...I wrote recently about how US investors were investing in US stocks; pulling back from investing globally. The US has more liquidity than the Pacific Ocean as the US is the place to invest for investors on the planet. Investors buying the fourth quarter is breaking records, but meanwhile back at the ranch, I'm seeing softness in MicroCaps. New issue IPOs have hit record levels, capital formation is off the charts in new territory, but yet MicroCaps are struggling.
Market Activity is at all time highs in the conference and roadshow arena and CEO visits to NYC is driving hotel and restaurant prices higher, and yet there is still a feeling of softness in MicroCaps. Some sectors are still hot like technology, homeland security, retail, but life sciences and biotechs are not hot like they were. Cannabis companies have their own special place in the market and the stocks in the sector is growing steadily.
I fully expect cash rich smallcap and midcap companies to continue trolling and bottom feeding in the MicroCap shallows and once a few high profile deals get done it will spark a rush into MicroCaps. It's almost as if the street is still struggling to find deals that fit their criteria while the companies, having less and less sources for capital, are showing their companies, but having difficulty finding traction. Convertible debt is the only life preserver in tough times for MicroCaps. I speak with MicroCap C-Suite execs everyday and taking their pulse is a daily routine. It's hard to watch $240 Billion go into one deal (Alibaba).
Where's the capital for the emerging growth market? The market seems to be at a stage where the low hanging fruit, small companies with EBITDA, have been picked and funded and what's left is too far below their existing criteria. The bankers competing for companies with revenues and earnings to fund has exhausted the landscape like locusts eating up everything in sight. So two things have happened; the best of breed have gotten IPO capital, and aftermarket prices have either dipped below IPO prices or are trading flat with the few exceptions trading at big premiums.
© 2017 Stock News Now
Supported by Superior Web Solutions