President and Co-Founder of GeoInvesting presented at the 2016 Microcap Conference in Toronto, focusing on stock trading and investing strategies revolving around using a combination of growth and value when selecting investments. microcapconf.com/conferences/toronto-2016/

1. 2016 Microcap Conference Toronto
Focusing on Information Arbitrage & Growth
+ Value Strategies

2. GeoInvesting
• Maj Soueidan (@majgeoinvesting,
@GeoInvesting)
• Bought first stock in college
• Fulltime investor since 1994, two years
post-college
• Co-founder of GeoInvesting, Launched
2007
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3. What We Do
• Help investors navigate a micro-cap space that consists of
thousands of stocks and an infinite number of information
sources
• Increase Awareness
• Save time performing research
• Help current micro-cap investors find underfollowed ideas
• Relate to the everyday investor
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4. What We Do
• Publish articles, present elevator pitches and issue
morning alerts
• About to launch a new product to help microcap investors
perform more efficient earnings press release and SEC
filing research. (Waiting list –
http://geoinvesting.com/geo-brick)
• Building a community of great investors who contribute
great ideas to our site.
• We also help institutional investors/firms with their in-
house research needs
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5. Playing Field Has Shifted
• Microcap Attrition
• Institutions
• Brokers
• Retail investor
• Investors are looking for “less risky” investments in large
caps or speculative quick hits to reduce “time” exposure
• Has impacted the speed at which really cheap value +
growth propositions rise to fair value and how long they
hang onto gains.
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6. Playing Field Has Shifted
• 55% percent of Americans are invested in stock
market compared to 62% before the 2008 financial
crisis. (Source: http://www.gallup.com/)
• Although investor participation has remained fairly
steady over time, they are choosing ETFs and funds .
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7. Playing Field Has Shifted
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8. Playing Field Has Shifted
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9. Playing Field Has Shifted
• Pre-2008 the retail investor accounted for 2/3 of
trading volume. Now program trading accounts for
2/3 of trading volume. (Sources:
https://en.wikipedia.org, http://etfreference.com/
• Less money finding its way into individual stocks +
less involvement in the microcap stocks = Lack of
price appreciation
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10. You Are Not Alone
• 2015 was one of Warren Buffet’s worst years in his history. Here
are some excerpts from a CNN Money article in December 2015
discussing Mr. Buffett’s year:
• “It’s been a tough year for most investors — including the
most legendary one out there.”
• “Warren Buffett’s Berkshire Hathaway is on track for its worst
year since 2008.”
• “This year, Buffett is lagging the market.”
• “The last time that Berkshire had a down
year and underperformed the S&P 500 was all the way back in
1999. That year, the S&P 500 gained 19.5% while Berkshire’s A
shares fell 20% and the B shares were down 22%.”
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11. De Ja Vu
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12. Separating Growth & Value
• Growth - Growth investors, on the other hand, focus on
the future potential of a company, with much less
emphasis on its present price.*
• Value - Value investors are strictly concerned with the
here and now; they look for stocks that, at this moment,
are trading for less than their apparent worth.*
* These are typical definitions of growth and value
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13. Separating Growth & Value
• “Growth” investor has little regard for value.
• Value investor puts little emphasis on the future
growth of a company.
• When in reality investors just have different
perspectives on what is cheap.
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14. Separating Growth & Value
• Value investor is perceived to only invest in boring beaten
up stocks trading at their lows.
• Growth investor is perceived to buy in vogue speculative
companies with huge growth rates trading at highs that
will grow into their valuations.
• But sexy “growth” stocks can have tremendous value if
found at the right time and boring companies can
experience extraordinary sales and earnings growth.
• The price level of the stock does not alone define its
value. Value can be found across 52 week highs and lows.
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15. Combining Growth & Value
If you subtly combine these concepts you have a
beautiful scenario. One where a stock is undervalued
by your standards based on what is going on today, but
is being grossly mispriced because of what you think is
going to happen in the future.
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16. Common Sense
• Common Sense: Warren Buffett:
“Market commentators and investment managers
who glibly refer to ‘growth’ and ‘value’ styles as
contrasting approaches to investment are displaying
their ignorance, not their sophistication…”
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17. GARP (Growth At A Reasonable Price)
• Avoid extremes (Source: Investopedia)
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18. GARP
GARP investors seek a balance between companies that have
had consistently strong earnings growth and those trading at
attractive price valuations. (Source:
https://www.tradestation.com)
• Reasonably low valuation multiples
• Sustainable EPS growth rates
• In good hands: Peter Lynch, Mario Gabelli, David Dremen.
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19. Finding Your GARP Strategy
Peter Lynch
• Trailing P/E<25
• Forward P/E<15
• Debt Ratio <35%
• EPS Growth >15% to <30%
• PEG Ratio (PE/EPS Growth Rate) <1.2
• Market Cap < $5 billion
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20. Finding Your GARP Strategy
• I approach investing in a manner where I want to find not so
obvious mispricing.
• Looking for catalysts that will impact growth and risk profiles so that
will change the perception of what a “reasonable” price should be.
• Catalysts
• Reduce leverage
• Margin expansion
• Finding new revenue for a mature legacy product
• Acquisitions
• Reduce customer concentration
• New management
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21. My Mispricing Scenarios
A stock of a profitable company being priced as a
boring “out of favor stock” that is about to receive an
expansion in its valuation multiples due to certain
catalysts leading to a period of sustained EPS growth.
It’s a plus If they pay fat dividends.
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22. My Mispricing Scenarios
A stock that looks overpriced due to losses or meager
profitability that is being ignored by investors but is
about to experience profitable growth or a return to
profitability due to certain catalysts leading to a period
of sustained EPS growth.
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23. My Mispricing Scenarios
• The key to these two scenarios is that they tend to
take investors by surprise and lead to a string of
profitable quarters of growth, paving the way for
multi-bagger moves since the mispricing can be
severe.
• Basically I am trying to catch mispricing right before
the meat of a new growth cycle to capture outsized
returns
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24. My Mispricing Scenarios
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25. My Mispricing Scenarios
A stock that is severely underpriced on
current and future EPS but is ignored.
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26. GeoInvesting – Micro-cap Space is Thawing
• Global chaos is good for micro-caps
• Interest rates rising will impact balance sheets of
larger companies more than home-grown micro-
caps
• Micro-cap participation finally seems broader
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27. Reversion To The Mean
“Market reversion is painful at first, but should lead to
a scenario where active management and stock picking
become important again. Over the last several years,
value had taken a back seat to hype, leading to an
overvaluation of ‘story stocks’ and ridiculous
undervaluation of ‘boring’ stocks. At some point value
will matter again.”
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28. Micro-cap Investing Does Work
• Over half of top ideas + contributor ideas, have
risen by more than 50%
• U.S. micro-cap GeoInvesting top ideas + contributor
ideas that more than doubled – 50
• Number of GeoInvesting ideas that have been
acquired – 40+
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29. • Contact us for special offers
• Write for GeoInvesting and get full
access to all of our premium features
4440 Township Line Road, Suite 103
Skippack, PA 19474
support@geoinvesting.com
484-991-8426
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Thank You