--- title: "Microcap Investing with Ian Cassel: The Stocks Wall Street Can't Buy" description: Ian Cassell, founder of MicroCapClub, and author of Stock Picker joins Jonathan Boyar to discuss the unique opportunities and risks of microcap investing. image: https://www.blog.boyarvaluegroup.com/hubfs/Ian%20Cassel_Website%20Thumbnail.png --- [Skip to content](https://www.blog.boyarvaluegroup.com/boyar-value-group-blog/ian-cassel#main-content) [![logo](https://www.blog.boyarvaluegroup.com/hs-fs/hubfs/Boyar_October2018%20Theme/Images/logo.png?width=110&height=70&name=logo.png "logo")](https://boyarvaluegroup.com) [![logo-inverted](https://f.hubspotusercontent10.net/hubfs/2333817/GiantFocal_Marketplace/March/logos/logo-inverted.svg "logo-inverted")](https://boyarvaluegroup.com) - Boyar Family of Companies #### Boyar Family of Companies Whether uncovering a new idea for our research subscribers, managing pension funds, or handling accounts for individual investors, our research-driven insights help both professional and individual investors pursue their investment goals.  [![Boyar\_Logo\_Asset\_Management-May-31-2023-08-39-05-3251-AM](https://www.blog.boyarvaluegroup.com/hs-fs/hubfs/Boyar_Logo_Asset_Management-May-31-2023-08-39-05-3251-AM.png?width=539&height=200&name=Boyar_Logo_Asset_Management-May-31-2023-08-39-05-3251-AM.png)](https://www.boyarassetmanagement.com/) Boyar Asset Management focuses on investing in the equity securities of intrinsically undervalued companies. 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On this episode of The World According to Boyar, Jonathan Boyar talks with the founder of MicroCapClub, portfolio manager at Intelligent Fanatics Capital Management, and author of Stock Picker about why the big institutions can't own these stocks, why most microcaps have to be sold within three years even when they work, and what it actually costs a small company to be public (less than the headlines say). Ian walks through a stock he bought after a fat-finger seller dumped 5% of the company in a day, and the 76 stock-promotion mailers he tracked in a spreadsheet. He explains what he looks for in a microcap CEO, why a CEO who owns 20% of the company can still be the problem, and the story of the Judas goat, which is about how not to build a reputation as a stock picker. And Jonathan asks him whether he'd ever take MicroCapClub public. The answer is short. **Key Points From This Episode** - Why microcap investing differs from investing in mid- and large-cap companies. - The structural inefficiencies Ian believes create opportunities for smaller investors. - Why Ian views microcaps as particularly suited to investors willing to conduct their own research and form independent conviction. - The role profitability plays when Ian evaluates microcap companies. - Why small, profitable businesses might choose to enter the public markets. - How the research process for microcaps differs from larger cap companies. - Why management quality becomes increasingly important as companies get smaller. - How Ian looks for repeat winners and management teams that have previously demonstrated entrepreneurial success. - Why management changes can provide opportunities to identify potential turnaround situations. - Why Ian's intention is to hold investments forever, but the fragility of small businesses often makes that difficult. - The concentration risks that can make microcap businesses more vulnerable. - Why some microcap companies experience only a "season of winning." - The importance of knowing when to sell and accepting portfolio turnover. - Why Ian looks for companies that dominate niche markets and can expand into adjacent opportunities.Ian's investment in IHC and what attracted him to the company. - Lessons from Ian's investment in disaster-remediation company lnfrasource Holdings around Hurricane Katrina. - How and why Ian founded MicroCapClub as a private community for experienced microcap investors. - The evolution of MicroCapClub from an idea-generation resource into a global microcap investing community.Ian's acquisition of Planet MicroCap and his ambitions for its investor events. - The story of the "Judas goat" and its lesson for aspiring stock pickers. - Warning signs for investors entering the microcap market and Ian's experience tracking promotional stock reports. - Why Ian suggests new microcap investors focus on profitable businesses. Ian's perspective on insider ownership and why he does not use a specific ownership threshold. **Links:** To find out more about the Boyar Value Group, please visit [www.boyarvaluegroup.com](https://boyarvaluegroup.com/) To learn more about Ian Cassell and MicroCapClub, please visit [microcapclub.com](https://microcapclub.com/) Ian Cassell's book, Stock Picker, is available on [Amazon](https://www.amazon.com/s?k=stock+picker+ian+cassel&adgrpid=187991004684&hvadid=792987805403&hvdev=c&hvexpln=0&hvlocphy=9026920&hvnetw=g&hvocijid=7052137341566495981--&hvqmt=e&hvrand=7052137341566495981&hvtargid=kwd-2518604620764&hydadcr=18465_13828071_2333530&mcid=4d3dd77d6a4c3a38ae0d3a9a6654b941&tag=googhydr-20&ref=pd_sl_9hff8k5xzh_e)and wherever books are sold.   **Transcript of the Interview With Ian Cassel** > \[Jonathan Boyar\] (0:04 - 1:42) > > Important disclosures and disclaimers apply to this episode. Please listen to the end of the episode for the full disclaimer. Microcaps are one of the last inefficient corners of the stock market. > > The big institutions can't own them, and Wall Street doesn't cover them, so they often trade at a substantial discount to what they're truly worth. Warren Buffett put it best. In a 1999 interview, he said, the highest returns of his life came in the 1950s, when, in his words, he killed the Dow investing peanuts. > > It's a huge structural advantage not to have a lot of money, he said. I think I could make you 50% a year on one million. No, I know I could. > > I guarantee that. Being able to invest in smaller companies is a real edge for individuals and for smaller firms like ours, and it's an area we've invested in for years. I wanted to spend an episode on how to do it well, and Ian Cassel is one of the most respected microcap investors around. > > So I asked him to come on and explain how an investor should go about investing in microcap companies. I hope you enjoy the show. Welcome to The World According to Boyar, where we bring top investors, best-selling authors, and business leaders to show you the smartest ways to uncover value in the stock market. > > I'm your host, Jonathan Boyar. Today, I'm joined by Ian Cassel, one of the leading authorities on microcap investing. He founded Microcap Club, runs Intelligent Fanatics Capital Management, and has just come out with a book called Stock Picker, which we're going to discuss, along with investing in microcaps in general. > > Ian, welcome to the show. > > \[Ian Cassel\] (1:43 - 1:46) > > Thanks, Jonathan. It's great to meet you, and I appreciate joining the program. > > \[Jonathan Boyar\] (1:46 - 2:16) > > I'm really excited about this. Microcaps is an area that I love to invest in. We actually, years ago, had a research service that was just dedicated to microcaps. > > The track record was fantastic, but it wasn't a commercial success, hence the opportunity. You know, if I can invest more in microcaps, I would. To start, I read the book, and I just want to get your opinion. > > How is microcap investing different than investing in mid- and large-cap companies? \[Ian Cassel\] (2:17 - 3:39) > > That could take an hour to answer. Investing in large-cap versus microcap, it's really two different beasts, two different animals, apples and oranges. They're just different. > > When it comes to the stocks themselves, kind of the thing you hit on first, their microcap space, there's a lack of respect there. Even though microcaps have shown over a century of outperformance, when you pull the CRSB data, I mean, the smallest decile, which is sub-150 million, has outperformed pretty much every other microcap decile by 200 to 300 basis points over 100 years. That's pretty significant, looking at the fact that most of the best investors ever started their careers in microcaps, from Buffett to Lynch to Greenblatt to most of the greats started here. > > And it's because of that inefficiency, that structural inefficiency that is apparent down here in these microcap companies, because it's mainly from the fact that larger institutional capital can't invest in these small companies because they're too small and too illiquid because they have too much money to manage. And that creates that inherent structural advantage. It might be the only one that smaller investors have, whether that's smaller funds or retail, to invest in an area where they actually have an advantage because institutions can't play down here. > > They can only buy them once the stocks hopefully go up 5 or 10 or 20x, once those stocks are larger. > > \[Jonathan Boyar\] (3:39 - 3:49) > > Just pushing back on that, though, there's a lot of sophisticated amateur investors. How come that efficiency hasn't been taken out yet? > > \[Ian Cassel\] (3:50 - 5:37) > > It's predominantly and I don't want to make it seem like there's just a bunch of morons investing down here because they're retail. I mean, I know some very smart people and you're one of them that invest in microcap companies. They're good just because they don't work at a research firm or JP Morgan doesn't mean they know what they're doing. > > I do think that there's more and more people globally looking at microcaps and especially with the fact that you can pretty much buy any stock in any market now, thanks to interactive brokers or wherever you trade, the whole globe becomes your sandbox, not just the geography where you live. That increases the competition as well. But I think for the same reason as there's different flavors of investing in large cap, there's deep value, value growth, hyper growth, people that focus on oil and gas, people that hate oil and gas or airlines or whatever. > > You have those same flavors of investing down here in microcap. And ultimately, it's really about finding your temperament, finding your flavor of investing and applying it appropriately into the microcap space. And I think that's where you can still get the alpha. > > I do think the worst way to own microcap is to own all of them. And all you have to do is look at the iShares microcap ETF to see why. Just look at that long-term performance. > > It's awful. That's 1600 microcaps and 78% of them are unprofitable. And the only time that thing does well is in the environment we have today, where it's risk on, who cares about the bottom line. > > That's the only time you see the IWC outperform the S&P, which is what it's doing this year in 2026. I believe that microcap is the place, though, if you're a stock picker and if you're willing to do the work yourself and form independent conviction, it is the place to get market beating returns. > > \[Jonathan Boyar\] (5:38 - 6:00) > > Obviously, everyone knows past performance is no guarantee of future success. The study that you cited is obviously backwards looking and predates most of it, interactive brokers and the internet, quite frankly. Do you think going forward that same structural advantage for microcaps will be there or what should investors expect? > > \[Ian Cassel\] (6:00 - 6:49) > > There's actually been some good research, just not me talking about it, making sound bites. There's a group called Jenga Partners out of the UK that did a white paper that looked at all global outperformers, all stocks, and they looked at only the stocks that went up 1000% or more over a 10-year period. Now, that 10-year period was 2012 to 2022. > > I think we can agree that's somewhat recent. They found that 87% of those companies that went up 1000% or more over that 10-year period originated out of the microcap ecosystem. That's interesting. > > So this is a phenomenon that is still occurring. And I think another thing that I think you would agree with, at least holistically, as would I, 91% of those 87% of microcaps, almost all of them were profitable businesses. They weren't story stocks. > > I think it is a phenomenon that's still ongoing today. \[Jonathan Boyar\] (6:49 - 7:00) > > You write in your book about these 10, 20, 30 million dollar companies in the age of venture > > capital and more specifically private equity. Why are these things even public to begin with? > > \[Ian Cassel\] (7:01 - 7:53) > > That's a good question. I think it depends on the geography you're looking at here in the US. You still have around 100 to 200 IPOs in microcap a year in the US, and that's a decent amount. > > Then you just have another 100 or so reverse mergers a year. So you have a few hundred companies entering the microcap space every year. And what is not good is I would say the quality level of those IPOs are much worse than they were 40 years ago. > > We're getting very few Walmarts going public in 1970 at a 30 million market cap. That quality level of a business. That's what I would love to see again. > > I would love to get really great, small, growing, profitable businesses to go public again. But you're still talking about a sandbox, at least in North America, of it's around six or 7,000 public companies under 150 million market cap. That's more companies that trade on the Nasdaq and almost the Nasdaq and NYSE combined. > > \[Jonathan Boyar\] (7:54 - 8:05) > > What does it cost for them to be public for $150 million market cap company? What's the public company cost running it? It seems probably a huge percentage or an abnormal percentage of the market cap. > > \[Ian Cassel\] (8:05 - 10:25) > > That's the headlines we read about why there's such decline is that cost. In addition to private equity and venture capital seeding these companies longer as private companies. But I think the main pushback you get is the cost of being public. > > And a lot of that is a lot higher. What they say in the headlines is it's higher than what it needs to be. It's kind of like how you and I could drive from here to Lancaster, Pennsylvania, New York City in a Ferrari, or we can drive in a Honda Civic. > > We'll still get there. And yeah, you can spend that much money if you want, but you don't need to. The companies I invest in and even the ones that are on the NYSE, that would be like 100 million market cap. > > The ones that are frugal that still do all their regulatory filings the way they should. Yes, they might not be using a top two auditor, but they're using a reputable one. I think you're looking at around $500,000, $600,000, $700,000 a year to be public, which is far less than what you see in the headlines, which everybody says is two or three or four million a year. > > Once again, you can spend that if you want. You and I can spend what we want to if we want to get somewhere. But I think it's much less than what most people perceive. > > And I've spent a lot of time talking to this at a couple of small business events, too, because nobody ever talks to small business owners, real ones, about going public as even an option. And then, of course, the question is, why? Why would I want to go public? > > Well, the irony is the best public small companies are growing profitable and don't need to raise money. There's actually the ones that do the best as public stocks because of that. > > Why are they public? > > What I would tell them and what I do tell people, just try to be a voice for going public if you're small and profitable, is the one thing the public markets do better than the private markets, taking AI and all that stuff out of it. The public markets really overvalue consistency. You can sell toothpicks. > > And if you can grow the top line 10 or 20 percent and the bottom line 50 for five years in a row, the public market will give you a 20 to 30 multiple on that if you can do that consistently, whereby you don't have to sell your small business to private equity for four times EBITDA. So I think if you believe in yourself, your ability to execute and grow a business top and bottom line, that's why you would go public, especially if you have a company that a public brand is important to you to be public, maybe that benefits your business to going back to the book and to investing microcaps in general. > > \[Jonathan Boyar\] (10:26 - 10:34) > > How is the research process different? Research is important for investing in any size company. But how is it different in investing in microcap land? > > \[Ian Cassel\] (10:34 - 12:17) > > You have to do the work yourself. Number one, there's very few companies have analyst coverage. You don't have the safety net of somebody else's work. > > And I think that's why the greatest investors started here. In addition to the inefficiency, it kind of reinforces the correct mindset to be a successful stock picker is independent thinking, independent work, independent conviction, really deciding what intrinsic value is, not letting the market tell you what it is, how you research these companies, though, is dependent on what your flavor of investing is. Obviously, I think if you are more deep value or value bent, you might use screens more often than somebody else. > > For me, I'm very qualitative. So what I generally try to find first is a higher quality management team. And of course, quality management team is the most overused word in stock picking, but generally trying to find great leadership running small businesses. > > And so even my portfolio today, I probably have almost every industry represented. Well, maybe not utilities, but almost every industry represented. I would say the common theme is I believe these are quality CEOs and management teams of these businesses, because one of the things I've learned early on co-authored two books on it on the topic of intelligent fanatics, which is a term Charlie Munger used. > > The smaller the company, the more important management becomes. I put a lot of emphasis on that management, meeting them in person. A number of reps obviously doing zooms, but more importantly, in person spending time, just like any relationship. > > You want to get past the first two hours of sound bites and get to see who they really are and what people really think of them. So for me and my strategy, my flavor of investing, the qualitative component and meeting management is very important to me. > > \[Jonathan Boyar\] (12:18 - 12:23) > > You discussed that in the book. How do you determine if this is a quality management? What do you look for? > > \[Ian Cassel\] (12:23 - 14:09) > > I would say the easiest way, and I wish they were all this way, is finding the repeat winners, the repeat management teams that have won before. And specifically, not somebody that worked as the CEO of IBM or whatever, insert any large cap, but really somebody that showed entrepreneurial excellence, the ability to scale a business from hustle to scale. One thing that you already know, Jonathan, there's a big difference between a 20 million market cap and even a 200 million market cap. > > That's basically a difference between a 10 million revenue company earning half a million and probably a 100 million dollar company earning 10. It's apples and oranges. They're both small business. > > They're both market cap. Really what I'm trying to find, again, with my flavor of investing, I'm trying to identify those super small ones that are sub 50 million that could make that transition from hustle to scale. I'd love to find management teams that have proven they've done that before. > > Maybe they sold that business or maybe they still own it or whatever. One of the key filters I use is kind of management changes looking into who's taking over. You might see 30 or 40 of these management changes a year in my hair cap and maybe one or two of them. > > All you have to do is read the resume. Let's you kind of sit up a little straighter in your chair and be like, OK, well, what are these very successful people doing with this small, mediocre business? That's a micro cap company. > > They're not here to waste time. They're here to build something again. That's the easiest way to potentially spot a good turnaround situation. > > And the great thing about turnarounds, as you know, is at the point of that transition of management, it's probably the cheapest that stock has ever been because all the shareholders that are already in it are already exhausted. So you can get at a deep value price and multiple that hopefully will turn into a growth multiple later on if they're successful. > > \[Jonathan Boyar\] (14:10 - 14:26) > > One of the things I found really interesting in the book, it's a big contrast. A couple of weeks ago, I had Chris Mayer on who wrote 100 Vaggers and he holds stocks for 10 years plus is you talk about even with the winners, you hold for 36 months. Why? > > \[Ian Cassel\] (14:27 - 14:58) > > I wish I could hold them longer. My intention with every purchase is to hold forever, but the reality is very few earn that right. It's hard to find a management team that can consistently execute smaller businesses, especially smaller micro cap companies that are smaller businesses. > > They're just more fragile and larger companies, the ones that Chris is investing in. We've talked about this offline, me and him. These are like you're investing in small children. > > Almost you're trying to figure out how they're going to evolve and perform and what their career path is going to be when they're eight years old because you see some signs of brilliance. > > \[Jonathan Boyar\] (14:59 - 15:09) > > You had a great analogy on another podcast where you compared him to buying or investing in Tom Brady after he won a Super Bowl and you're investing in high school. > > \[Ian Cassel\] (15:09 - 17:02) > > Tom Brady, I guess. And that's exactly how it is. And so when you think about small business, I'm in the small business investing business. > > Small businesses are filled with concentration risk. You have key person risk, customer concentration. You probably have product concentration, jurisdictional concentration, and all of that concentration just leads to more negative outcomes. > > Even with the winners, it can just simply be a 20 million market cap company that does 10 or 15 million in revenue that wins a big contract. And all of a sudden, they're growing 30% year over year the next four quarters. But guess what? > > They have to replace that in four quarters. Not only replace that, but if you think it's going to grow more, they have to get two of them. So that's more of a bet on management quality and management execution. > > What I just described in that scenario, that's probably a stock that'll go up 200% because people will look at it, not understand what's happening. And they will plug it into their Excel spreadsheet and just say, this thing's going to go 30% a year for the next 10 years and be the next Google. The reality is in four to six quarters, they stumble, they fall in their face. > > They're not able to replace that contract or whatever it is in their business. These companies have a season of winning, not necessarily 10 or 20 years. So it's difficult to find the ones that have more than just a season of winning in them. > > The reality for me, it's important for me to look at microcap investing through that lens and also understand even the best investors ever, even Warren Buffett. He's owned hundreds of stocks in his public portfolio. He only owns nine for 10 plus years. > > So it's taken him lots and lots of turnover, owning hundreds of companies to find a handful that are worthy of owning long-term. So when you apply that down into the small, fragile businesses, microcap turnover is important. Turnover and selling is also important. > > \[Jonathan Boyar\] (17:02 - 17:08) > > You also in the book, you know, Stock Picker discuss owning a niche market is important in microcap land. > > \[Ian Cassel\] (17:08 - 18:11) > > Why? Niche markets are interesting just because it's kind of another qualitative factor that you can look at. When you see a microcap company dominate a niche market, it kind of proves that management is competent. > > They either create that market or they took market share. And then they usually have decent union economics at that point in time, if they're already dominating that niche. And if they're dominating that niche and doing it well, and you do some research and realize their customers are very happy, what happens is those happy customers pull that company into other adjacent markets where they're being underserved. > > And so I love to find kind of these smaller niche players that dominate a niche. A lot of other investors will look at it and say, well, the market is only a hundred million dollar market or whatever it is. I'm not going to buy into that. > > What happens is in probably five more years, the market's going to be 500 million because they would have been pulled into other areas from their happy customers. They're usually higher quality businesses as well. And so finding those niche market leaders is part of what I look for as well. > > \[Jonathan Boyar\] (18:12 - 18:28) > > Before we continue, if you're enjoying this conversation, I'd encourage you to subscribe to our substack at BoyerResearch.Substack.com. That's where we share some of our research, all of our interviews, and our thoughts on investing. Now back to the conversation. > > \[Ian Cassel\] (18:29 - 19:56) > > Is there a current example you can give? A company called IEH Corp. IEHC is the symbol. > > Small, obscure, micro-cap company. We have been following it for 10 years. About three years ago, a fat finger seller decided to sell 5% of the company in the open market in a day or two. > > I already did the work on it several years before. In fact, they're located in northern Pennsylvania, so I can just hop in my car and drive two hours and meet the management team. And that's what I did. > > And what do they do? They make a specific electrical component that's made in Boeing 787s, made in aerospace and defense. Supposedly, they don't say this, but in SpaceX things as well, but in a bunch of different areas, missiles, Patriot missiles. > > And at the time, it was just getting beaten down because of the issues that Boeing was having. So that side of the business got cut in half. And obviously, the Iran war didn't happen yet. > > So everything was kind of flatlining the business. It was still profitable. But anyway, fat finger seller just nailed it down to below tangible book value. > > So we just stepped in and bought like 4% of the company because we knew eventually it would turn. We didn't know exactly when. If it just got less worse, it was probably a double. > > It's kind of one of those setups. And that's just an example of one that ultimately ended up working. Boeing, now they're increasing their deliveries. > > Obviously, the war in Iran helped. Patriot missile contracts are kicking in. We ended up buying it at five, like two, three years ago. > > And now it's at 30. I think something like that. And of course, everybody loves it now, now that it's up. > > \[Jonathan Boyar\] (19:57 - 20:05) > > Is that an example of kind of what you discussed before, that hopefully there's no more war, that you need to continue to have these events time to leave? > > \[Ian Cassel\] (20:06 - 20:58) > > As I meant, there's a whole bunch of things we could talk about with this one. First off, they literally are a 50% market leader in that electrical component. So there's another company out of Europe that does it, but they're right up there, if not the market leader, a small little niche market that they're expanding that component into healthcare and other applications at the same time. > > But they're pretty dominant now. The business is dominated into aerospace and defense and commercial aircraft. So that was just kind of an example of you find these very small companies. > > And that was a $20, $30 million revenue business. Where's the growth going to come from? Well, it came from somewhere. > > But in your case, yes, there's fragility there because of that concentration in those end markets. My best example of that, when I give it in the book, it's probably worth telling is with Charis Holdings. It was a company that I owned back in 2006. > > They were a disaster remediation rollup. \[Jonathan Boyar\] (20:58 - 21:00) > > This was around Hurricane Katrina, right? > > \[Ian Cassel\] (21:01 - 21:30) > > Yeah, right after Hurricane Katrina, they went in and bought like the number three, number seven, and they became the number two. And they did a big debt deal with Jeffries to do all of this. After the fact, you realize, wait a minute, their whole business model to duplicate what they did the previous year, which was $280 million in revenue and $84 million of profit. > > And this was a $60 million market cap. They needed three direct hits from category three hurricanes in populated areas. And guess what? > > There was no hurricanes the next year and the thing went bankrupt. \[Jonathan Boyar\] (21:32 - 21:39) > > Yeah. On some of these $10, $20, $30 million companies that are good businesses, have you ever been tempted to try and buy the whole thing? > > \[Ian Cassel\] (21:40 - 22:28) > > No, not necessarily. Everybody invests differently. Even we take larger positions because I manage a fund now. > > I still have really no urge to do activism. First and foremost, I don't like to find really bad situations that I have to step in and make them less worse. I'd rather find good situations that can become great. > > That's just more of my emotional makeup or setup. And because of that too, I'm more on the growthy side of things with my flavor investing. So except for that couple of the examples I just gave, I do have some cheap stocks, air quotes, in my portfolio. > > But a lot of them are more on the growthy side, which it just wouldn't make sense to even try to take them over. I'm mainly trying to find leadership that wants to grow something. So far, it hasn't really occurred or hasn't really been something I would want to pursue. > > \[Jonathan Boyar\] (22:29 - 22:38) > > You have shown a pretty entrepreneurial bent. You have Microcap Club, etc. Can you just tell everyone a little bit about it? > > As a publisher of research, I find it fascinating. \[Ian Cassel\] (22:39 - 24:19) > > MicrocapClub.com, I founded that in 2011. And that was two years after I became a full- time private investor. And I was a full-time private investor, living off my portfolio from the middle of 2009, right after the GFC to 2019. > > I stopped then because that's when I launched a fund. So it was about 10 years. And after I had become a full-time private investor, I had cut my teeth in this business. > > I just got started in the early 2000s. I was always a part of public stock message boards, because that's where the activity was on Microcap stocks, because they're mainly retail- owned. And that's where you build your reputation. > > That's where you met people. It was on Raging Bull, and Yahoo Finance, and Investors Hub, and Silicon Investor, all these places. And I always had an affinity towards that type of message board format. > > But what happened was, from early 2000s to late 2000s, I would say, it just got more and more of a cesspool. There was more and more noise, less signal. I thought, all right. > > And by that time, I was aware of Value Investors Club. And I saw what they were doing. Talked to John Petri. > > Just kind of like, okay, there's some things I could probably take from what they're doing and apply it specifically to a community for microcap investors. So it really created microcapclub.com to be a place for experienced microcap investors to exchange ideas in a private forum that would be cut off from the public. You don't have to worry about grandma buying $100, because she thinks that Ian's recommending a microcap stock. > > I didn't want that liability either. I just wanted to talk to smart people about what they liked and why. And so launched that in 2011. > > And there was no monetization of this either. There was no monetization until 2016, about five years. > > \[Jonathan Boyar\] (24:20 - 24:22) > > Was this just an idea generator for you at that point? > > \[Ian Cassel\] (24:22 - 26:22) > > Yeah, strictly an idea generator for my personal investing. And it wasn't until 2016, I finally said, okay, I'm sick of spending $20,000 a year of my own money, keeping this thing looking bigger and better than what it was. Let's see if we can actually make this a profitable business. > > I was also running into fund managers and brokers and analysts that have compliance departments where they wouldn't be allowed to even participate because it was a message board. This was a kind of an easy way to allow them to participate. So launched that in 2016, started doing our own events as well. > > It took a solid 10 years for it to actually turn into something pretty magical. The first five years was mainly me talking to myself. I had a reputation back then, so I had people joining, but it's one thing to find people to join that will also participate. > > So fast forward to today, it's been 15 years. It's just awesome. I feel like we have probably the best brand in Microcap globally. > > Microcap Club, even though it's still a small community, about a thousand people, it's very global. And that's how it's changed really in the last five years. Five years ago, it was mainly > > U.S. and Canada investors. Now it's 24% from Europe, 10% from Australia. When we have our get togethers, it's a global community. Then I saw an opportunity to acquire planetmicrocap.com, which acquired that in January of this year. And that fed really well into the online community. It's a nice flywheel because people online want to meet in person. And so now we have a couple events that we have, one in Vegas, one in Toronto that we put on. > > The goal there, again, is to make the Vegas one kind of the Berkshire of Microcap. We want to pull quality into this ecosystem. We want to do things right, keep this space, keep the light lit. > > The cool thing is, in the last five, six, seven years, and it might be the product of a bull market, is there's a lot of people entering the space of Microcap investing. 15 years ago, when I would go to a Microcap event, I was the youngest person there by 40 years. The average age was 70. > > Literally, the space was dying. Now, when you go, probably the average age is 27. \[Jonathan Boyar\] (26:22 - 26:29) > > So this is a niche business. It's clearly growing. This seems like a perfect Microcap. Would you ever take it public? > > \[Ian Cassel\] (26:29 - 26:38) > > Oh, God, no. No, that'd be awful. No, no, no, no. > > No, it doesn't need to be publicly traded. That was a very quick answer. Yeah, no. > > \[Jonathan Boyar\] (26:39 - 26:56) > > No hesitation there. Okay. And it relates to this. > > It was probably one of the most interesting parts of the book. And maybe if you can tell it, the Judas goat story. I'd never heard of this before. > > I don't know if that's just me, just not knowing it or whatnot. But can you go through that? \[Ian Cassel\] (26:56 - 28:09) > > It's a great story. It's probably one of my favorite ones from the book. The Judas goat, if you go back in time by 120 years ago, at the large meatpacking plants, these large butcher operations, where they would either have pigs or cattle or sheep or whatever, you would find what was called a Judas goat. > > What they found was they could not coerce sheep up this large ramp. The sheep would go back and forth to make their way upwards to around the seventh or sixth level of this meatpacking plant. And that's where they would be slaughtered. > > And they couldn't get people to coerce them to go up. The only thing that they found would coerce sheep to go up this ramp to slaughter was a goat. And they would call it the Judas goat. > > The Judas goat would lead the sheep up the ramp to slaughter. The funniest part about this was the Judas goat would do this because he was addicted to nicotine. They would give the Judas goat a lucky strike or whatever, a cigarette to eat afterwards. > > And he got his nicotine fix. And that was enough to let the goat do it again and again and again. So I think they continued to do that until like the 1940s. > > It was an incredible amount of time that that still continued to happen. \[Jonathan Boyar\] (28:09 - 28:11) > > It would have been better if it was a camel. Yeah, exactly. > > \[Ian Cassel\] (28:13 - 29:13) > > Although I may be dating myself with that. Yeah, that was kind of a lead-in story to talking about how to build your reputation as a stock picker in this space and not lead sheep to slaughter. You have so many people that are trying to build a reputation now that are pounding the bullish drum on individual stocks, pounding and pounding and pounding on them, not really realizing that they're likely going to be leading sheep to slaughter and just communicating even when you're bullish about something. > > And listen, I did it too. I think the most important thing an aspiring stock picker can do is get to know a company you like really well, become the axe in the name, which means you know it better than anybody else, write about it, and more importantly, be right. That's going to open doors to capital, to jobs, to whatever. > > That's what matters. It doesn't matter if you flunked out of fourth grade or you went to Harvard. What matters is you picked a monster winner and people know it was you that knew about it. > > That's how I build my reputation. But it's important the way you communicate while you're doing that. It's not hurt people along the way. > > \[Jonathan Boyar\] (29:14 - 29:25) > > Unfortunately, the reputation in microcap land is a lot of fraud. And there's also a lot of people who are doing pump and dumps. How do you spot that as a microcap investor? > > What are the warning signs? > > \[Ian Cassel\] (29:26 - 30:48) > > I think, unfortunately, most people get their first entree into microcap investing from some hard, glossy mailer they get in their mailbox at their home. That's some nice glossy report that says that company XYZ is the next Amazon or Netflix or whatever. And the funny segue there, I collected all of those reports I would get at my house. > > I had an Excel spreadsheet of like 76 of these things and I would track their performance. The average performance of all of those things 12 months after I received it was down 98.2% or something like that. They would all go down. > > So unfortunately, a lot of times that's the first entree that somebody gets to microcap investing. As you can imagine, you lose your money and never want to look at the space again. And that's unfortunate because those companies are the minority. > > I think the problem is the perception of microcap where people think that that's the majority. That's a minority. That's probably less than very small single digits. > > Most of these companies, they might be mediocre businesses. But there's people that are trying behind the scenes to make them great. And so I would say for anybody like looking at the space for the first time, and I kind of talk out of both sides of my mouth with this because I got started as a story stock investor. > > But I would say focus on the businesses that are profitable. That's 18% of microcaps in the ecosystem are profitable. 95% of most of the landmines go away if you focus on profitable businesses. > > \[Jonathan Boyar\] (30:49 - 30:52) > > What about high insider ownership? Or is that a double-edged sword too? > > \[Ian Cassel\] (30:53 - 32:29) > > Being in microcap, larger percentage of the companies have higher insider ownership because they're small companies. By default, a lot of these companies do have that already. I like to see high insider ownership. > > I don't have any set rules like it needs to be 10% or 20 or eight or whatever. Just because I don't think that is necessarily important because I found that great leadership comes in all shapes and sizes. It's not just one size. > > It's not just the founder. Especially in microcap, and you probably run into companies here too. There's plenty of microcap companies I can show you that have 20% CEO ownership, and that stock's not going to go anywhere. > > It's run like a family business. They're not doing what they need to do to expand the business. Your future is just tied to that mediocre CEO that owns 20% of the business. > > I don't get too hung up on the actual percentage, but you definitely want to see skin in the game in one shape or form. The main thing I want to really find is CEOs that are obsessed with the business and CEOs that have high standards. Those two things create great businesses. > > By trying to get to know them as best you can, you're never going to have 100% hit rate. I think if you spend enough time with somebody, it can show up in the little things like their responsiveness to an email on a Saturday morning to whatever. A bunch of different ways. > > I just want to see that fact that they're obsessed. Sometimes that obsession, you still find that with CEOs that own 2% of the company. It's not their fault they weren't the founder. > > Maybe they were the second in command that finally got a chance to take over. It's not their fault they weren't rich, or they weren't given founder shares, but they have just the same fire in their belly as a founder would. > > \[Jonathan Boyar\] (32:30 - 32:43) > > Well, Ian, this has been great. We've talked about StockPicker, which I really enjoyed, how to invest in microcap stocks, and Judas Goats, among other things. Thank you so much for being on The World According to Boyer. > > \[Ian Cassel\] (32:43 - 32:44) > > Absolutely. Thanks for having me on. > > \[Jonathan Boyar\] (32:45 - 34:08) > > You can buy Ian's book, StockPicker, wherever books are sold. I would also encourage you to visit microcapclub.com. Thanks, Ian, for being on the show. > > If there's one thing to take from Ian, it's that the edge in microcap investing is doing the work. There's value hiding in plain sight for those willing to look. What he's searching for is a CEO who's obsessed with the business and has high standards, because those two things create great businesses. > > This is true at any size. It's just easier to find and cheaper to buy when no one else is looking. If you liked this conversation, go back to our latest episode with Chris Mayer, who holds his stocks for 10 years and would disagree with Ian about the 36 months. > > They both make valid points. There are many different ways to be a successful investor. You just have to find the strategy you're comfortable with. > > I hope these episodes help you discover the one that's right for you. Until next time. Provided by Boyar's Intrinsic Value Research. > > For general informational purposes only and should not be construed as investment advice. Any opinions expressed herein represent current opinions of Boyar Research only. Boyar Research assumes no obligation to update or revise such information. > > Investing in securities involves risk, including the possible loss of principle. Past performance does not guarantee future results. 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All rights reserved. | [Terms of Use & Legal Information](https://boyarvaluegroup-4595129.hs-sites.com/terms-of-use-legal-information) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "dateModified" : "2024-10-01", "datePublished" : "2024-10-01", "headline" : "Microcap Investing with Ian Cassel: The Stocks Wall Street Can't Buy", "image" : [ "https://4595129.fs1.hubspotusercontent-na1.net/hubfs/4595129/Ian%20Cassel_Website%20Thumbnail.png" ], "mainEntityOfPage" : { "@id" : "https://www.blog.boyarvaluegroup.com/boyar-value-group-blog/ian-cassel", "@type" : "WebPage" } } ``` ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Jonathan Boyar", "url" : "https://www.blog.boyarvaluegroup.com/boyar-value-group-blog/author/jonathan-boyar" }, "dateModified" : "2026-10-07T15:53:10.835Z", "datePublished" : "2026-10-07T15:43:45.000Z", "headline" : "Microcap Investing with Ian Cassel: The Stocks Wall Street Can't Buy", "image" : [ "https://www.blog.boyarvaluegroup.com/hubfs/Ian%20Cassel_Website%20Thumbnail.png" ], "mainEntityOfPage" : { "@id" : "https://www.blog.boyarvaluegroup.com/boyar-value-group-blog/ian-cassel", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.blog.boyarvaluegroup.com/hubfs/Boyar_Logo_Value_Group-1.png" }, "name" : "Boyar Value Group" } } ```