Four decades ago, two influential papers introduced the idea that firm size is related to stock outperformance (Benz, 1981; Reinganum, 1981). Since then, debates have emerged on whether this outperformance is genuine or a result of asset pricing models overlooking risks especially prevalent in smaller companies. Nevertheless, for investors willing to stomach liquidity constraints and earnings volatility, the space could offer substantial opportunities.

 

Microcaps usually fall between the chairs for institutional investment mandates, and few can motivate the cost of deeply researching these names. This leaves room for a patient and thorough investor to generate outperformance by digging where others are not. Additionally, smaller companies are generally easier to understand, with simpler operations and accounting. Peter Lynch stated that the person who turns over the most rocks wins the game. Thus, if you can choose, why move mountains when you can play around with pebbles?

 

For this event, we have gathered some of the most interesting companies with market caps (often significantly) below SEK3bn, profitability, or a clear path to black figures in the near term. Hopefully, the event will present several exciting investment opportunities that might have been overlooked by other investors.