fbpx

The Rising Importance of Supportive Shareholders in Microcap Investments in a Higher Interest Rate Environment


Old Maxims and New Realities


There’s an old maxim in microcap investing that encourages investors to jump in when there’s “little to no” institutional ownership. While there’s still merit to this saying, in today’s high-interest environment, “little” might just be more advantageous than “no.” In years past, when money flowed freely, all a startup needed was an intriguing narrative and a potential market to court investors. Achieving a few milestones, even without generating revenue, could secure additional funding at higher valuations. The allure of betting on future cash flows was palpable in an era when capital was abundant, and the returns on parked cash were negligible.

Credibility and Capital: Why Supportive Shareholders are Vital

  1. Expert Analysis Enhances Credibility
    In an environment where capital is more expensive to obtain, the scrutiny each investment undergoes is higher. Institutions, equipped with expert analysts, carry out comprehensive due diligence before taking a stake in any company. This intensive analysis often gets published, serving as a credible form of marketing for the microcap firm. The validation from a respected institution under these stricter conditions can carry even more weight than it would have during the days of cheap money.
  2. The Power of Association with Renowned Investors
    As the pool of available funds shrinks, the competition for capital intensifies. The endorsement from a reputable institution can make all the difference in attracting other investors and reducing the cost of capital. This is even more crucial now, as higher interest rates put additional financial strain on microcap companies seeking to finance their operations or next growth phase.
  3. Stakeholder Stability and the Flywheel Effect
    In this cautious investment phase, the benefits of institutional and other deep-pocketed support become increasingly pronounced. Their long-term commitment serves as a buffer against market instability. These are not the weak hands of retail investors looking for a quick flip. Even more important, these are investors dialed in with the company progress who can and will go out and BUY MORE, much much more of the stock when good news is released.
    Too often in the microcap space have I seen the best news a company has ever put out become the event driving exit liquidity for retail investors only to see the share price flounder despite the company progressing and being de-risked.
  4. The Drawdown Defense
    Protecting against downturns is paramount today. Observing seasoned investors maintain or grow their stakes can deter others from selling in a panic, thus minimizing the risk of sharp drawdowns.
    Further, with their in depth analysis and understanding of the story it is always good to have deep pockets intimately familiar with business progress who both can and will step in and buy when shares are undervalued.

Spotlight: Companies Set to Shine

  1. Alaska Energy Metals Corporation (AEMC, TSXV)
    Following its recent surge, AEMC demonstrates the benefits of robust backing, illustrating how significant supporters can amplify a company’s potential.
  2. Borealis Mining Company: A Glimpse into a Goldmine of Opportunity
    While still not public, Borealis is already garnering attention, thanks in part to a leadership team that boasts some of the mining industry’s most prominent figures.

Kelly Malcolm, CEO: Helmed the 2022 Exploration Company of the Year.
Tony Makuch, Chairman: Adept at building and selling enterprises for billions.
Greg Gibson, Director: A seasoned professional with a history of lucrative deals.
Bob Buchan, Director: The mastermind behind the world’s 7th largest gold producer.


A Landscape of Evolving Opportunities


In the maze of high interest rates, the roles of supportive shareholders and stalwart leadership stand out in relief. Both AEMC and the upcoming Borealis exemplify these values in action. For discerning investors, these firms blend potential with stability — a combination worth investigating in today’s dynamic investment scene.

Bill McClain – Editor of The Momentum Letter
About the author.

The Momentum Letter operates The Free Trade Report

With the dearth of easy-to-access data on company share lock-up agreements and dates, The Momentum Letter issues “The Free Trade Report” to members highlighting key share unlock dates for companies in the microcap and small cap space. To gain access to the “The Free Trade Report” database sign-up today.

Significant Past Unlocks in the last 90 days (6 of Many…)

Ticker Locked Shares Unlock Date Share Price on Unlock Date Current Share Price Return % Since Unlock Date % Float Increase
PRTI 5,175,422 11/26/2024 0 0.10 0 85.20
RNCH 19,885,271 10/20/2024 0 0.05 0 43.40
ALEX 18,024,834 11/01/2024 0 0.84 0 44.87
CLIP 8,440,909 11/26/2024 0 0.21 0 23.95

Get access to all past stock unlock data join the Free Trade Report (it’s free! )

Upcoming Unlocks in the next 90 days (6 of Many…)

Ticker Locked Shares Unlock Date Current Share Price % Float Increase
NIRV 3,257,300 03/18/2025 0.02 10.59
PLCN 2,435,233 03/03/2025 0.04 11.56
GAND 8,260,558 03/08/2025 0.07 10.26
CMET 5,977,033 03/17/2025 0.06 22.85
BVCI 2,263,978 02/12/2025 0.70 10.69
TWOH 13,530,601 02/05/2025 0.01 12.84

Get access to all upcoming stock unlock data join the Free Trade Report (it’s free! )


Unlock your access to more companies and more tools by joining “The Free Trade Report”. The Momentum Letter will deliver weekly updates such as when new companies are added to the database, new unlock dates approach and recent market impacting unlocks along with other valuable information to your inbox. You can login here or visit the registration page to create your account. (it’s free!)



Comments (3)

  1. Allison Merkle
    Posted on September 30, 2023
    • William McClain
      Posted on September 30, 2023
      • William McClain
        Posted on October 2, 2023

Give a Comment