Top 50 Microcap Investor List: Neil Cataldi
For this week’s Top 50 Microcap Investor, we present Neil Cataldi. Neil graduated from Towson University in 2001 with a bachelor’s degree in finance before launching his career at Goldman Sachs as an options specialist where he “actively managed options market pricing and risk measures across both equity and options positions.”
Read our feature on Neil here.
Lunch at the Club
You are invited to attend Lunch at the Club next Wednesday, October 20 at 12:00pm EST. Michael Green, Chief Strategist and Portfolio Manager of Simplify Asset Management will present his best investment idea.
Sign up as a Premium Member for $100/year to attend monthly investor presentations.
Premium Member John Clifford, Managing Director at The Conrad Family Office, announced the launch of Conrad Real Estate Lending Fund. The Fund gives investors the option to invest in Real Estate without the participation of buying or selling it directly.
For more information contact John Clifford BSc. (Hons)
Managing Director
+44 (0)7703 390 421
john.clifford@conradcapital.co.uk
CO/nversations Podcast
Tune into the CO/nversations podcast to hear our latest episode with Artem Fokin, Founder and Portfolio Manager of Caro-Kann Capital LLC.
We also recently featured Artem Fokin as a Top 50 Microcap Manager.
Backup Systems
“The engineering idea of a backup system is a very powerful idea.” –Charlie Munger
Backup systems, redundancies, margins of safety—whatever name you choose to call them—are important. As those that have been following the problems and delays in unloading container ships at the ports of Los Angeles and Long Beach already know, having a system that relies on everything going approximately right can create major problems when things go wrong.
As U.S. consumers slowed spending at restaurants, hotels, and salons over the last nineteen months, and instead spent more money buying goods online, the demand for ships carrying containers rose. As passenger flights between Asia and the U.S. ground to a halt—which almost always carry some freight along with passenger luggage—the demand for ships carrying containers rose. And as more containers arrived, the demand for trucks and truckers, among other things, also rose to levels that couldn’t be met. There wasn’t much slack. There wasn’t a good backup plan if it was ever needed.
Systems and supply chains with many moving parts and little redundancy often break at the wrong times. We see it in the ports today as we near the holiday season, as well as the energy markets in Europe as we approach the winter season.
What investing lessons can we take from all of this? One lesson is that you should try to protect your downside. What if things go wrong? Do you lose money, or just not make as much as you had expected? Another lesson is to have excess liquidity in case you are right, but the market disagrees with you for a while—whether in the form of cash or an income stream that would allow you to buy more at a better price. This gives you the adaptability and flexibility that many systems do not have. And a final lesson is to keep things simple. When too many things must go right for you to succeed, your odds of success might be lower than you think. In his 2004 Annual Letter, Warren Buffett described this lesson well:
“If only one variable is key to a decision, and the variable has a 90% chance of going your way, the chance for a successful outcome is obviously 90%. But if ten independent variables need to break favorably for a successful result, and each has a 90% probability of success, the likelihood of having a winner is only 35%.… Since a chain is no stronger than its weakest link, it makes sense to look for – if you’ll excuse an oxymoron – mono-linked chains.”
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Microcap Updates
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