As the fog of the final day of the LD Micro conference embeds itself in my brain, it is fitting that Chris Lahiji and his team at LD host the conference at the Luxe Sunset hotel.
A different part of Sunset holds legendary rock clubs like the Whiskey a Go Go and the Rainbow, but on this end of the Boulevard, brains are fogged by a constant stream of information, not intoxicants and loud music.
As I attempt to process the 29 (!) one to one meetings I have had over the past 2 1/2 days, that volume of meetings is an indication that companies are still telling compelling stories. Elon never returns my calls (haha) but for companies in the small/microcap arena, it is always C-level executives conducting the meetings.
These CEOs are managing their businesses against the backdrop of rising interest rates and slowing macro growth. This is not a great time to be raising capital, but this is an investment conference and so, there has to be supply of capital to meet the demand.
There is a hearty group of professional investors that run small and microcap funds. They have experienced years like 2022 before. So, for my investing ideas, I try to, for a change, shut my yap and listen to what these fund managers have to say.
The buy-side panel includes a stock-picking contest with the winner determined by share price performance until next year's LD Micro conference. One stock, four minutes to pitch it, and a decent-sized donation to the charity of the winner's choice.
This is what the smartest guys in the room are buying. Almost without exception the stock charts of the selected names are frightening. Again, though, I trust professional fund managers to know the difference between "buy on weakness" and "it's going to zero."
I may have missed a pick or two. I apologize to any fund manager that I have inadvertently snubbed, or if I forgot "partners" or "capital" or the like in jotting down the name of the manager's fund
Transparency is a virtue here, and without exception the fund manager answered "yeah, I own it" when queried by Chris about the stock in question. Reporting the picks is not an implicit buy recommendation from me, obviously. My clients and I will keep buying Exxon Mobil (XOM) - another new all-time high earlier today - but these folks do a little more research on emerging companies than I do, and I respect their process.
Here are those small-cap fund managers' top picks for the next 12 months.
- Mitch Sacks. Grand Slam Capital
One Group. (STKS)
- Scott Weise. Semco Capital
- Bill Burnham. Inductive Capital
-Michael Melby. Gate City Cap Mgmt
Unit Oil and Gas (UNTC)
- Mark Gomes Pipeline Data
Smith Micro. (SMSI)
- Joe Boskovich. Old West Investment Mgmt
- Chris Abbot. 1035 Capital Mgmt
- Chris Lahiji (a small-cap fund manager in addition to being the conference host)
- Arham Khan. Mecca Partners
- Jeff Hoo. Granite Partners
Berkshire Gray. (BGRY)
- Hamed Khorsand. BWS Financial
Arlo Technologies. (ARLO)
- Evan Greenberg. LegendCap Oppty Fund
Build a Bear Workshop. (BBW)
(Please note that due to factors including low market capitalization and/or insufficient public float, we consider ASRT, SMSI, and TZOO to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)