Small companies offer the highest possible potential
returns, as a matter of scale, since it is far easier for a company with $10
million in sales to double its revenue, than for a business with $10 billion in
sales. Most of the innovation introduced in the private sector is through
small-cap companies, and innovation is not only a target for investment but a
fuel for overall economic growth. Matter of fact, in 2010, the Kauffman
Foundation published a report that showed that without fast growing, early stage
companies, job growth would have been negative in America for the past 35
years. According to the National Venture Capital Association, 92% of the job
creation that occurs with small businesses is after their initial public
offering and they are already trading.
It can well be argued that large-cap companies are net job
destroyers. For example, when a Wal-Mart moves into a neighborhood, studies
have shown that even after the initial hiring of new employees, once the store
is in place, the community has 15% fewer jobs. Large cap companies are more
likely to offshore jobs to a third world nation to cut labor costs. Profits are
less likely to go into developing new facilities to create jobs. Over the past
ten years, the companies in the favored large cap index, the S&P 500, spent
over $3 trillion buying back shares of stocks. This benefits the stock options
of their CEOs and the hedge funds that trade the majority of their shares, as
it shrinks stock supply to raise valuation. However, those were funds that could
have been placed into retained earnings, used to innovate, and create jobs.
Small-cap companies can provide the highest rewards to
shareholders, and yet they get the least respect. Last year was considered an
exceptional year for initial public offerings with over $60 billion dollars
raised. Yet, the average day of trading volume on just the New York Stock
Exchange alone is over $110 billion. Innovation and growth is highly valued,
yet how Wall Street allocates capital is questionable at best.
With well over 20,000 companies that publicly trade, 80% of
Wall Street analysts follow a mere 20% of the largest companies. So the burden
of research is placed on you, the individual investor.
To help guide you through the vast forest of small
companies, TinyGems provides exceptional growth ideas and aid in the research
process to building a portfolio of successful small cap stocks.
For more information, visit www.TinyGems.net
MissionIR is committed to connecting the investment community with companies that have great potential and a strong dedication to building shareholder value. We know our reputation is based on the integrity of our clients and go to great lengths to ensure the companies represented adhere to sound business practices.
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