Summer is already well underway in Quebec, and if you are like most investors, you probably are in vacation mode.
The same scenario repeats itself regularly as June arrives: liquidity in the microcap sector dries up, and people are less receptive to hearing about new opportunities. It is what many call the summer doldrums. It usually dissipates at the beginning of September as people come back to the office and the warm weather goes away.
As an investor, summer can present great opportunities. And I’m not talking about opportunities to taste new wines or try barbecue recipes.
Here are five summer activities to get ready and be ahead of others when the fall arrives:
1- Improve Your Knowledge
While you enjoy time on the beach or by the pool, pick up a good investment book and learn something new. Are you more of the audio type? Listen to podcasts. Visual? Youtube is full of relevant videos.
When I travel during the summer, I try to find a book that will somehow make me question my investment philosophy. I want to open my horizons and find ways to become a better investor.
If you are a value investor, why not learn more about growth investing? Do you only invest in large caps? Take a look at microcaps!
2- Try Out Some Products
Make a Peter Lynch of yourself and uncover new investment opportunities by putting yourself in the consumer’s shoes. Try the products and services of public companies that you follow and compare with the competition, as long as it is financially reasonable to do so.
Go to the movie theater and upgrade to a seat with motion from D-Box Technologies (TSX: DBO). Test Beyond Meat (NASDAQ: BYND) products at home or A&W and Tim Hortons. Buy a domain name on NameSilo (CSE: URL) and put their customer service to the test. Enjoy alcohol-free beer and wine from Hill Street Beverage Company (TSX Venture: BEER).
There are hundreds of opportunities to gain an informational edge while having fun.
3- Update Your Watch List
Because there is less action in the market during the summer, I generally notice there are fewer new opportunities to look at and research. This time is great to revisit the companies that are already on my watch list.
Take advantage of the off-season to learn more about companies that intrigue you and to set your priorities straight in terms of fundamental research.
When the action picks up in the fall, know what you want to work on and which companies deserve your attention.
4- Take Advantage of the Low Liquidity to Find Bargains
Summer is often a tough time for microcaps because liquidity evaporates. Several stocks are already illiquid to start with, but even more so in the summer. When everyone is on vacation, motivated sellers are sometimes forced to liquidate positions at bargain prices.
Find illiquid stocks with high potential and be ready to buy when an aggressive seller shows up. Of course, conduct proper research first!
5- Have a Drink With Other Investors
Enjoy the nice weather and the terraces while having a drink or coffee with investors you know. Find events where you could meet other enthusiasts like yourself. Share investment ideas and discuss strategies. This exchange of information with other investors is one of the best ways to improve.
There you have it! Five ways to be proactive while you take some time off during the summer.
Philippe and I wish you a great end of the summer and hope to see you again in the fall with renewed energy, increased knowledge, and ready to find new opportunities!
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Espace MicroCaps is under contract with Rivemont Investments (“Rivemont”) to provide securities and strategy analysis for the Rivemont MicroCap Fund (the “Fund”). In other words, Espace MicroCaps acts as external expert/consultant for the Fund. In return for this expertise, Espace MicroCaps is remunerated by Rivemont.
Decisions as to whether or not to trade a security for the Fund are made exclusively by Rivemont.
As at July 31st, 2019, for the companies mentioned in this article, the Rivemont MicroCap Fund:
- Holds a position in NameSilo Technologies (URL.C).
- Does not hold a position in D-Box Technologies (DBO.TO), Beyond Meat (BYND) and Hill Street Beverage Company (BEER.V).
Philippe Bergeron-Bélanger and Mathieu do not hold personal positions in any of the companies mentioned in this article.
This article is neither an offer to sell nor a solicitation of an offer to purchase securities and should not be considered legal, tax, financial or investment advice. Several estimates and assumptions have been used in the writing of this article. Espace MicroCaps does not guarantee the validity of the information presented.
Espace MicroCaps is not responsible for direct or indirect trading losses caused by the information presented on this blog. Everyone is advised to make their own analyses and inquiries and to consult their own professional advisers with respect to legal, tax, accounting and other matters relating to the acquisition, holding or disposition of an investment.