Kyle and Paul Andreola discuss evaluating smallcap stocks, focusing on profitable growing businesses, the PEG ratio, understanding capital raising, and the importance of value. They also talk about the current state of microcaps.

Paul Andreola is a successful microcap investor managing his own money for over 30 years. He's a board member for Atlas Engineered Products, Total Telcom, and Departure Bay Bay Capital. He runs Smallcap Discoveries, where he interviews CEOs of microcap businesses and shares his strategies.

IN THIS EPISODE YOU’LL LEARN:
The importance of flipping over as many rocks as possible
Why focus your efforts on profitable businesses that are growing
The power of owning businesses that institutions can’t invest in
Why you should stay away from lowgrowth businesses even when they are cheap
How to use the pricetoearningsgrowth ratio to help you identify undervalued growth stocks
How to add a margin of safety using the PEG ratio
How to use the PEG ratio to help you determine what needs to be sold
How increasing fund flows can attract lowquality businesses in search of capital
Why owning profitable companies can derisk your investing
Why you should stay away from businesses that are likely to heavily dilute shareholders
The importance of having a board member with capital markets experience
The hidden costs of financing
The role of intangible assets in finding financing
When it makes sense to use equity for funding
The importance of buying businesses that have minor struggles that are fixable
Why businesses that are struggling can offer significant upside
When and why averaging up makes perfect sense
Why you should be flexible on how much concentration you put into a position
Why averaging down is a losing strategy
How opportunity cost should help govern your portfolio allocation
The positive tax consequences of holding positions
Strategies for selling your losing legacy positions
The one question to ask yourself about positions to make sure it’s right for your portfolio
Why building an investing network is so important
Why value will always do well despite overall market conditions
Why increases in financing is a signal that capital is coming down the market into Small Caps
What Paul likes to do when it’s harder to find good opportunities
Why institutional capital inflows are the primary driver for increasing returns

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