MCMInvest (80.03)

Depression Era? Pick Small Cap Stocks

April 13, 2009 – Comments (1) | RELATED TICKERS: OXM

Small cap stocks offer individual investors the "venture capitalist experience" in being able to pick-up shares when P/E valuations and trading volume are low. For confidence when dealing with small caps one must identify:

- The presense of a revolver, or a commercial bank line of credit, against the company's treasury account holding its own shares or other publicly traded securities that can be used by the bank to qualify as an acceptable financial instrument to serve as FDIC-approved collateral. In this market 55% LTV is the most aggressive revolver locked-and-loaded that I've seen in Edgar filings.

- Free Cash Flow

- Quality of current shareholders (Barclays or Billy Bob's Brokerage)

- Filter out the "noise" of the planned insider purchases of the stock that's prescribed under these executives compensation packages. When these insiders go in large on their own, one would be advised to follow suit. On the "small cap" level few insiders are grandstanding by purchasing their company's own shares, rather often times I've felt that these officers have a depth of understanding that leads them to believe that their own company will grow at a rate more aggressive than bank CD so they choose to invest in the company. For a low volume stock such as a small cap the demand on the public market by the CEO will send the stock high enough. As insiders are leaders within their organization and community, followers will follow suit, further serving to send the way stock up even on market down/even days like today.

DOW - down 0.08%

OXM - up 11.42%

Question: What's best practice as far as doing a blog post, such as this? To offer a few concrete stock picks, specific stock analysis, articles such as the above concerning macroeconomic theory, or stream-of-conciousness?