Skymark Research
Timely Information at your finger-tips
About Us
The emerging/small cap markets have always proved lucrative for knowledgeable investors. Recent increase in available financial information and online investing, coupled with the fact that undervalued equities stocks have been known to out-perform many other sectors, has created an ideal environment for undervalued equities investing.
Our Team is designed to provide the tools that allow our subscribers to be knowledgeable & fully equipped to take full advantage of a sector that continues to provide for some of the highest returns available in the markets today.
Our philosophy is simple. 'Don't invest in the stock market invest in companies! Take the time to learn and understand the company its market its products or services, the marketing strategy and if you can envision a healthy balance sheet in the future invest on that premise. Of course take into account the share structure, capitalization, competence of management, validity of the business plan and the popularity of the sector it is in. If it all makes sense we invest on that premise.
In the Small Cap markets the majority of the companies fail so we abide by two golden rules; 1) Never to Invest more than we can afford to lose. 2) Always remember to 'pay yourself first', (don't let greed get the better of you take profits off the table when you can).
Enjoy your capitalistic spirit!
Key Factors
- Capital Structure
- Management
- Finance
- Easily Understood Product or Service/Sector
- The identifiable market for the company
- Proprietary Nature
- Barriers to Entry
- Revenue, Future Contracts & Profitability
- The Sizzle
- Exposure
- Timing
A manageable and responsible capital structure is one of the key factors to an early stage public company's success. With a low amount of shares outstanding and on the public float the task of building a solid market with minimal volatility will be easier than if it were large amount of shares outstanding and in the float. This should result in an environment that is conducive to a loyal shareholder base, quality financings and eventually the interest of the institutional community. Management should own a significant stake in the company, (preferably 51%+).
Researching the qualifications of management and their past experience is important. Are they suitable for their particular position? What stake, (share position) in the company do they have, what are they committing to accomplish. We find it is good to speak with management directly and learn firsthand their level of commitment and how passionate they are about their roles.
Ensure there is a sound plan to accommodate all of the financial needs of the company, short and long term. Is there enough money in the bank to move the company to the next stage? Identify the monthly operating costs of the company; the 'burn rate' and additional 'ramp up' costs needed to move the company to the next stage. Does the management team have a track record in successfully raising capital? Assess the financial projects and judge whether they are actually realistic. Be careful that they are conservative rather than presumptuous and hopeful.
We believe in order for investors to put their hard earned cash into a company, they must be able to quickly and easily understand what the company does and how/why it is going to be a winner, (If it is rocket science, then the real audience may be limited to rocket scientists.) Is the sector a popular one? The popularity of the sector can be an important issue when presenting the company to the investment community or at the institutional level.
If the real market for the company's products or services isn't substantial, then the growth prospects for the company will be limited. Public markets value real growth potential and future earnings. If this element isn't strong, neither will the share value or potential upside. A stable market with consistent revenue is good but true dramatic corporate growth potential is vital to dramatic growth in share value.
The more proprietary a company's product or service, the better chance they will have moving forward and gaining valuable market share. A unique product or service will differentiate a company's offering from direct and indirect competition..
If your company/business model is a real winner and the barriers to entry are relatively low, you can be sure that as soon as you have proven yourself, a flood of competition will emerge. Barriers to entry can include patented technology, high capital requirements, intellectual property, long developmental phase to get the business running etc.
Emerging growth companies that do not have a clear vision to revenue and profitability will most likely not survive in today's market. The large caps and to a lesser extent, the small caps will survive in the absence of profits for a period of time because they have proven their businesses, (otherwise they wouldn't be large or small cap companies). The emerging growth space will not tolerate 'concept' companies in today's market environment. Ensure the plan to profitability is a clear one or the company could suffer results from unfavourable financings that result in further dilution of the shares.
The last ingredient that will enhance the probability that investors will commit is pure emotion. The other ingredients have to be present, but sizzle has attracted more investors to companies with mediocre fundamentals than one's that are boring and have excellent fundamentals. We believe companies that can boast attributes like; being revolutionary, having a niche market, being unique in their field, proprietary technology, intellectual property will have an advantage in their sector.
You can be the best company in the world, but if nobody knows about you - Who cares? If you are a great investment opportunity, let the public know. A professional investor relations/public relations department is a key component to every public company. Professional investor and public relations will translate into a large audience of investors that should be receptive to the corporate developments of the company. We believe as long as the company is progressing and seeing success the market will always follow. A professional plan must be designed and implemented, this will translate in maximum shareholder value, ideal financings, an abundance of exposure and probable further corporate developments.
Not enough can be said about timing. Many great ideas are ahead of their time, but really great ideas are on time! Every company, product or technology must present a compelling case that the world is ready to receive it. Too early means it's going to cost a lot to wait around until the time is right and too late means everybody is doing it and competition is too fierce to survive. The early bird does not always get the worm in business.