It is a stock picker’s market…if you make
those good picks, you’re being paid for it.
And I think there’s more to come
…’

-- Brian Leni, founder of Junior Stock Review

RETURN

OF THE

STOCK PICKER

COVID-19 has seeded fertile ground for wily stock pickers. In fact, the last time we saw pickings this good, we strung together average gains of 113% across a portfolio of 17 stocks.

We’re on the hunt once more. Care to join us…?

Dear Reader,

I’ve been in this biz long enough to see recurring patterns.

And if what I’m seeing right now is correct, 2021 will be a banner year for brave speculators.

I’m going to show you my rationale.

And, if you’re game, I’ll give you OUR TOP FIVE PICKS.

It’s group publisher James Woodburn here.

I’m writing to you today with a bit of a history lesson.

Specifically, I’m going to share with you the history — warts and all — of our keystone publication, Australian Small-Cap Investigator.

It’s the newsletter we pitched our tent with here in Australia back in March 2007.

The aim being to put you into stocks that trade in obscurity at the murky bottom of the ASX.

In issue #1, we made this opening declaration:

The great thing is there are hundreds of these small companies with great products, great stories, and great prospects.

They can be in virtually any kind of industry.

What they all have in common is that they are on the verge of something very good happening.

That’s what we’re looking for.

And we’ve been looking ever since.

For tiny companies on the verge of something very good happening.

It’s been quite the stock-picking odyssey.

Australian Small-Cap Investigator helped readers mercilessly capitalise on the GFC recovery, where small-cap stocks led the way.

(Cobar — SOLD 71%. Mitchell Communications — SOLD 152%. MEO Australia — SOLD 220%. Eastern Corporation — SOLD 138%. Retail Food Group — SOLD 116%. McPherson’s — SOLD 338%.) 

We also leveraged the great Aussie resources boom between 2008 and 2011. Highlights there were Bow Energy’s history-making rise from 17 cents to 95 cents in just seven months…Bauxite Resources’ 389% surge in 17 monthsand LNG’s rise of 201% in 11 months.

The pot stock mania — we led from the front there, too. Then-editor Sam Volkering gave fledgling stocks his backing well before they became a mainstream frenzy. 

Occasionally, Australian Small-Cap Investigator discoveries that were complete nobodies on the day of recommendation…evolved into household names by the time we sold.

Afterpay (a gain of 2,324%) and Zip Co (866%) being recent examples. That’s rare. But it happens with experience (and a bit of luck thrown in, too!)

Most recently, we helped subscribers clock an eye-watering 257% on a four-month trade on PointsBet Holdings.

That kind of quick win is the stuff small-cap dreams are made of.

Right now, we have multiple holdings in the portfolio that are thriving — even as we wade through our first recession in 29 years.

That’s the beauty of this kind of investing.

Get your stock picking on point, stick to a rigid exit strategy, and it doesn’t matter what the externals are.

The world can go to hell in a handbasket…and you can STILL chalk up the kind of gains we’ve talked about above.

Of course, as goes with this territory, there have been misfires and mismanaged trades in our 13-year history, too.

We have multiple losers in the current portfolio at present, the biggest being a most disagreeable -88%.

$1,000 into that recommendation would now be worth $120.

That’s not cool.

But as stock pickers — especially SMALL-CAP stock pickers — we know that’s just how this game is played.

These stocks are small and volatile.  

You try to cap your losses with a nuanced stop-loss strategy. But you also don’t want to exit a stock at a 40% loss…only for your initial research to be proven correct, and have it jump 2,000% after you’ve sold.

That’s the subtle balance of small-cap stock picking.

The aim is for the winners to eclipse the losers.

Seasoned small-cap stock pickers know that for every successful company that flawlessly executes its business plans and hits the big time, 10 fail.

For instance, the worst-case scenario — a complete delisting — befell one of our trades on 28 August.

That still smarts.

But, overall, Australian Small-Cap Investigator is killing it in these unpredictable conditions.

The average gain across all sold stocks since September 2019…that’s 16 sells in total…...including the losers...is 184%.

As head of a financial publishing company that puts out 18 different investment services, I can tell you now: That is some track record.

But this is not an ordinary sales letter

Yes, near the end, I’ll invite you to subscribe to Australian Small-Cap Investigator.

It’s as low as $69 for an annual subscription.

Chump change, really.

(With the first 30 days to get that 69 bucks refunded, if you choose to — our standard guarantee.)

But, like I say, this is not our usual pitch for business.

Whether you subscribe or not, I promise you’ll come away from this letter with two things.

  1. You’ll see why we believe we just entered a STOCK PICKER’S MARKET. And why the next 12 to 18 months are shaping up to be a small-cap speculator’s Valhalla.

We believe this, because we’ve been here once before.

VERY similar conditions.

Conditions we fed off to string together the most impressive series of wins in this publication’s history.

Over the course of a single year, we made a series of fearless punts on 17 tiny companies.

The results: 14 winners. Just three losers.

Average gain across the winners: 143%.

Average gain overall, including the losers: 113%.

That is SOME portfolio…

And we’re seeing everything lining up in a very similar way, right now.

Global economies in freefall…

Historic stimulus packages from central banks…

Record low interest rates…

Of course, we have many different dynamics at play right now to 2008/2009 as well as the similarities.

A pandemic and a global financial crisis are two different beasts.

And past performance should never be taken as a guaranteed guide to the future.

All I’m saying is, if you’re into stock picking, you should pay close attention to what I’m about to show you here, about how this pandemic-impacted market is shaping up for 2021.

This is hard-won knowledge you can use yourself in the months ahead — whether you subscribe to the newsletter or not.

  1. I’ll share five key lessons that we’ve learned about successful small-cap investing in Australia over the last 13 years.

You don’t go deep into this territory…for as long as we have…without learning a thing or two along the way.

You learn to see things most analysts and brokerages can’t.

You learn to spot little nuances.

In a 2005 Kansas University interview, Warren Buffett explained:

You have to turn over a lot of rocks to find those little anomalies. You have to find the companies that are off the map — way off the map.

You learn how to read market conditions. And how to use them to your advantage.

You learn…through trial and many errors…how to spot if a trade is about to go south.

In this letter, I’ll share a few of our best small-cap trade secrets with you.

Again, I think you’ll find these interesting and useful, even if you don’t choose to subscribe.

Finally, I’d also like to share with you five stocks we believe carry potential to be standout performers in 2021.

We have some intriguing live plays in the portfolio right now.

An overlooked small-cap backed by Australia’s most secretive billionaire…a company that recently uncovered the biggest gas discovery Western Australia has ever seen…a cloud communication platform that, like Zoom, is shining during the pandemic…

But these five 2021 plays are TRULY special.

I’ll show you what I mean a little later.

First, I want to get pack to the phrase that headlines this letter…

What is a ‘stock picker’s market’?

Okay, so there’s loads of debate out there about what a ‘stock picker’s market’ is.

And, indeed, whether such a thing exists.

That latter doubt is seeded into your mind by the fund managers.

They don’t want you believing you can make money by picking individual stocks by yourself.

They want you to be ‘passive’. To ‘diversify’.

Translation: They want you to buy their fund so they can take your money.

But there are those (like us) who believe you CAN make money...a LOT of money...by using your own noggin to back the right stock at the right time.

If you’ve read this far, there’s a chance you’re in this camp.

BUT let’s take it one step further...

There are ALSO those who think that there are certain moments in history where the odds fall into the individual stock picker’s favour.

Hence the term ‘stock picker’s market’.

But what makes such a market?

That’s a lot fuzzier...

Google ‘What creates a stock picker’s market?’ if you want to be bored and confused.

Correlation, value, momentum, beta, blah blah.

One article will tell you one thing, another the complete opposite.

Our ethos regarding a stock picker’s market at Australian Small-Cap Investigator is as simple as it gets:

You CAN outperform the market by massive margins picking stocks with textbook growth characteristics.

We know this because we’ve been helping many subscribers do it for years.

And:

Sometimes...you find yourself in a 12- to 18-month window where there are MORE opportunities to spot stocks where their growth is NOT priced in.

Where you can capitalise on chaos, market distortions and seemingly indiscriminate pricing.

Where you’ve got a massive stock-picking tailwind.

Instead of slotting up a few double-digit gains in a six-month period...you’re suddenly nailing triple- and quadruple-baggers...and your win-loss ratio leaps higher.

We believe we’re in such a window now.

And that’s why I’m writing to you.

The current custodian and editor of Australian Small-Cap Investigator is Ryan Clarkson-Ledward.

As he says:

A rare upside of the pandemic is that it’s morphed the market into a punter’s paradise.

I’ve seen the ASI record the last time conditions were like this.

It made me green with envy.

But now the stars have aligned to give my subscribers a  crackand it’s an opportunity I don’t plan on squandering…’

Perpetual chief executive Rob Adams just told The Australian Financial Review the market will be a ‘stock picker’s dream’ until a coronavirus vaccine is found.

We rarely agree with ‘mainstream speak’, but in this case we think this guy is spot on...

2021 is setting up to be a
stock picker’s VALHALLA

The disconnection of indices and ‘secondary stocks’ (small-caps) is a worldwide phenomenon right now.

Giant stocks the world over are struggling.

Shift your focus to smaller stocks, however, and it’s a different story…

As Real Money puts it, It’s a triumph of stock picking over market timing.

Our flagship small-cap letter’s theory on golden stock-picking conditions boils down to this:

It’s harder to detect potential screamers when EVERYTHING is moving in unison.

Low volatility. Indices grinding steadily high.

That’s a passive investor’s market.

That, largely, was the market we’ve been in for much of the last decade.

It’s much easier to sift out big small-cap winners when everything is going all over the place.

Some stocks and sectors tanking.

Some stocks and sectors soaring.

You see an explosion in the difference of the best performers (think Afterpay, Perseus Mining and Mesoblast) and worst performers (think the companies most hurt by coronavirus: Southern Cross Media, Qantas, oOh!media, Flight Centre).

It’s the GAP that creates a stock picker’s market.

And that’s the market we’ve been moving into since the pandemic hit.

Before coronavirus, passive index funds ruled the market.

As soon as the world awoke to the COVID crisis in the first quarter of this year, we saw the biggest dispersion of returns in the stock market since 2009.

2009, by the way, being another stock-picking purple patch that Australian Small-Cap Investigator helped readers take full advantage of.

That was another time the world seemed to be ending.

Let me show you how we played it...

Picking stocks during Armageddon

Remember something called the global financial crisis?

Australian Small-Cap Investigator subscribers at the time will.

Because it kicked off the biggest stock-picking spree in the publication’s history...

In September 2008, markets started to fall into the abyss.

And, yet, while most fund managers and stock brokers were bailing...WE were buying...

We know a stock picker’s market forming when we see one.

At the time, Australian Small-Cap Investigator made a series of audacious calls.

By the time the market hit rock-bottom on 20 November 2008, you couldn’t pay a broker to give you a stock tip.

That was the exact day ASI tipped a little stock called LNG.

It went on to rise 243% in just 12 months.

Three weeks later, the market wasn’t looking any better and we tipped an almost unknown company called Bow Energy.

Then, JUST SIX MONTHS LATER, at 10am on Wednesday, 10 June, we send the following alert to subscribers:

Bow Energy is now a “sell” recommendation. This leaves you with a profit of 458%.

This is simply too big a profit to leave on the table. Let’s take it...’

458% in six months.

And yet when we made those two buy calls in late 2008, you might have thought we were crazy.

But all the while during those crazy months, we urged subscribers that — despite what the mainstream media is saying...despite what your own gut might be telling you — this was clear-as-day A STOCK PICKER’S MARKET.

Now, this would have seemed counterintuitive at the time.

In late 2008, the level of fear was off the charts.

(Ring any bells...?)

You had the President of the United States admitting in a press conference that, unless drastic measures were taken to save the global financial system, ‘this sucker could go down.

And yet we assured subscribers...

For a small-cap growth investor, opportunities haven’t looked as good as this in five years.

The ASI editor at the time said:

I remember a conversation I had at the time with old broker pals. They told me their analysts didn’t have a single buy recommendation on their books.

Even the pro-analysts had lost their battle!

If you think back to late 2008/early 2009, you can see why.

People were talking in all seriousness about the possibility of a new Great Depression. (Just like right now...)

But there we were...aggressively making stock picks.

All in all...ASI recommended 17 stocks over that time period...and they made AN AVERAGE GAIN OF 113%.

AVERAGE GAIN ACROSS THE WINNERS: 143%.

AVERAGE LOSS ON THE LOSERS: JUST 29%.

That’s your sweet spot as a small-cap investor right there!

Where your average wins are FIVE TIMES HIGHER than your average losses.

You simply don’t often see that.

Even more impressive was the win-loss ratio.

Fourteen winners. Just three losers.

That’s virtually unheard of in a portfolio of over a dozen small-caps.

In normal times, you’re lucky if you get 50/50!

Of course, don’t forget there were trading costs to subtract there. And taxes to take into account on any banked gains.

But the point is, this was all done in the aftermath of the global financial crisis.

Now we find ourselves in another crisis.

Even bigger. 

A particularly nasty flu that has infected the whole world.

COVID-19, it goes without saying, has ripped our collective worlds apart.  

But, in doing so, we believe it has created, for the first time in years:

A STOCK PICKER’S MARKET

On 14 October 2008…the beginning of the last true stock picker’s market, in our opinion…we wrote a SPECIAL EDITION weekly update to Australian Small-Cap Investigator subscribers.

Its aim was to give readers some calm perspective amid all the panicky headlines.

And to stress that what was happening, in small-cap stock terms, was not a crisis. It was an opportunity:

Small-cap investors are used to big movements in the market.

And when markets go up, small-caps almost always lead them. That’s one of the main reasons for buying in at the small end of the market. As a small-cap investor, you want to see big percentage gains in the shares you own. Yet we also know it can mean big percentage moves to the downside.

I’ve showed you how our strategy proved correct — and produced the goods for those who followed it — in the year that followed this SPECIAL EDITION.

But what are the similarities between then and now?

There are several.

In late 2008, an unprecedented level of global government borrowing and money printing was underway to prop up economies and markets.

Just like right now.

In America alone, the pandemic has pushed debt levels to their highest since the Second World War.  

Australian Treasurer Josh Frydenberg just got given the green light to borrow massively — and blow out our deficit to a record $200 billion.

In 2008 and 2009, all this ‘funny money’ fed a stock picker’s market.

Now we’re seeing EVEN MORE funny money…more than has ever been injected into the financial system.

And here’s the big then-and-now similarity.

I’ll try not to get too technical, but it’s really important you get this.

Because this is what made it that much easier for us to pick winning trades in the last stock-picking market.

And we’re seeing the EXACT SAME THING in the small-cap space here in Australia right now…

It’s something I brought up earlier: VALUATION DISPERTION.

Where you see a big difference between the super-big winners.

And the super-sad losers.

That doesn’t happen often.

But when it does, it makes it that much easier to sort the wheat from the chaff.

Check this chart out…

Exponential Stock Investor Chart Source: The Market Ear

See that big valuation dispersion spike?

That’s 2009.

Now, this is a rare metric, so up-to-date charts are hard to come by.

The most up-to-date one I could find is the one above, from 4 May 2019.

As you can see, even half a year before the pandemic, dispersion levels were on the rise again.

But I can assure you that if this chart DID stretch to the present day, you’d see a spike just like in 2009.

Valuation dispersion levels are now at record highs.

In other words: The difference between CHEAP small-caps and EXPENSIVE small-caps is wider than it’s been since 2009.

And that means OPPORTUNITY for wily stock pickers prepared to take advantage.

You’re seeing this same phenomenon all over the world right now, in most indices.

Already by May, six months into the pandemic, you started seeing more ‘winners’ and more ‘losers’ on the American market.

The gap between valuation multiples among US companies was, by May, the widest since America’s peak, which was the tech bubble in the early 2000s.

And that was four months ago!

As William Lough, manager of the ES River and Mercantile UK Dynamic Equity Fund, puts it:

Currently, investors love the stocks that have already delivered, and really hate the ones that haven’t. This has become far more pronounced than in a more “normal” market.

The opportunity then, for savvy investors, is to exploit that disparity.

So, you see what I mean?

It’s déjà vu all over again!

The upshot is this:

The more divergent the gap, the easier it is for a smart small-cap investor to take a divergent view…and to potentially profit from it.

That was the source of our wellspring of gains back in 2009.

Lough says that in the UK right now, the market valuation dispersion is in the top 5%.

You’ve got fundamentally good companies that have been sold off way too heavily due to the pandemic.

And you’ve got this other cohort of small-caps that are powering ahead regardless.

It’s not like shooting fish in a barrel. Finding small-cap winners is hard — in any market. But it DEFINITELY helps to have a tailwind…

And that’s what we believe you and I have right now.

A stock-picking tailwind.

As Lough continues:

It is incumbent on investors to use crises like the one we’re in to take advantage…’

100% correct.

And Australian Small-Cap Investigator has form in this department.

If you’re keen to join us for a second go at this, let’s get going.

How do you go about picking stocks in a stock picker’s market?

Here are some lessons learned…

STOCK-PICKING LESSON #1:
20-baggers come from targeting
future HOUSEHOLD NAMES

This year, we sold two massive ‘bagger’ gains.

A multi-bagger stock is one that gives you a return of more than 100%.

A two-bagger is a 100% gain. An 11-bagger is a 1,000% gain. 

These are what we go forCONSTANTLY.

We don’t get them often. Like I said, they are hard to find.

It’s just that a stock picker’s market makes them SLIGHTLY easier to identify.

Obviously, you can have big losers, too. Not in the thousands of per cent. That’s impossible.

But you CAN conceivably lose 100% of your investment if a small-cap play completely implodes.

Small-caps are by far some of the riskiest investments you can ever make.

Thankfully, that’s never happened to our readers.

But there have been — and will continue to be — stocks we’ve had to sell out of at a big loss.

In September, for instance, we cut off our trade in BluGlass at a loss of 65%.

That’s never nice.

But keep in mind…

The calculus of small-cap investing is that you take on the risk of losing 100%...for the chance to make many hundreds or even THOUSANDS of per cent.

One-baggers. Three-baggers. You get those and it’s usually ‘Job well done.’

But sometimes you get stocks that go on absolutely MENTAL runs.

Afterpay at 2,324% profit. Zip Co at 866% profit. They’re two ASI recent examples.

Stunning gains.

Gains, in my opinion, that are worth the big risks, provided you have the punting capital to put on the line.

Gains also that you generally see more of in a stock picker’s market.

But there’s a deeper lesson to be learned here…

And that’s to try and sniff out ‘household name potential’ before you buy.

Think: Could a whole bunch of Australians know this tiny company’s name in five years’ time?

Of course, it’s highly unrealistic to expect every one of your picks to become an Afterpay.

But we have learned over the years to try and seek out that X-factor.

The ‘secret sauce’ that could potentially see a company’s name plastered on billboards, with its ticker symbol tracked by thousands of investors.

There’s a good chance you know about Afterpay today.

What a story.

A Millennial, techy twist on the decades-old concept of layaway: Buy now, pay later.

An implausibly young CEO, Nick Molnar, entering Australia’s rich list because of it.

In 2016, however, virtually no one knew this company existed.

But ASI readers did.

Then-editor Sam Volkering, along with current editor Ryan as his researcher, cottoned on to this little-known e-commerce start-up’s central secret before most. That central secret being:

Millennials hate credit cards — because they compound debt.

But Millennials love STUFF.

Afterpay, or Touchcorp as it was called back then, was a nipper of a company with great social media savvy — offering you a way to pay for stuff in four interest-free instalments.   

In June 2016, Sam and Ryan called Afterpay an opportunity most investors don’t see.

And posited that if this obscure little start-up could ‘tap into a tiny fraction of this opportunity, they could become one of Australia’s leading global payment companies.

Here’s what happened next...

Exponential Stock Investor Chart Source: Google

Afterpay is now a billion-dollar company.

Even amid COVID-19, it’s adding 20,500 customers a day. 

And Afterpay shares are now worth $78.

They were $1.53 the day Australian Small-Cap Investigator tipped them.

Meaning you could have made a gain of nearly 5,000% if you’d taken our buy advice on this stock back in 2016 and held on until today.

STOCK-PICKING LESSON #2:
Look for stocks with ‘COVID immunity’

This is a lesson we’ve learned on the fly this year.

The star attraction of small-caps is, if you find the right ones, you can get paid even if the wider market is getting shellacked.

One such stock from the ASI archives that fits this bill is a company called Bellamy’s Australia.

We first picked it in 2014 when it traded at $1.40.

2015, if you remember, was a crappy year for the ASX…

Exponential Stock Investor Chart Source: Google

It went from touching 6,000, to 4,892 the following January.

Our Bellamy’s pick, however, was immune to the market carnage.

Because these guys were locked into a powerful near-term trend that transcended the day-to-day goings-on of the financial world: The global organic food boom.

Seems a bit quaint now; organic food is everywhere.

Six or seven years ago, it was a bit more cutting-edge, at least from a small-cap perspective. 

More specifically, in 2014 Bellamy’s was about to hit a ‘critical inflection point’…that would result in a very possible upward rerating of its stock price.

Its organic branded baby food was quickly winning market share from old-style competitors.

And, while few spotted it at the time, the company had a unique opportunity to grow to massive scale if it could build on its toehold in Asian export markets.

Back in 2014, Chinese baby formula sales were starting to soar.

Premium and ultra-premium segments of the baby formula market were growing at a rate of knots. And for Bellamy’s, it was a case of right place, right time, and right strategy.

And all this unfolded while global stock markets had a terrible year.

2021 could be a terrible year for global stock markets in general.

(Although, who can really know? With all this stimulus…uncertainty…a pandemic…and a US election…predicting what markets will do next year is a mug’s game.)

The point is: It’s possible to find small-caps that rise to the surface and ride high, no matter what’s going on everywhere else.

While the market was tanking in 2015, Bellamy’s was using the newborn tools of social media — including Facebook, Twitter and Instagram — to drive brand awareness in China and Asia more broadly.

Our focus on social and digital media has fostered substantial growth of an engaged online community,’ company directors Rob Woolley and Laura McBain said at the time.

In China we are quickly building a strong following through social media and word-of-mouth sales.

Old hat now, but, as I said, this was pretty cutting-edge at the time.

And WE had our readers in this stock.

Bellamy’s quickly began shifting its products in all of China’s major online marketplaces.

And Australian Small-Cap Investigator readers got in relatively near the beginning of this massive success story…

Based in Launceston, Tasmania, Bellamy’s traded on the ASX for just $1.40 when it was first spotted by us.

It had a market cap of just $133 million.

By 2016, those shares were trading at $12.75.

And Google at the time put its market cap at $1.23 billion.

A mammoth gain.

But the key to this lesson is that we siphoned this gain WHILE THE WIDER MARKET WAS FALLING.

A massive capital appreciation in drab conditions.

Now, to be clear: We didn’t capture ALL of that gain.

We sold early and it kept on rising.

Readers who bought the recommendation could have nailed 575.7% in 14 months…which is insane when you think about it...but we sacrificed more gains by chickening out and banking profits too early…which leads me to:

STOCK-PICKING LESSON #3:
Picking your SELLS is almost more
important than picking your buys

Remember the Afterpay story I was telling you about?

The stock that rose 5,000% after we tipped it?

Well, there’s a downside to that story.

Just like Bellamy’s, we hit the eject button too early.

In February this year, after getting in four years ago when these guys were absolute nobodies, we made the call to take our profits off the table.

At the time, we reasoned it had done all we’d asked of it.

The gain we sold for, 2,324%, is still one for the record books.

Problem is…Afterpay just kept on rising this year after we exited.

Our reasoning at the time was sound.

Afterpay had become a darling of the ASX since we tipped it as a nobody fintech. It had made us a tremendous gain for a stock held for just over three and a half years.

We figured back in February 2020 the value of Afterpay was pretty much priced in. And it was time to realise those profits and exit the position.

We even warned readers ‘the stock may continue higher.

However, we didn’t anticipate it almost doubling again THIS YEAR!

YEESH!

But what we didn’t…COULDN’T, really…anticipate was the boom in online sales due to this new (in February) COVID thing.

A boom Afterpay has mercilessly exploited ever since we exited the stock.

Look, these things happen in small-cap investing.

Trust me: A too-early exit for a gain in the thousands of per cent is WAY better than staying in a stock that loses you money.

But it doesn’t mean you can’t learn lessons from it.  

There’s knowledge to be gained here.

Exit strategies are almost more important than picking what stocks to buy.

What current readers are saying about ASI

Appen, Nanosonics, Rural Funds group, Electro Optics Archer etc

These are all small caps I have made money from, some more spectacular than others.

What I really like is learning about new start up Australian companies. I have always believed that Australians are amongst the smartest and most entrepreneurial people in the world.

I knew nothing about shares when I started. With the help of your Company, and regular reading about companies in the newspapers and magazines I have learnt a lot since I retired.

Your wise advice over every trade I have followed, do not invest more that you can afford to lose.

MFM

Taking profits prematurely is annoying as hell, especially in this instance.

But we can tell you from experience it’s nowhere near as annoying as watching your profits blow away like sand in the wind because you held on too long…because you got emotionally attached to a trade that suddenly turns on you.

That happens a LOT with small-caps.

For months on end, you’re winning. Then suddenly you’re pulling your hair and watching the stock plunge.

Stop orders are a useful tool we use to stem losses (because there WILL be losses…).

We’ll give you guidelines on what we want out of a trade…the potential gains, and how long we want to be in that trade.

And, occasionally, we’ll take gains off the table in increments.

So you can bank profits in this stock picker’s market…but also STAY IN THE WINNING TRADE.

But, ultimately, the exit strategy will be up to you.

I’m sure we have more than a few Australian Small-Cap Investigator readers who refused to sell and are still in Afterpay today.

And fair play to them!

Sometimes, something truly special happens with a small-cap.

We’re just an advisory, pointing you in a direction. What you do with that insight is up to you…

It’s adrenalising when you get an Afterpay situation.

Word starts to spread…financial writers, reporters, analysts and bloggers start mentioning the name monthly, weekly, then daily...quarterly reports go from gathering dust to being downloaded by the dozen...

And, as in Afterpay’s case, an X-factor like COVID-19 comes into play to send a company into multibillion-dollar territory…

The information gap that afflicts nearly all small-caps rapidly closes…

…and all you can do is grip tight and pick your exit!

When you watch that unfolding with a stock YOU owned from the get-go...when you see, day by day, the sudden uptick in coverage propel a stock price from cents to dollars...and it’s a situation YOU predicted long ago…when this same stock couldn’t get a write-up in a comic book...

…mate, it’s a euphoric feeling very hard to describe!

Don’t take my word for it, though.

Why don’t you join us in attacking
this stock picker’s market?

I invite you to take a $69 annual subscription to Australian Small-Cap Investigator today.

Again, this comes with our usual 30-day ‘get-out clause’.

Meaning you can get a full refund of that $69 within the first 30 days.

Pretty decent deal.

Especially considering you’ll receive instant access to three just-published reports:

Return of the Stock Picker: Five Ripe Small-Cap Plays to Start You On Your Journey

Why Right Now is a Small-Cap Punter’s Paradise (and how to invest in them smartly)

And:

A Beginner’s Guide to the Australian Stock Market: How to Buy and Sell Shares on the ASX

3 x Premias

The five stocks profiled in the first report are our main picks for next year.

They’re getting very little coverage at the moment. I reckon very few people are reading their quarterly statements other than me, a few other small-cap wonks and the folks at the ASX, who require the statements as a condition of listing.

That means these stocks carry big risks. But then, having read this far, you know that already.

Read the reports.

Do your own due diligence on the recs.

Go through the Australian Small-Cap Investigator archive.

Study the current portfolio and all the active buy recommendations.

Then make the call.

You can either stick around for the ride. Or request a full refund in the first 30 days.

 

 

Of course, this kind of action isn’t for everyone.

Even when you’re in a stock picker’s market.

Even the pro investors tread super carefully with small-caps.

Really, it doesn’t pay for Australian analysts to research stocks unless they can make enough money (either commissions or future investment banking fees) to make the effort worthwhile.

So obscure securities, which don’t trade in volume, are generally ignored.

And THAT leads me to your fourth small-cap stock-picking lesson…

STOCK-PICKING LESSON #4:
Use your ‘little guy advantage’

Small-caps aren’t liquid enough for big fund managers to get into and out of with ease. They simply have too much money to invest.

As Warren Buffett told Business Week:

It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.

Notable that Warren Buffett considers $1 million ‘not a lot of money’.  And of course, nothing is guaranteed. He knows that. But his point is sound. We have some advantages over the pros when it comes to small-caps.

Particularly in the current COVID-impacted climate.

There are two types of pro analysts — ‘sell side’ and ‘buy side’.

And because they lack that ‘structural advantage’, neither pay much attention to small-caps.

What current readers are saying about ASI

Great service and I have had some excellent results from Ryan. Up 968% on WSP (still holding) and made 93% on Z1P.’

MV

Many of my big gains over the last five years have come from small cap stocks. Pointsbet has gained me 181% on selling half. Balance showing 189.5% now.’

NFE

I waited for BRN to purchase as it seemed a possible good company. I brought at 0.04 and sold two-thirds at 0.9. This does not happen often!

ME

I recently sold half of Ryan’s recommended stocks at about [a] 610% gain.’

AK

Going well with BRN and DCC. Couldn’t have done it without you.’

Marcus M

Sell-side guys want to sell stocks to clients on behalf of a brokerage.

Preferably boatloads of them. Preferably large-caps.

You’re just moving the inventory, and the best inventory to shift is ‘A-list’ stocks — ANZ, Telstra, Rio Tinto and the like, where the liquidity is high.

Shovelling as many big-name stocks as possible and swallowing the commission. These guys get paid on VOLUME.

Think about it...

If you make your money based on how many shares you trade...then ‘C-list’ stocks trading less than 15,000 shares a day are simply not worth following!

A buy-side analyst works for a hedge or super fund.

His living is buying stocks with other people’s money.

Buy-side guys avoid small-caps too.

Say a company has a market cap of just $238 million.

And a big superannuation fund with assets of around $6 billion bought the whole company... It would have to rise 27% in value to shift the entire fund up just 1%.

It’s just not worth it for the big buy-siders.

There are SOME dedicated small-cap funds out there, but they’re in the extreme minority.

(That’s one way to get blanket exposure to this stock picker’s market right now…if you don’t have the time or inclination to individually pick stocks. And if you can swallow the fact that the managers have zero accountability to you and will charge you big fees no matter how well the fund does.)

But on the whole, buy-side guys don’t cover small-caps because they can jeopardise their main objective — beating the index.

They’re after a ‘relative return’.

If you’re a money manager, it’s ‘Job well done’ and ‘Here’s your five-figure bonus’ if you manage to beat the index by 2.5%.

You don’t do that by taking excessive risks.

You do that by mindlessly covering ASX 200 stocks.

That’s what relative returns are about.

Having a ‘little guy advantage’
is EVEN MORE useful in a
stock picker’s market…

What it means is you can come across an opportunity that totally blows your mind.

Where you do the due diligence…and find out something huge on a small company’s horizon…and you think: ‘SURELY I can’t be the only one seeing this. Why isn’t the smart money all over this stock?

That was our thinking with one of our biggest winners from the last stock picker’s market in 2009, Bow Energy.

We learned this company was sitting on roughly 10% of Queensland’s recoverable gas reserves at the time.

Seemed impossible we were the only analysts in Australia who could see this.

At the time, you could buy Bow stock for less than the cost of a postage stamp.

We had to be missing something, surely.

The recoverable reserves it had already confirmed meant Bow should have been valued around $140 million. That was nearly six times the current share price at the time.

What the hell was going on here?

We chased the CEO, John De Stefani, for confirmation.

Turned out, yes, Bow Energy was indeed sitting on a vast gas resource of 6,200 PJ. For this reason, Stefani said Bow’s goal was to become a ‘mid-tier listed energy business within three years.

We sold Bow Energy for a 458% gain just seven months later.

And the lesson we’ve learnt since is this:

Bow was pretty much our discovery alone because it was a million miles off the big buy-side and sell-side analysts’ radar.

It was the ‘little guy’s advantage’ in action.   

The big boys simply can’t be bothered with small-caps...because at heart...finding great stocks for individual investors is neither their passion nor their business. It’s not how they make money.

It’s how WE make money, though...

As a ‘lone wolf’ investor, you don’t have these restrictions. You can throw as little or as much as you like into a company.

And every stock in the ASX is fair game…ESPECIALLY right now…

So, which little companies
are we targeting for 2021?

There’s so many angles here, it’s almost paralysing!

COVID is not going away and its impacts on the stock market — hammering some sectors, elevating and disrupting others — are only going to get stronger in the next year or two.

But what stocks should you pick?

Well, I can tell you now one area Ryan is laser-focused on is a resurgence in Australia of marijuana-based small-caps.

We were right at the vanguard of that first wave back in 2017.

For instance, we tipped Aussie medical pot pioneer AusCann Group when it was just 21 cents.

Less than a year later, it was a $1.74 stock.

But as you’ll see from the chart, there was a distinct whiff of mania about the 2017 pot stock boom.

We have pot stocks that we held on to in the portfolio today that are way down.

That’s what happens with small-caps…you get little manias that run out of puff.

That’s why you need to be super-smart with your entry and exit points.

But Ryan is convinced 2021 is going to see a resurgence, albeit in a slightly different area.

You’ll get the full backstory if you subscribe, but this new resurgence concerns cannabidiol (CBD) products that have swept the world in recent years.

With a proposed new law implementation date of 1 June 2021 — another ASX small-cap mania could be brewing here.

For pot stocks, this is a big deal.

Approved prescriptions have been steadily rising over the past year.

The number of people legally using cannabis in Australia almost doubled from 2,889 in August 2019 to 5,564 in July 2020.

So THAT’S on our radar right now…

A potential second Afterpay, which leverages the Australian CBD boom.

Whether or not that will happen, though, remains to be seen.

The idea with small-cap investing is you put multiple hooks in the stock ocean…and see what bites.

With that in mind, here is a snapshot of what’s getting us excited about our top ASI recommendations for 2021. You’ll learn the full details of them in your first special report, which you can claim today.

PICK #1: Our Number One Pandemic ‘Bounce-back Belter’ Pick

When you go back through the archive, you’ll see that periodically we have plays that we call ‘Bounce-back Belters’.

Stocks we believe have been massively oversold, are trading at insane value for money, and which are primed for a huge recovery.

And this one certainly fits that criteria in spades.

All I’ll tell you here is that it’s a solid media company that was all the rage for several years…but then got completely hammered by the pandemic.

Its share price fell by more than two-thirds…and has largely traded sideways ever since.

Ryan is convinced that is about to change.

Once restrictions start to lift, the niche media sector it dominates should see a swift recovery…and so should this small-cap.

PICK #2: A BRILLIANT Fintech With a Disruptive New Take on Investing

The best small-caps incubate disruptive, revolutionary ideas and make them mainstream. And what this fintech is cooking up is truly stunning.

In fact, I believe this is one of those once-in-five-year discoveries.

As such, I’m reluctant to give away its secret here; I want to keep this play to ourselves for as long as possible.

But it’s setting out to disrupt how we invest in Australia, just as Afterpay has disrupted how we shop online.

It’s genius, pure and simple.

And yet this company only has a modest following so far in Australia. But Ryan has convinced me that’s about to change. And plans are afoot to target the young middle class in Indonesia, Malaysia and Thailand.

PICKS #3 and #4: Our Prime Telecom Plays for 2021 (As One’s Eyeing a Big Overseas Market, the Other is Looking to Directly Take on the NBN at Home)

These two are intriguing.

I can’t say much about either here as I don’t want to give too much away.

But one has shown its worth throughout the pandemic. It’s going toe-to-toe with the NBN. And is hitting some incredible milestones in sales and earnings.

The other is a plucky little ASX telecom upstart with an ambitious plan to corner a chunk of the growing mobile network market in Singapore.

It’s taking on the three much larger incumbents in Singtel, StarHub and M1. But it has a few tricky plans up its sleeve to achieve this goal…

PICK #5: This One Has ‘Future Superstar’ Written all Over It

Ryan has been watching for an entry into this stock for a long time.

Now he’s got the perfect conditions to pull the trigger.

Online video, content creation and Zoom were already on the rise before the pandemic. Now this area has exploded exponentially.

These little ASX guys are at the forefront.

They only listed in late 2018…had a barnstorming run with the share price tripling in a year…but a lot of that got sucked away when the pandemic hit.

There is no logical reason why this stock should be trading this cheaply right now.

Especially because something intriguing is in the works. Something the market seems to have missed so far.

Last year, this company bought an even smaller UK company for its patented wireless technology. This can sync audio and video across multiple devices. 

This is a key industry problem.

Our pick plans to license the tech, conceivably making it a standard for every audio and video device.

An announcement around this, with a key player, could come at any time. Discussions are already happening…

This to me looks like an absolute textbook ASI play.

But look, a stock-picking market is by no means a safer market.

None of these are anywhere near sure bets.

As Stockhead brilliantly put it recently, thanks to COVID:

Like the Netflix series Stranger Things,
ASX small caps are in the “upside down”

The article continues:

But unlike for the characters in the show, the “upside down” hasn’t been as terrifying.

(For those who have no idea what we’re on about, the “upside down” in Stranger Things is a much darker mirror image of the real world with a big scary resident “Demogorgon” that eats everyone.)

Spheria Asset Management portfolio manager Marcus Burns said earlier this week there have been some major distortions operating in the ASX small caps space that have turned the space upside down.

This is what we’ve been talking about.

An ‘upside down’ stock picker’s market.

With all these weird distortions that send small-caps flying all over the place.

Stimulus distortions like central bank money printing.

Low interest rate distortions.

And the ultimate distortion of a once-in-a-century pandemic.

That’s why speculative activity is off the hook right now.

That’s why some small-caps are flying…and micro-caps (the riskiest of the lot) are outperforming ASX small-caps by 20%.

But be crystal clear:

You can get eaten alive
in the ‘Upside Down’

So, if the thought of making an investment and watching it go down in a matter of months (or even days if things get really hairy) leaves you cold, you shouldn’t buy these stocks.

You shouldn’t really have read this far!

But if you have a small bit of capital you’re willing to put on the line in the hope of spinning it into $20,000, $35,000, or even more — these are probably your best options on the entire Australian market at this time.

But they could also tank.

Those are the rules of this game.

This is a chance for you to compete
in a space which is — by necessity —largely uncontested by
investment firms

So, by now you’re either in or you’re out.

$69 for a whole year of recommendations.

30 days to get that transferred straight back to you, if you so desire.

No harm, no foul.

You can even download and keep your three reports...

Return of the Stock Picker: Five Ripe Small-Cap Plays to Start You On Your Journey

Why Right Now is a Small-Cap Punter’s Paradise (and how to invest in them smartly)

And:

A Beginner’s Guide to the Australian Stock Market: How to Buy and Sell Shares on the ASX

3 x Premias

…and then refund.

Have our best ideas for the year ahead, and still not be out-of-pocket.

That’s kind of nuts from a financial publishing perspective.

But hopefully it shows you how confident I am that, once you get to look under the bonnet of Australian Small-Cap Investigator, you’ll want to stick around.

If you’re not satisfied, just ask for a refund in that first month.

You’ll have gained access to ALL of our previous share tips, all of our current holdings, plus Ryan’s five marquee recommendations for 2021.

You can get all that, and, if you’re still not quite at ease with the whole thing, request a refund.

I honestly don’t mind if you do this.

I wouldn’t want you to feel compelled to stay on if you suspected this might be a little too risky…or if you think the financial uncertainty around the pandemic makes it imprudent for you to be punting on small-caps.

Again…

Stock picking is for
PUNTERS ONLY.
It always is…but
especially so right now.

$69 will get you one brand-new share tip in each monthly issue for a year.

Ryan will tell you what he believes the risks and rewards are, when to get in, and what he thinks is a realistic target price.

PLUS, he’ll tell you what action to take on your existing shares, whether to buy more, sell completely, take a portion of profits, or hold your position for the time being.

Ryan will also send you a weekly email update, where he passes on time-sensitive tips, developments or changes to your holdings with the COVID crisis in mind, plus any ‘Zoom meeting whispers’ (they used to be wine bar whispers, but there’s not much whispering there in many parts of Australia) that might affect your share tips.

$69 is nothing for all that.

STOCK-PICKING
LESSON #5:

Embrace the
‘Age of Extreme’

In stock market trend terms, you could label the 1980s ‘The Age of the American Consumer’. The 1990s was ‘The Age of Tech’. The 2000s was ‘The Age of a Rising China’.

We believe we have just entered a new age: ‘The Age of Extreme Markets’. This is what creates prime stock-picking conditions.

Have a think about it for a second. Just as with the American consumer boom of the 1980s, and the tech boom of the 1990s, we’ve never really had this situation before. We are in uncharted waters.

Wall Street’s VIX Index (a ‘fear gauge’ for the markets) is currently flashing hotter than at any time since the dotcom crash. Volatility is going NUTS.

This is simply a situation I don’t see subsiding any time soon. Not next year. Not even the year after.

Stimulus efforts from banks…recovery efforts by governments…new outbreaks of the virus in 2021…new lockdowns…and whatever other black swans lie in wait…

You’re going to see the market perpetually lurching from one extreme to the other…and all the while small-caps will lurch even harder.

And then there’s the icing on the cake: You have the media feeding into the whole thing.

Volatility sells. It keeps you clicking back for more. This fear and uncertainty causes your ‘average’ investor to buy and sell stocks for silly reasons.

This is what feeds a stock picker’s market. And this is what we’ll be feeding off in the coming years…

As the head of Australia’s leading independent financial publisher, I can tell you right now that, dollar for dollar…

This is among the best
small-cap research in Australia

And man, if you’re EVER going to try your hand at this game, NOW IS THE TIME!!!

As Marcus Burns, portfolio manager at Spheria, says, factors have converged to create a rise of speculative stocks beyond conceivable multiples.

Both Ryan and I are absolutely sure these conditions are only going to intensify in 2021.

That makes this arena even more risky.

REMEMBER: An ‘Upside Down’ stock picker’s market means some small-caps can get obliterated.

But OTHER small-caps can rise thousands of per cent at the same time.

We’re searching for the latter category.

Ryan has his five top stock picks for 2021 ready and waiting for you.

You’ve got a 30-day window for a full refund, if you decide it’s a bit risky for your blood. (If you want, you can ‘paper-trade’ those first five picks in that 30-day window.)

Click on the big ‘SUBSCRIBE NOW’ link below. You’ll be taken to a secure order form where you fill in a few details. As soon as that’s processed, you’ll get the official welcome email with your first five picks.

Best regards,

James Woodburn Signature

James Woodburn,
Publisher, Fat Tail Investment Research

SUBSCRIBE NOW


SOME QUESTIONS YOU MIGHT HAVE

What will you send me?

First off, you’ll get instant access to three just-published reports.

Return of the Stock Picker: Five Ripe Small-Cap Plays to Start You On Your Journey

Why Right Now is a Small-Cap Punter’s Paradise (and how to invest in them smartly)

And:

A Beginner’s Guide to the Australian Stock Market: How to Buy and Sell Shares on the ASX

You’ll then be handed the ‘keys’ to the entire Australian Small-Cap Investigator archive. All of our previous share tip write-ups and all of our current buy recommendations can be found there.

You can get all that, and, if you’re still not quite at ease with the whole thing, request a refund within 30 days.

From there, you’ll receive a new issue and stock recommendation (occasionally two) per month. Ryan will tell you what he believes the risks and rewards are, when to get in, and what he thinks is a realistic target price.

PLUS, he’ll tell you what action to take on your existing shares, whether to buy more, sell completely, take a portion of profits, or hold your position for the time being.

Ryan will also send you a weekly email update, where he passes on time-sensitive tips, developments or changes to your holdings with the COVID crisis in mind, plus any ‘Zoom meeting whispers’ (they used to be wine bar whispers, but there’s not much whispering there in many parts of Australia) that might affect your share tips.

Is this a scam?

No. Australian Small-Cap Investigator has a proud history dating back to March 2007.

No financial publication could have anywhere near that longevity if it was a scam. ASIC would have closed it down long ago.

Fat Tail Investment Research has an outstanding 4.3-star Google rating. I encourage you to read the many rave reviews there.

We’re part of a publishing group that’s been around since 1979.

Our business is regulated in Australia by ASIC. Ryan is a fully accredited stock analyst, which means he’s able to give general investment advice in Australia.

Some people will no doubt be wondering if ASI is a ‘pump and dump’ scheme…or whether Ryan is ‘front-running’ stocks.

No. Absolutely not.

It is completely against the rules for Ryan, or anyone at Fat Tail Investment Research, to invest in any of the companies we recommend.

If Ryan did that, his employment would be terminated, and he could end up in prison.

We get that people are sceptical. If you are, please read the newsletter over the next month as part of your subscription.

You’ll quickly see that this is the real deal.

What guarantees can you offer me?

No one can guarantee you success in the markets. If someone offers you this, run a mile. There are no guarantees with any form of investing. No one can see the future. Small-cap stocks are high-risk.

You could lose money. Be sure you’re comfortable with that. If you want to be in the running to make big money from the winners, you have to be comfortable with that risk.

The stock market is uncertain. That’s because LIFE is uncertain. No one can see the future. That’s why you should never invest more than you can safely afford to lose.

All we can do is provide the best defence against that uncertainty: Meticulous research.

Of course, I can guarantee you that if you don’t like what you see, for any reason, you can walk away with a full refund of your subscription cost any time in your first 30 days.

What are the risks?

All stock market investing involves risk. There’s no point swerving that. And anyone who tells you otherwise isn’t being honest with you.

A stock picker’s market is a very risky market.

Because the winners can be bigger than normal. But the losers can be bigger than normal too.

The specific risks involved with this kind of approach depend on exactly what stock opportunity Ryan finds. This varies depending on exactly what theme he’s looking at. But he will always highlight the risks along with each recommendation.

My only brief is to find stocks with really big gain potential. That means small-caps and sometimes micro-caps. You should know they tend to be much riskier than blue-chips because they are hyper-sensitive to news and announcements.

The value of these stocks can jump up rapidly, but can fall back just as rapidly.

In other words, never invest more than you could comfortably afford to lose on any one recommendation.

What if I get stuck?

First of all, don’t panic!

Second of all, read the just-published report A Beginner’s Guide to the Australian Stock Market: How to Buy and Sell Shares on the ASX.

That contains a whole bunch of great content that will help you in many areas of small-cap investing. Practical stuff that even experienced small-cap investors should find useful.

When you join Australian Small-Cap Investigator, you’ll also receive phone access to our member services team, plus an email address through which you can ask any questions related to your subscription (although we can’t give personal investment advice).

Be clear: I want this to work for you. I want you to make a ton of money from Ryan’s stock recommendations.

And I want our service to be easy for you to follow, so that it doesn’t take up too much of your time — or fill your head with stress — every time you buy a stock.

Ready to get started?

Click the link to join a stock picker’s paradise!

SUBSCRIBE NOW

(You can review your order before it’s final)