Unlocking the Power of Emerging Market Stocks

Steve Kanaval |

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Trading stocks and the ability to collect information has changed more in the last 15 years than it did for the previous 100 years. As we enter the era of Robo-Advisors, I expect that, 15 years from now, we’ll see the same exponential change in the way investors commit capital.

Sarbanes - Oxley did much more than might be immediately clear. This is due to one salient point – the law shifted accountability from internal legal counsel directly to the CEO/CFO. That means that when they sign an SEC filing document (10Q or 10K), they are fully responsible, and that they can and will do time in jail if they are tempted to fudge numbers.

Many from the 90's call this the WorldCom Law - wherein CEO Bernie Ebbers and CFO Scott Sullivan used fraudulent accounting methods and made up numbers each quarter to maintain WorldCom’s stock price. Today, both of these fellows are jail, and that crazy era changed the accountability of public company management teams, likely deterring many a CEO/CFO from lying about earnings.

Flash forward to 2015 – we have a powerful search tool in Google, Inc. (GOOG) , and the ability to search filings on companies regarding profits, losses, revenue mix and who is buying or selling the stock internally. This in itself has helped smaller investors regain the trust of markets, simply because they had a comfort level of transparency.

Each day, I focus on smaller stocks because everyone else seems hyper focused on mega stocks. The irony is that they can’t afford to trade stocks like the FANG names that drive the market (Facebook, Inc. (FB) , Amazon.com, Inc. (AMZN) , Netflix, Inc. (NFLX) , Google). So, they buy a mutual fund and pay silly fees, or they invest in an ETF, or, they rely on a broker to do the work for them – which is usually a bad idea.

Find Undervalued Small Caps with Equities.com

At Equities.com, we approach this problem with a simple set of ideas. We find smaller stocks that are moving, we dig in until we understand why they are moving, and then we contact the company. If the company does not respond, we write about them anyway, and based on what we find in the filings and by doing our own research, we discover what channel they are selling into. It is the same mentality every hedge fund in the world uses to pick stocks – and it works.

We will be doing more of this writing for you every day, and establishing a universe of stocks we believe are undervalued or overvalued. This niche is our focus. Yes, we will write about other topics as well, but everything we do is about finding smaller companies that are mispriced, and writing a simple article that details precisely why the stock is mispriced. As Director of Research at Equities.com – I love simplicity, and we strive for precisely that.


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DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FB Facebook Inc. 115.40 0.30 0.26 25,070,364
AMZN Amazon.com Inc. 740.34 -3.31 -0.45 3,561,307
GOOG Alphabet Inc. 750.50 2.58 0.34 1,452,484
NFLX Netflix Inc. 120.81 3.59 3.06 8,953,590

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