QIS Update #2 - 2018 - A Message from the President - March 2nd 2018
Included in this update:
- A message from the President of QIS Capital
A Message from QIS Capital's President
First of all I would like to thank all of our readers who have been with us for many many years. We have had some tremendous years, some disappointing years, reviewed some great companies, been disappointed by companies and management teams, and hopefully we've all learned about the intricacies of the small-cap markets.
I've been publishing small-cap reports for 23 years now and have seen a lot of change in the industry over those years. I've seen energy booms, dot-com booms, mining booms, recessions, real estate bubbles, financial collapses, and marijuana and crypto-currency hysteria. I started in the industry with a strong focus on fundamental companies - those generating cash flow and earnings and trading at a low multiple of these measures. My true love was oil and gas stocks as I could compare numbers, results, and forecasts to mathematically find undervalued gems. Unfortunately this sector took a major hit in 2006/2007 and hasn't since recovered and I was forced to look into other sectors which weren't so black and white.
Over the last 10-15 years I have seen a tremendous turnover in the small-cap industry. I have seen countless newsletter writers, analysts, investor relations companies and brokers leave the industry as it has become increasingly difficult to make money. Even those that focused almost exclusively on small-caps have turned to larger capitalization stocks or have merged with larger companies that do not allow them to cover the small-cap industry. There are very few professionals left in this diminishing business.
Over the past 3 years in particular I am having a much more challenging time finding truly "undervalued" fundamental small-cap companies. I'm seeing huge market capitalizations with no earnings or I'm seeing companies with modest earnings trading at a 50-100 times price to earnings ratio. That is unsustainable from a fundamental perspective. I would currently be challenged to list 10 companies I want to own on a fundamental basis which is highly unusual for me.
This is where I would like to hear from our readers. You have probably noticed that we have been very quiet over the last 6 months. During this period I have tried to rebalance by personal trading accounts as I've become overweight in highly illiquid stocks. I've also been researching a number of new companies for future publication and for participation in future Small-Cap Conferences. If you have a fundamental small-cap company that you follow - we want to hear about it! Please email me at firstname.lastname@example.org or give me a call at 250-377-1182.
Once again I would like to thank all of our readers, many of whom have also persevered these investment cycles. The small-cap industry, as measured by the TSX Venture Exchange, is trading at the same level we were 10 years ago after the financial collapse. The larger cap indicies are trading at record levels well above those experienced before the financial collapse. It's been a very challenging period and hopefully the strong survive and prosper in the end. As we continue on this journey I look forward to continuing to provide our readers with quality research and investment ideas and look forward to hearing some of your ideas. Please feel free to contact me anytime as I always enjoy discussing new companies. All the best and best of luck in your investing endeavours.
President, QIS Capital Corporation