Trends Watch: Micro-Cap Fund Investing

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.   

This week, Elana talks with Stephen Read, Partner, HIT Capital.  

What is your outlook on micro-cap fund investing?

My outlook on micro-cap fund investing is optimistic, as I see it as a space with significant untapped potential.

Where do you see the greatest opportunities and why?

The greatest opportunities lie in micro-caps due to their inherent illiquidity and the fact that they are often ignored by larger institutions. This creates a niche where small, focused fund managers can dive deep into fundamental analysis and uncover growth potential in undervalued, underfollowed stocks. The inefficiencies in this market provide skilled managers with the chance to capitalize on mispricings that others overlook.

What are the greatest challenges you face and why? 

The greatest challenges with micro-cap investing are linked to their inherent volatility and illiquidity. However, by curating like-minded and trustworthy investors (LPs) who share a long-term view, these challenges can be mitigated. Our key is aligning with investors who have the risk tolerance and capacity and believe the long-term rewards can outweigh the short-term fluctuations and liquidity concerns. 

What keeps you up at night? 

My three kids. 

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.