NEW ZEALAND: We remind investors that small, under-followed companies are often far more profitable than companies that have too many people vying for investment banking business.. .sorry “producing research”.
We thought we’d take some time to talk about the value of small, under-followed companies. We believe the market of under-followed companies is less efficient and therefore, it’s possible to find greater profits in smaller, out of the way companies. Large companies, on the other hand, are closely followed and therefore it’s more difficult to establish an “edge” in our thinking about such a company. There’s a great deal of academic research to support this view.
The idea that small companies are often more profitable than large ones was brought back to us when we reviewed the performance of our recommendation in South Port New Zealand (OTC:SPNZF) back in February. In that piece, we suggested that investors who were interested in gaining exposure to aluminum would do better buying this obscure little company than they would by buying Alcoa (NYSE:AA). In the intervening months, the shares of South Port have risen about 5% and the shares of Alcoa are down about 34%. This is certainly an example of “small beats big.” We’ve spent a great deal of time in debates with impassioned Alcoa speculators, so that won’t be the focus here. We’re simply using Alcoa as the more well trodden counter example to the small, obscure (and profitable) South Port.
Shipping activity at Port Qasim on February 11
KARACHI: Three ships namely, Glen Canyon, Al-Salam- II and TSM Pollux carrying Containers, Gas oil and Palm oil were arranged...
