Jim Collins Prescribes Five Micro-Cap Names to Build Portfolio Immunity

In a volatile macroeconomic world, micro caps can offer some immunity as they move based on company news rather than front page headlines. But you have to pick your companies carefully. In this interview with Streetwise Reports’ Special Situations, Jim Collins, founding partner of The Portfolio Guru, shares the names of a handful of companies he found in his travels to the LD Micro Conference and beyond.

Special Situations: You’re a big fan of micro caps. Why is small better in a world that, according to your recent The Portfolio Guru Post newsletter, is experiencing weak global aggregate demand?

Jim Collins: I think small is better because small-cap company stocks move based on factors that aren’t necessarily driven by global macroeconomics. That is particularly important in today’s volatile market.

SS: Do you see the recent fall in the stock market as a temporary blip because of headline news out of China, or are we shifting to a new stage in the world market?

JC: I don’t think it’s a blip. I think it’s a correction to more reasonable levels of valuation. A lot of people expected that China, India and the other emerging markets would generate marginal demand to soak up excess supply from the U.S. and Europe, but that was too optimistic. All markets are growing at much lower rates than the historical averages, and it is very risky to depend on a market devoid of any middle class to pull the world out of recession. We are seven years past the Lehman Brothers collapse but we haven’t come very far.

“Chanticleer Holdings Inc. recently closed a rights offering that raised $6.6M.”

SS: Last year, you called the LD Micro Conference “a micro-cap love-in,” and shared the names of five companies that sounded interesting as a way to …read more

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