Akin to individuals with goals to reach the top of the corporate ladder, companies have goals to climb the sustainability ladder from a startup to publicly traded – ‘An Idea to IPO’. To go from ‘Idea to IPO’, companies need more than a great idea, a great product, a great team, great sales, and great customer perspective. Companies need to view themselves from the eyes of investors, fund managers, and shareholders. A Wall Street fund manager’s insights, approach and strategies discussed in this blog are worth paying attention to.

In the article, How a Small-Cap Fund Weeds Out the Worst Stocks, Bob Bergson outlines strategies he devised and deployed successfully for Northern Small Cap Core Fund (NSGRX).

Consupts’ take on Bob’s strategies for NSGRX (quoted):

  • Analyze thoroughly, always
    1. To qualify companies for the fund, Bob and team screen for:
      1. Performance Indicators or traits such as stability, growth rates, and investments in future growth
      2. Nonperformance indicators or traits such as dwindling margins, lots of debt, and inadequate cash flow, to name a few
  • An oxymoron, this is an exit strategy where you exit before you enter. If all indicators show that it is a bad bet, don’t make it. Don’t enter to exit. Just stay out.
    1. “Companies that rank at the bottom of these screenings (listed above) land on the do-not-buy list. It’s far easier to identify companies that are least likely to succeed”, Bob says.
  • Be clear on purpose, WHY is your company in business?
    1. From “Uncovering the very best companies to avoiding the very worst”, NSGRX’s strategy on purpose is vivid
  • A risk awareness strategy that shapes product-market-fit
    1. “What do investors sell first? It’s not the microcaps. It’s larger, more liquid securities.”
  • The classic Pareto Principle or the 80/20 rule, this ROI strategy helps your company remain focused on efforts that yield results
    1. “Some of the biggest outsize returns in the space come from the smallest segments of the small-cap universe,”.

Consupts takes pride in helping clients analyze, formulate and execute such winning strategies. To learn more, check out www.consupts.com