yourself into or out of an idea based on the wrong things.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi)

Q&A with Dean Pernas

1. How did your engineering background shape the way you invest today?

Dean Pernas: “It’s your job as a chemical engineer to make sure things don’t deviate. You want static conditions, production consistency, quality consistency day in and day out. Whereas investing is very dynamic. Things are always changing, there’s tail risk involved, and you’re constantly adapting. I found being a babysitter of large plants or well sites pretty boring for me. I always loved investing, and my brother and I have been doing it for close to 20 years now. We just loved researching companies, researching industries, talking to management teams. It’s almost like a game of poker.

When the market crashed in 2020, we thought it was the right time to pursue investing full time. We also realized there was a complete lack of high-quality stock research that was backed by an actual audited track record. A lot of firms show you the two stocks that worked and ignore the other 98. We thought there was demand for transparent, high-quality research.”

2. Why are you selective with microcaps?

Dean Pernas: ”In microcaps you rely heavily on management execution and strategy, and we find that to be lacking severely in many cases. These businesses are often fragile. There’s significant key-man risk or customer concentration risk where if one thing breaks, the whole business can go belly up.

Unless the demand environment changes significantly, we typically stay away from microcap land. A lot of management teams are also overly promotional and salesy, and we don’t like that at all.”

3. What is “Motor Investing” and how is it different from “Moat Investing”?

Dean Pernas: “We codified our philosophy into something called ‘Motor Investing.’ Just like the motor drives the motion of a car, the motor in a company drives its future financials. The motor is the interplay between internal and external elements. Does the company have the right strategy? Is management executing? How are customers evolving? How are competitors evolving?

We like that analogy better than moat investing because Buffett’s moat analogy conveys something static… like there’s a moat and that’s it. We don’t think business quality is static. Moats can strengthen or weaken over time, and customers evolve too.

Our sweet spot is when the motor is getting stronger, the potential energy is building, but the financials don’t yet reflect it. That’s where we like to play.”

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4. How do you actually generate investment ideas today?

Dean Pernas: “We use both quantitative and qualitative processes. We run screens, but we also spend a huge amount of time reading industries and trends. Once we find a trend we have very high conviction in… for example AI penetration increasing and more time being spent on AI every day… then we look for companies that can benefit from that trend.

The process changes depending on the environment. The screens we used during COVID are different from what we use today. It’s dynamic.

We’ve also built AI tools internally. For example, if we’re looking for companies pursuing volume-led growth instead of price-led growth, we built an AI scraper that goes through every 10-K filing and identifies those companies for us.”

5. How should investors think about AI as part of their research process?

Dean Pernas: “AI is extremely helpful for quickly bringing yourself up to speed on an industry. It compresses the amount of time required to learn dramatically.

It also helps with idea generation. Sometimes you know an area is going to be important, but you don’t know which company is the best way to express that theme. AI can surface names you might never have found otherwise. That said, you have to be careful. ChatGPT sometimes just agrees with everything you say, so you need to pressure test your own ideas. You can’t treat it like holy text.

As investors, you have to adapt constantly. The second your methods become stale, that’s dangerous. AI is only getting better, so the more investors lean into understanding it, the better positioned they’ll be over time.”

6. What made Capstone Green Energy such an attractive opportunity?

Dean Pernas: “Capstone makes microturbines. Essentially very small turbines ranging from about 100 kilowatts up to 10 megawatts.

Historically, the industry was terrible. Almost everybody lost money. Capstone itself emerged from bankruptcy with about a billion dollars in NOLs. But then two things changed simultaneously. First, a new CEO came in and began making operational improvements, including bringing manufacturing more in-house. Gross margins improved dramatically.

Second, the demand environment completely changed because of AI. Data center power demand exploded, and the electrical grid became constrained. Companies increasingly needed off-grid power solutions. Capstone’s products suddenly became highly relevant because they could provide fast deployment compared to the years-long backlog for large turbines.

So you had a management team making the right operational changes combined with the best demand environment imaginable. That combination created the opportunity.”

7. What are some investing mistakes that fundamentally changed your process?

Dean Pernas: “One mistake was American Outdoor Brands during COVID. I thought outdoor activity trends would continue much longer than they actually did. In hindsight, I had no real predictive ability around long-term human behavior changes after COVID. Management also bought back stock aggressively at valuations they shouldn’t have, which made us more skeptical of buybacks in certain situations.

Another major lesson came from Endor, a German sim-racing company. Demand exploded during COVID, but management completely failed to scale operations fast enough. Then Chinese competitors entered the market and wiped them out. The CEO had too much control and not enough pushback internally. That taught us an important lesson about microcaps and founder-led businesses: if leadership becomes overly confident or insulated, things can deteriorate very quickly.

A lot of investing is separating true signal from noise. That’s much harder than most people realize.”

Key Takeaways

• Great investing often comes from identifying businesses whose future earnings power is improving before the market fully recognizes it.

• Dean Pernas’ “Motor Investing” framework focuses on strengthening business momentum rather than static concepts like traditional “moats.”

• Microcaps only become attractive when there is either a major external demand shift or unusually strong management execution.

• AI is rapidly changing the investing workflow by improving industry research, idea generation, filing analysis, and pattern recognition.

• Management meetings and site visits can provide insight, but they can also create false conviction if investors mistake noise for signal.

• Many SaaS businesses may ultimately benefit from AI adoption rather than be disrupted by it, particularly those with strong customer workflows and adaptability.

• Long-term portfolio performance is primarily driven by concentrated, high-conviction core positions rather than short-term catalyst trades.

  
  Stocks Discussed

• META Platforms (Nasdaq: META) : Discussed as an example of a mega-cap opportunity where market panic around TikTok, Apple privacy changes, and metaverse spending created a deeply undervalued setup.

• Capstone Green Energy (Nasdaq: CGRN): Microcap turnaround benefiting from AI-driven electricity demand, constrained power grids, and improving execution under new management.

• Sprout Social (Nasdaq: SPRT): SaaS company the market may be overly discounting despite AI potentially strengthening its long-term value proposition.

• Bandwidth (Nasdaq BAND): Software company benefiting from AI-related communications infrastructure and changing enterprise workflows.

• American Outdoor Brands (Nasdaq: AOUT): Used as a case study in misjudging post-COVID consumer behavior and overestimating the durability of pandemic-driven demand trends.

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One thing I really agreed with Lukas on was the importance of still starting with the numbers. He explained that when he looks at a company, he still opens the filings first and decides pretty quickly whether it’s even worth deeper research. I think that’s important because a lot of newer investors are starting to rely too heavily on AI before they’ve actually learned how to analyze companies on their own. Where I think AI becomes incredibly useful is on the qualitative side: understanding industries, learning new concepts quickly, exploring business models, and helping you think through ideas from multiple angles. I also talked about how I’m personally using AI almost like an investing partner now: challenging assumptions, testing frameworks, spotting inconsistencies in management commentary, and even helping identify potential catalysts or opportunities I may have otherwise overlooked.

We also spent a lot of time talking about whether AI will eventually destroy the investing edge, especially in microcaps and nanocaps. Both Lukas and I agreed that while AI is becoming an incredibly powerful tool, investing still remains deeply personal and judgment-driven. Lukas made the point that conviction itself is something investors still have to develop on their own through experience, mistakes, and independent thinking, not something an AI model can simply hand you. I agreed with that, but also talked about how AI can strengthen conviction when used the right way by helping investors explore industries faster, challenge assumptions, and think through situations from multiple angles. Ultimately, we both came back to the same core idea: the investors who combine strong manual research skills with AI tools intelligently will probably have the biggest advantage going forward.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

Key Topics Discussed

• How AI is changing investment research

• Why AI should enhance, not replace, manual analysis

• The importance of reviewing financial statements yourself

• AI as a tool for qualitative research and business understanding

• Whether AI will destroy the investing edge in microcaps

• Building AI workflows around an existing investment process

• Conviction building in investing

• Using AI to challenge assumptions and management claims

Stocks Discussed

• RCM Technologies (RCMT): Engineering and staffing company with exposure to industrial and data center-related demand.

• ABVC BioPharma (ABVC): Small biotech name used as an example for analyzing sharp post-selloff situations with AI.

• Bandwidth Inc. (BAND): CPaaS/software communications company discussed in the context of SaaS durability under AI pressure.

• Cipher Mining (CIFR): Bitcoin mining company linked to broader AI/data center infrastructure themes.

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We also talked through the practical reality that short-termism isn’t inherently bad. Everyone wants returns quickly, but it becomes dangerous when it pushes investors into chasing low-quality stories, pump-and-dumps, or promotional themes simply because they appear to be moving. In my own experience, some of the best returns have come not from blindly “holding forever,” but from identifying pockets of explosive growth or clear catalysts before the market fully prices them in. Furthermore, long-term investing has its own traps. Investors can become lazy, using “I’m long term” as an excuse to ignore deteriorating execution or avoid making difficult sell decisions when management underdelivers.

One of the biggest themes from our conversation was the importance of staying adaptable. In the nano- and micro-cap world, there are opportunities on both the short- and long-term side, but only if you stay focused on the thesis and are willing to adjust as facts change. We also talked about how the investing landscape is evolving. More retail investors, better AI tools, and faster access to information are making it harder for hidden opportunities to stay hidden for long, which means finding catalysts and acting early matters more than ever. We wrapped up with Lukas breaking down his quick look into VersaBank, including its U.S. expansion, steady growth in its receivables financing business, and upside potential from newer fintech and AI-related initiatives.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

Key Points Discussed

• Fixed Holding Period Rules Can Be Misleading: Every investment thesis has its own timeline

• Time Horizon Should Match the Opportunity: Some setups play out in months, others take years

• Short-Termism Isn’t the Real Issue: The problem is chasing hype over fundamentals

• Catalyst Investing Still Works: Big moves often come from spotting inflection points early

• Long-Term Investing Has Risks Too: Patience can turn into complacency if you’re not careful

• Management Execution Is Key: Continued execution may justify holding through volatility

• Nano Caps Remain Inefficient: Strong businesses can stay overlooked for long periods

• Conviction Must Be Balanced With Flexibility: Avoid both panic selling and overholding

• AI Is Changing Research Dynamics: Faster tools may shrink market inefficiencies over time

• Investor Psychology Creates Opportunity: Short-term narratives can lead to mispricing

Stocks Discussed

• VersaBank (TSE:VBNK): Discussed as a longer-term holding tied to U.S. expansion, receivables financing growth, and fintech/AI optionality.

• TSS Inc. (Nasdaq:TSSI): Referenced as an example of a painful long-term hold that ultimately worked after major volatility.

• KORU Medical Systems (Nasdaq: KRMD): Mentioned as an example of a catalyst/fundamental trigger investment.

• Ceco Environmental Corp (Nasdaq: CECO): Referenced as another example of a thesis-driven investment.

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Lukas started investing at a young age, but how quickly he evolved through different market environments. From experiencing the tailwinds of the 2020 bull market to adjusting through the 2022 downturn, he’s developed a flexible, framework-driven approach that blends growth, value, and special situations without boxing himself into any one style. He’s focused on finding mispriced opportunities, often around inflection points, while staying grounded in process, position sizing, and continuous self-reflection.

Lukas walks through how he sources ideas, why he prioritizes flexibility over rigid frameworks, and how journaling and self-awareness have shaped his development as an investor. We also get into his views on microcaps, portfolio concentration, and the balance between short-term opportunities and long-term conviction.

Thanks for reading! This post is public so feel free to share it to help us find more great investors to interview.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

1. When did your investing journey really begin?
“So I started when I was 13, I think around that age. My brother, at that time, had an interest in the stock market… he sent me one YouTube video from some German finance guy that made educational content about how to value stocks. I found that topic intriguing, because I would say I was always a little bit more of a number and spreadsheet kind of guy. I could just spend the whole day looking at numbers and be satisfied with it. And yeah, it really just came from my own passion.”

2. What were your early investing experiences like?
It was really one of those periods where almost everything was going up… it didn’t really matter how speculative it was. I did fairly well during that time, but, I mean, who didn’t, right? Looking back, it was an amazing experience because I got to see firsthand what a strong bull market actually feels like. I wouldn’t say that I got all the lessons out of it, but at least I experienced it and became aware of it.”

3. How would you describe your investing philosophy today?
“I don’t like to box myself in. I’m not a quant guy. I just have a spreadsheet, I have my DCFs, I have my databases. But at the end of the day, what are all these approaches there for? They’re only there to give you a framework to find out whether a stock is overvalued, undervalued, or fair valued. So at the end of the day, you’re trying to find a mispricing… and why would I box myself into one specific category?”

4. Where do your best ideas come from?
“Sometimes it’s random, sometimes I find something on X, sometimes on Discord or a forum. Or you get into contact with somebody and you talk about stocks. But I also like to really screen a lot… either I test out certain screeners or sometimes I even go A to Z on stocks. I would say it’s really a mixture of everything, but most of the time I find something myself through a screener.”

5. What exactly are you screening for?
“I like to screen a lot for growth. I try to make the screener in a way where I screen for an inflection point in terms of either growth or revenue. Then I try to take into account whether the company is unprofitable and what levers it has to become profitable. I don’t like to buy things expensive… usually something below a 10 price-to-earnings ratio is appealing for me. But of course, that’s just a guideline.”

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6. How do you structure your portfolio and positions?
“I like to run a concentrated portfolio… let’s say three or four names becoming like 80% of the whole pie. I usually like to size by conviction because I’ve done a lot of research and taken into account as many factors as I can. I also like to build positions slowly and sometimes start with a tracking position. It’s always a little bit different when you have a stock in your portfolio compared to just having it on a watchlist.”

7. You’re active in microcaps. How do you think about mispricing and discovery in that space?
“I think every framework should have points where they converge in terms of agreeing that a particular stock is mispriced. And mispricing… it has a lot to do with discovery, in a sense. A lot of times, these companies are just not well understood or followed. So if you do the work, you can find something before the market fully recognizes it.”

8. You mentioned most mistakes trace back to mindset. What specifically tends to go wrong?
“Every time I made a mistake, I could sort of trace it back to the most simple fact… sometimes it’s a lack of research. But the other fact was also that I wasn’t open-minded enough. By thinking differentiated, I mean you really have to think in all possible cases: the bull case, the bear case, the base case. And if you don’t do that, you sort of miss what can actually happen.”

Key Interview Takeaways

Flexibility Over Labels: Lukas doesn’t identify as a value, growth, or momentum investor… he uses all frameworks as tools depending on the situation

Mispricing Is the Goal: Everything centers around finding stocks where price doesn’t reflect underlying value

Inflection Point Focus: Lukas screens for companies where growth, profitability, or sentiment is about to shift

Screening + Network: Ideas come from a mix of deep screening work and conversations with other investors

Concentrated Portfolio: Lukas typically holds 10 names, with top positions making up the majority of the portfolio

Conviction-Based Sizing: He sizes positions based on research depth and confidence, not equal weighting

Process Over Prediction: Emphasizes journaling, reviewing mistakes, and refining decision-making over time

Micro Over Macro: Focuses primarily on company-specific opportunities rather than macro forecasting

Stocks Discussed

Cloudflare (NYSE:NET): Early interest sparked by seeing widespread usage before fully understanding the business

Minnova (CVE:MCI): A speculative gold play where the thesis was driven by strong risk/reward and existing infrastructure

Enterprise Group (TSE:E): Screened idea that led to discovering overlapping investor ecosystems in Canadian microcaps

NTG Clarity (CVE:NCI): Another example of finding overlooked small caps through screening and research

Sezzle Inc (Nasdaq:SEZL): Highlighted as a higher market cap opportunity

AltynGold PLC (LON:ALTN): A gold producer with long-term upside

Xpel Inc (NASDAQ:XPEL): Referenced as an example of a microcap winner that can significantly impact portfolio returns

Biosyent Inc (CVE:RX): Another example of a successful small-cap that can drive outsized gains over time

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This Round Table with Lee Roach of , , and breaks down the opportunity set and risks associated with this Chapter 11. The conversation also reveals some really interesting lessons in the Chapter 11 process that you can use to evaluate bankruptcies.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and , home of the Microcap Quality Index (MSMqi).

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Through sharing ideas and discussing emerging opportunities like TSSI and TGEN, I’ve seen firsthand his ability to spot under-the-radar trends early and think through catalysts in a clear, structured way. Mike has built a reputation for deep research and focusing on asymmetric setups, often identifying mispriced narratives before they become widely recognized. In this 2025 “rewind” Skull Session , he walks through how he finds potential multibaggers, evaluates risk, and builds conviction.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

1. What sparked your interest in investing, and how did your journey evolve?

“I really have always been interested in markets and investing. And really post graduation, I worked in investment banking in New York, pretty briefly. The impetus for that was just an interest in companies and valuing businesses, but I pretty quickly realized that I’m more of a self- directed person. I’m really interested in the kind of freedom to research what interests me at the time, or to hop on to something compelling.”

2. How did your early experience trading news shape your investing approach today?

“What it really showed me, and kind of gave me an education in, is what specifically moves markets and what specifically moves stocks. Because if every day you’re looking at all the news coming out and seeing how that affects things, and tracking how it affects things, you get a good sense of what really matters and what kind of things will be overlooked.”

3. How do you generate ideas today?

“A lot of what I do on my Substack and on my Twitter is I just try and notice larger trends. That’s something that’s been very, very successful with TSSI or TGEN, and I try and think through the beneficiaries, or I’ll just notice something that is maybe not a large trend, but something has changed in the world, and it’s been overlooked. And I’m happy to get into more examples of those specifics to kind of illustrate those points. But I guess I’ll just finish by saying the other thing I really try and do is connect with people and talk to people across Twitter.”

4. Why do you emphasize network and idea flow so much?

“I think something I want to emphasize to everyone on Twitter that is interested in this world is that you can monetize through charging money. That’s great, or you can try to derive alpha from simply having a really broad network and putting more and more stuff out there… What that results in is you talk to a lot of extremely smart people, and you get really good idea flow. And then there’s kind of a reciprocity there… it’s kind of easier to identify when an idea or situation is really compelling than it is to find those situations yourself or to, you know, wave through 1000s of ideas. It’s better to have ideas flowing to you.”

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5. How do you think about thematic investing?

“There’s first order beneficiaries. So, for something like GLP1s that might be, who is actually selling the drugs. Then, there’s second order beneficiaries that might be like a HIMSS or something like that, right? And of course, you can abstract more and more. I typically tend to focus on the second order beneficiaries of large trends. That’s something like data centers are getting built out… I’m more interested in the TSSI and TGENs. That’s like a second order beneficiary.”

6. What does your day-to-day process look like when sourcing opportunities?

“I would say that I do really two approaches, and I guess, are a bit contradictory. One is, I look for large themes that I think will play out… The other thing I do is more just like tracking the news and what’s been happening recently… And so this company, they were trading like they wouldn’t benefit at all… it’s really frequently the case that there is information arbitrage… And the way I source ideas is just through curiosity. I mean, when you come across an interesting account on Twitter… you really want to see all the names they’re mentioning and just look into it.”

7. Why do you focus on microcaps instead of large, well-covered stocks?

“I genuinely don’t have an edge on predicting what a company like META will do in the next 12 months. There’s there’s no chance. But I know for a fact that there are obviously compelling opportunities that very few other people are looking at. And even if they are looking at them, like a company under 100 million…typically, a larger fund… is simply too liquidity constrained to take a serious look.”

Key Interview Takeaways

• From Trading to Investing: Started with short-term, news-based trades, but has shifted toward longer-term, high-conviction ideas

• Idea Flow is the Edge: A lot of his best ideas come from conversations and his network, not screens

• Second-Order Thinking: Looks for the “hidden winners” of big trends, not the obvious ones everyone is already chasing

• Microcap Inefficiency: Focuses where bigger funds can’t play, which creates more opportunity

• Practical Research Approach: Spends time where it matters: filings, management calls, and talking to the right people

• Management Really Matters: Prefers teams that understand their problems and speak honestly about them

• Runs Concentrated: Keeps a small number of positions and sizes up when he has conviction

• Catalyst + Momentum: Wants a reason for the stock to move, and pays attention when momentum starts building

Stocks Discussed

• TSSI: A good example of a stock that lagged its peers, then quickly caught up once the numbers started to show up

• TGEN: A longer-term story where things are starting to come together, especially with partnerships helping validate the thesis

• LASR: Not getting much attention, but could benefit from increased defense spending in a meaningful way

• HNRG: A company most people have written off, but may have a second life tied to powering data centers

• PSIX: Brought up to show how another high performing stock in the data center was found using information arbitrage

• LFVN: Mentioned as a smaller, less obvious way to play the GLP-1 trend

Watch the video to learn more.

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I met David many years ago after he subscribed to GeoInvesting, and over time we developed a friendship.

As I got to know him better, it became clear he had a unique background, from managing money to building and selling businesses, and now launching the Land Value Alpha fund.

David has moved across public markets, private ventures, and real estate, and today he’s settled in on a strategy centered around land, infrastructure, and water rights.

In this conversation, we walk through that evolution and how he’s thinking about building value in an asset class that most investors don’t spend much time on and why he believes this is one of the most overlooked opportunities in investing today.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

How did you first get into investing?

“I was a stock jockey starting at age 13, my grandfather taught me about the stock market. In my early teenage years, I was even trying to get on the phone with Kenneth Iverson from Nucor Steel, and I was an early investor, with my grandfather’s guidance, in Nucor Steel and International Mineral and Chemical.

What was interesting about Nucor was that they paid performance bonuses to employees at every level, from the lowest to the highest, and obviously the stock did very well over decades.

So I was hooked on the stock market. When I got into college during the crash of ’87, I doubled down… and it worked out quite well. I ended up buying more of both International Mineral and Chemical and Nucor Steel.”

What did your early career look like after that?

“When I went to law school, I worked for the SEC in the Division of Enforcement. What was great about it was not only did I learn a lot, but I also learned that I didn’t want to be on that side of securities in any form.

So when I graduated from law school, I worked for Merrill Lynch in San Francisco. I had a very good experience there, and then after three years, I went off and started my first hedge fund, focused on small-cap and microcap stocks, searching for idiosyncratic returns. I ran that fund for the better part of seven years. It was a very strong-performing fund: 42% gross, 33% net audited returns over almost seven years.”

How did you transition from public markets into real assets?

“I went off to a startup company that I founded called Sector Base, which was later renamed Revere Data, and eventually it was sold to FactSet Data Systems in 2013. Over that period of time, I then got into doing reverse merger transactions… alternative ways of going public.

We had a bell curve of results. Some didn’t work, some were average returns, and some were exceedingly successful.

At that point, I said, ‘Well, I’m going to take a left turn and check out real estate.’ So, being a contrarian investor, I bought facilities in bad locations, in poor condition, with low occupancy, assets that no institution would touch, and then turned them around.”

What led you specifically to focus on land?

“So focusing on hard assets, I then decided to explore land. What happened was, in 2019, I started flying around the country, traveling by train, driving… really trying to find a place for the rest of my life that was a resort community or near a resort community.

After doing all that travel, in 2022 I found the Flathead Valley (Montana). I determined it was an incredible opportunity, not just from a personal lifestyle perspective, but also for investing… because it’s a very fast-growing community. And yet, at the same time, it still has modern conveniences.”

What insight led to your Land Value Alpha strategy?

“I met a large landowner, and I saw what he was doing on the land. He didn’t know anything about Wall Street or capital markets, but he knew how to buy land, and he knew how to use heavy equipment to build roads and develop infrastructure.

Through that observation, I realized there was an opportunity not just to buy land, but to conduct infrastructure work and create water rights. That would create an active layer of appreciation on top of the passive layer of simply buying land and waiting.”

How do you actually generate returns from land?

“People think when they buy land, you just hold it and that’s it. But there’s really an active component. We look at land as having three parts: passive appreciation, active appreciation, and a reset premium.

So building roads, installing power, drilling water wells… that active component is what drives returns well beyond the typical five to seven percent you might expect from passive appreciation alone. Then there’s also a reset premium that we gain over time as the land becomes more discovered.

If I had to estimate, I would say something like 20% to 25% of the return comes from the passive component, and roughly 60% to 70% comes from the active component.”

What role do water rights play in the strategy?

“There’s secular scarcity in the western United States… What a lot of people don’t do when they’re researching to purchase land is they’re not looking at water basins, they’re not looking at aquifers… We look at all that stuff, and we use that as an information advantage when buying land.

We project that for every dollar you invest in water infrastructure… you should get 4x your return… So water is not only critical for life and critical for the value of the property, but it’s quite an accelerant.”

What kind of returns are you targeting, and why is this asset class attractive?

“So we’re targeting 20% annual returns… we expect to generate 6x in terms of your return on capital in 10 years.

What I find incredible about this asset class is not only the returns are very compelling, but it’s very, very stable. So the volatility is very low, measured against every other asset class you could find.”

Closing Thoughts

What was interesting to me in this conversation is how much of David’s approach still reflects his roots in microcap investing, just applied to a completely different asset class.

He’s still looking for informational advantages, still focused on asymmetry, and still willing to go where others aren’t. The difference now is that instead of parsing filings or catalysts, he’s “underwriting” land, infrastructure, and water… and physically creating value rather than waiting for a management team to execute on their timeline.

It’s also a reminder that alpha doesn’t disappear, it just migrates. And sometimes, it shows up in places that investors who specialize in information arbitrage aren’t even looking, something we also continue to explore more deeply through conversations and research shared at the MS Cliffnotes Substack.

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Andrew is the author of Underlying Value Substack (@underlyingvalue on X).

The focus of our conversation last week was on deep value investing with a catalyst: hunting globally for small-cap mis-pricings (South Africa), realizing that a good business might still be “messy,” and capital allocation discipline.

We also dug into how to use and not use AI in stock research, and managing portfolios as conviction builds.

Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).

The idea of “deep value with a catalyst” sounds simple, but it’s actually demanding. It forces you to think about timing, incentives, capital allocation, and whether you truly have an edge, not just a spreadsheet that looks attractive.

Microcap investing is a corner of the market where if something looks obvious, it might not actually be priced into the stock. With that being said, Andrew does not confine himself to microcaps, and one of the reasons I found this conversation beneficial.

Here are the key themes from our discussion, in Andrew’s words:

1. Can you tell us more about your background and career?

“My first job, (graduated 2009) was at Brown & Brown, which is this insurance brokerage based out of Daytona Beach, that would just buy brokerages, and they’d be paying two to three times, and they’d be recognized for it at 15 times earnings. So that’s kind of like right out of the gate… was my first exposure. Then I worked for Accenture in their business strategy practice for six and a half years. That was really mega fortune, 50 companies stepping in with more of a specific focus on executing different business divisions,. Microsoft, Cisco or Sprint are some of the examples of companies I worked at. After that and doing some m&a work, I went and jumped into Platinum Equity as an ops professional, where you’re really dealing with creating and executing a playbook, post acquisition of various companies, and you’re working with senior management to execute it. And then for the last five years, bought and operated a business, did a “bots” business with my wife. We operated it for five years, and then got out of that, sold it last year.”

2. How has your consulting and operational experience shaped your investing?

“I think you just, you try to get more context on what’s actually happening. You know, it’s easy to be a spreadsheet jockey and come up with all these numbers, but I think you got to really know the nuance on what’s happening within those companies. And especially when you’re going small cap, these are messy companies. A lot of them are just trying to tie things together. Some of the last things that they’re really worried about is how they put the polish on the IR deck, at least if they’re probably doing the right things. They’re actually focused on executing, they’re not too worried about what their investor focus is or how they’re engaging with with that cohort. Having exposure and having exposure across really large and medium and small cap has been a benefit, and really helps in talking with management and getting a better understanding of the business.”

3. What is your core investing framework?

“Deep value with Catalyst. Something that you have the value component there, but there’s a catalyst is where I like to focus on in any company that I’m investing in. There has to be a reason why it’s undervalued. And by and large, the market’s pretty efficient, and there are lots of smart people swimming around. So you really have to have some kind of contrarian edge, or contrarian take on, you know, why? Why you’re the lucky one to be able to stumble on on this security. But, yeah, it’s a deep value with the catalyst. But I’m not against a long term compounder that I think I can forecast into the future. And see what the growth and how that will result in a great investment opportunity in the current state.”

4. What role does capital allocation play in your decision-making?

“Yeah, absolutely. I think that that’s probably the most important thing I’m trying to understand… this company is producing X amount of cash. Where’s that cash gonna go? How’s it going to find its way back into my pocket? Or, how are you going to be able to grow this in a way that that makes more sense than putting that into my pocket?”

5. How do you use AI in your research process?

“AI is just great leverage… It’s kind of like having a high powered research analyst right next to you, and you’re able to get near instantaneous information. I use it on just standard prompts that kind of run in the background and send me reports, plus just using it in my research process throughout as I have questions… Maybe it comes down to what is critically important in any investment as well. You have to know what’s critically important for this to work out. And then you need to go and verify it yourself… It’s a great servant, but it’s a terrible master.”

6. What makes public markets uniquely attractive?

“That’s kind of why I went back from private to public markets… because you can change your mind. When you’re operating a private company, you might change your mind, but you sure as hell better be coming and figuring out how to rally a team to make this a more successful enterprise, because, if not, the whole thing’s going to be a house of cards that falls over the top of you. I think there are two beautiful things about public markets:
One is that you could change your mind, and unless something changes, you’re not terribly handicapped or hurt for new retail.
Two, it’s not a zero sum environment. It’s actually a positive sum environment to go out and talk to different investors and to share different ideas and to grow it together, because you’re incentivized to bring people on board, and hopefully the share price rises over time, and you’re able to benefit of that instead of in the private markets.”

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