The curious world of micro caps—evolving and devolving businesses
For this post, I define the opportunity set of micro caps a bit differently than common benchmarks. I discuss some of the fundamental drivers of micro cap businesses and how their stage in the business life-cycle can distort fundamental metrics. Historically, 41% of the universe is in some sort of transition—evolving to new heights or devolving towards liquidation—which creates lots of noise in the data, and scares lots of investors away.
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