Are MicroCap Insiders Aligned With Shareholders?
Liu says that “Almost every microcap success story is, at its core, a management success story.” and he shares 3 ways microcap insiders signal alignment and confidence to common shareholders.
1. Incentives – “Small salaries and large ownership force insiders to generate the majority of their wealth by growing their business (and therefore stock price), thus aligning them with shareholders.”
2. Insider Transactions – “insider buying can show a lot about near-term developments in microcaps, despite the SEC’s “regulations” guarding against malpractice”
3. Premiums – “Perhaps one of the most guaranteed ways to generate a return in microcaps is buy upon the announcement of a share purchase or conversion at a premium to the then-price.”
Read the full post on WhyMicrocaps HERE.