Ernest Schlotter, SISM Investors
Under the “Radar,” stocks offer great opportunities for significant returns. These unknown, forgotten companies may trade at cheap valuations because they haven’t caught the interest of big institutions
Investors should not only focus on the high-flying stocks but taking some time to discover new names should also be a priority. Undiscovered stocks offer investors the opportunity to add exposure to growth companies that could become huge winners before the stocks gain widespread exposure. The best way to judge a lesser-known company is to look for an increase in trading volume that might indicate institutional buying, strong earnings growth, and a unique business model.
Under-the-radar companies usually have smaller market caps, so it makes no sense for huge hedge funds to take the time and resources to get into the story. The lack of liquidity prevents institutional investors from deploying billions of dollars of capital.
In addition, analysts from Wall Street also tend to ignore those companies since there are only small financial incentives to get involved.
Investors might ignore small-cap stocks for many reasons, but that doesn’t mean they can’t be an excellent investment.
Our mission at SISM Investors is to find those stories, generating significant gains in stocks that are off Wall Streets’ radar.