Full Time Investor Tim Heitman Trades Investment Stories and Strategies with Maj Soueidan [Weekly GeoWire No 98] [Video]

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Last week, I engaged in a Skull Session/Investor Insights podcast with Tim Heitman, an investor of over 40 years who transitioned from investing in larger companies to focusing on micro and nano caps. His pivot was driven by the greater potential for alpha generation due to market inefficiencies and fewer analysts covering these stocks.

Among the many things we discussed, we tackled analytical approaches to investing in smaller companies and the challenges and opportunities presented by the OTC market. We also discussed the importance of qualitative analysis, management change, and the need for adaptable strategies in this space.

We also touched on the significance of CEOs having a stake in the company, the impact of capital structure on stock performance, and the value of cash flows in assessing a company’s financial health.

Below are some of the notable clips from the Investor Insights session.

Tim Heitman on His Background and Investing Journey

Tim shares his background and journey as an investor. Having been in the business for 40 years, starting in 1983, his interest in business and numbers stems from his father’s employment in the marketing department at John Deere, where Tim was exposed to a professional business environment and ultimately became obsessed with numbers. 

Tim discusses his educational path, obtaining a finance degree from Miami, Ohio, and working for Fidelity Investments during the era of Peter Lynch’s leadership, emphasizing the significance of research at that time.

He details his subsequent roles, including working for a private broker-dealer and then joining a hedge fund led by David Tice, where he honed his analytical skills by assessing companies from a short-selling perspective. Tim also mentions his second career as a sports photographer, providing him with a creative outlet.

He recounts his transition to working as the Director of Research and a partner for a hedge fund called Manalapan Oracle, which dealt with the challenges of the 2008 financial crisis. He expresses burnout from the demanding period and shares how his photography work served as a balance and distraction.

Maj and Tim Discuss The Importance of Key Metrics in Analyzing Companies

Maj Soueidan and Tim Heitman discuss the importance of quickly assessing key financial metrics when analyzing companies.

Maj mentions focusing on margins, debt, and other crucial indicators on the income statement, balance sheet, and statement of cash flows. They describe a method of efficiently gathering essential information from SEC documents, conference call transcripts, and press releases to form a comprehensive evaluation, suggesting that this streamlined approach can lead to effective decision-making.

In response, Tim recalls his time working with David Tice and a technique called the “One Hour Analysis.“

This method involved consistent pattern recognition and a systematic review of critical factors in a short timeframe. Tim explains that this approach was particularly useful when dealing with a large number of stocks within limited time constraints.

He contrasts his analogue approach with digital methods of screening, expressing his belief that computer-based screens might not necessarily provide a competitive edge due to widespread access to such tools.

Maj Soueidan and Tim Heitman Talk About Their Experiences With Turnaround Stocks

Maj discusses his experience with a company

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Subscribe Now Tweets From Maj’s Feed

3 reasons not invest in Microcaps:

1. You’d rather buy stocks like Monster Beverage Corporation (NASDAQ:MNST) Nv5 Global, Inc. (NASDAQ:NVEE) Xpel, Inc. (NASDAQ:XPEL) Rand Worldwide Inc (OOTC:RWWI) after they 10x+ & aren’t microcaps anymore.
2. You’d rather listen to haters like some fund managers more interested in scaling to earn fees who can’t beat the market or the media vs.…

— Maj Soueidan (@majgeoinvesting) August 20, 2023

When the management team of a microcap gives you the run around when you ask them how they feel about dilution, their need to raise money soon and their position on preserving capital structure. pic.twitter.com/Cu4k3uYqYY

— Maj Soueidan (@majgeoinvesting) August 22, 2023

People spend $50, $100, $300 at a night club or a bar. ROI = hangover, accelerated aging process, late for work. But it’s like pulling teeth to get some people to invest in stocks or investing tools. ROI = Anything you want.

— Maj Soueidan (@majgeoinvesting) August 25, 2023

Just finished an early a.m call with a CEO of a company I’m digging into. I loved his reply to my question on if his endgame is sell the Company:

“CEOs that start a biz with selling it as their primary goal are often destined for failure. My focus is to build a great company.”

— Maj Soueidan (@majgeoinvesting) August 26, 2023

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