Investing in Small Cap Disruptors in Australia

Hi Ian. This is an interesting question. It sounds like what you’re looking for is probably some type of ‘stock screener’ to help you filter out certain companies and criteria.

I think there are some websites which offer screens, one of those being Market Index. Having said that, I’m not sure if all of these smaller companies are covered by the screens, or just the biggest 200-500 companies.

It’s probably going to be hard work to find some of these ‘hidden gems’. But that’s probably a good thing. If it was easy to find them, then everyone would do it and there’d be no opportunity. So there’s that, or there are paid services available which either provide more detailed screening for stocks or a list of stock recommendations for that sort of thing. None that I can recommend, but some other people here might have more thoughts on this.

All the best with your search :)

Howdy Ian!

Great question, and sorry it’s taken me so long to reply to you. As Scott says below/above, my response is limited to general financial advice only (not personal financial advice like you would get from a financial planner). Scott’s answer is first glass – reminding us to focus on the risks, first and foremost.

Having started my own company (Rask) and invested heavily into it, and other small companies over the years — I’m a big fan of investing in companies that have a growth-style. However, I have been wrong so many times. A great growth investor from the USA is the co-founder of The Motley Fool, David Gardner. His strike rate was a lower than 50% (meaning only half of his ideas went up!).

Anyhow, I digress. I think the core of your question is ‘how do I filter for small-cap companies?’.

When you’re investing in small caps, you need to be very careful with your information sources. Always make up your own mind. Frankly, I’d also be very skeptical of the sources of news and information. For example, I tend to stay away from HotCopper, Stockhead, The Market Herald, etc. because these websites rely on companies paying them for publication (i.e. the companies pay the websites for coverage…).

I often stay away from most brokerage research too (e.g. from stock broking firms, sell-side analysts, etc.). If I do read these reports it’ll be solely for their research on the business – I never take their valuations as my own. Unfortunately, brokerage firms are often financially incentivised to get you trading, investing in the IPOs they manage and participating in Share Purchase Plans (SPPs). Basically, the conflicts of interest make me question their research (even if the analyst has the right intention).

This is why I’d stick with pure ‘filters’ for the ASX. You can use Tikr.com, the Stocklight app. Tikr is more powerful but I think it costs about $20 per month.

When you find a company that you’re interested in:

Once you find a c

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