Paul Sonkin

There's an interesting section in Outliers, by Malcolm Gladwell, in which he describes how disasters like plane crashes or the Three Mile Island nuclear accident are rarely because of one big mistake. They're more likely to result from a series of small mistakes, any one of which, if avoided, would have kept the disaster from [...]

Paul Sonkin

Concentration and micro caps don't mix well, so we typically own around 100 names, with a big position being 3 to 4 percent of the portfolio. Tiny companies are by definition more vulnerable to catastrophe if something goes wrong, so we try to limit the potential damage from that by owning a lot of them. [...]

Paul Sonkin

In my second year at Columbia I took Bruce Greenwald's value investing class, and on the first day he showed us a table from Eugene Fama and Kenneth French's famous Journal of Finance paper called “The Cross-Section of Expected Stock Returns.” The table showed how low-price-to-book stocks and small caps tended over long periods of [...]

Paul Sonkin

The potential value added by the research into a microcap company is substantially greater. I have a lot less competition. I'm also much more able to speak directly with the CFO or CEO, who may not be as polished in the ways of Wall Street and might be more open and forthcoming about their business. [...]