How Some Investors Made 10,400% in 1 Year
I call this investment “stock options that never expire.” Since the beginning of 2003, this strategy has produced amazing profits. Look at just a few of the results:
- 1,840% on Integrated Biopharma Inc. — Every $500 you put into this strategy with this company in January would now be worth $9,200
- 1,036% on a company called Encore Capital Group — A simple $1,000 investment at the beginning of the year would give you an extra $10,360 today
- 1,415% on a company called Carrier Access Corporation — A $10,000 investment 10 months ago would pay for a vacation villa in Hawaii or the Caribbean, or anywhere else you wanted to build
In the past 12 months, the numbers are even better: Your “stock options that never expire” on a company called Evolving Systems Inc. would have earned you a 4,008% return. The same investment with a company called Dobson Communications would have earned you a 3,460% payday. And the exact same investment with a company called Lodgian would have earned you an amazing 10,400% return.
This investment strategy can triple your money (or better) in a matter of months. It can make you rich, even if you’ve got only a little bit in the bank to start with.
Can this really be true? Can there really be such a thing as an investment that gives you all the profit potential of stock options–without the expiration dates and other risks?
And if so, is there really a chance for you to have success when you’re up against an army of billion-dollar portfolio managers and a slew of MBAs on Wall Street?
The answer to these questions is “yes.” And the secret lies in one simple fact. You see, individual investors like you and me have one HUGE advantage over Wall Street with the investment strategy I’m going to detail for you.
Our advantage is this: Wall Street firms and multi-million dollar mutual fund managers are not permitted to buy this investment. That’s why I believe it is the only investment strategy in which individuals like you and me have a clear advantage over the big guys.
Let me explain…
The investments I want to show you how to buy are shares of the very smallest public companies in the United States.
These companies are called microcaps, because their total current value in the stock market (calculated by multiplying the stock price by the total number of shares on the market) is less than $250 million.
I know, $250 million doesn’t sound very small to you and me. But these companies are actually the smallest ones listed on the major U.S. stock exchanges. Home Depot, for a point of reference, is valued at about $75 BILLION. So these companies are worth about 1/400th of Home Depot’s value. (Home Depot, by the way, is big, but it’s not even among the top 30 biggest companies in the United States.)
These microcaps are, for the most part, companies you’ve never heard of… yet. They’re rarely written about in Barron’s, The Wall Street Journal, or any other financial publication.
You can buy these microcaps through your regular broker — or any online brokerage service.
And these companies are listed on the major U.S. stock exchanges, like the NYSE.
I call these investments “stock options that never expire” for two reasons:
1) You can buy microcap shares–just as wealthy executives and company insiders have done for decades with employee stock options–for pennies apiece. Full shares in these stocks cost just $.75, or $1.50, or sometimes $2.75–what corporate insiders often pay for options. This means you can own thousands of shares for as little as $250.
2) You can buy these shares when they are still incredibly cheap–when the company is still very small. As the company gets bigger and other investors catch on, you’ll have the option to sell for tremendous gains. Tiny moves in the share price will give us huge profits.
In fact, most investors don’t know microcap companies provide the absolute biggest returns in the stock market, year after year after year.
So why can’t Wall Street firms buy these same microcap companies? It comes down to simple mathematics… and a few government regulations.
Here’s what I mean…
Let’s say an average Wall Street mutual fund has $900 million in its portfolio. If the manager wants to divide the fund into 10 equal parts, that’s about $90 million for each part.
But the microcap companies I’m talking about are worth, at most, $250 million. That means if the average mutual fund tried to buy shares in one of these microcaps, he’d be buying up almost half the shares. Impossible. That would send the price through the roof–and the mutual fund manager could never get a good deal.
Plus, SEC government regulations don’t allow giant mutual funds or other big banking firms to buy a huge percentage of any one company.
That’s why it’s just not feasible for big Wall Street firms to pay attention to microcap stocks.
TO REITERATE:
The first reason to buy microcap stocks is because you can control thousands of shares, often for as little as pennies a share.
The second reason to buy microcaps is because mutual funds cannot. This gives us a huge advantage.
As Business Week reported in July of this year: “What makes investing in microcaps so appealing is that the stocks are, by and large, ignored by Wall Street and priced inefficiently.”
It means we can get in early on great companies before Wall Street has the chance. Remember, Microsoft, Intel, and Wal-Mart were all once tiny microcap companies that mutual funds weren’t allowed to buy.
This brings me to the third reason it makes sense to buy microcaps with a portion of your overall portfolio: They are more profitable than any other type of stock.