Top 50 Microcap Investors: Matt Brackmann
The next feature of our Top 50 Micro-cap Manager list is Matt Brackmann. “Matt joined Perritt Capital Management in 2004. As portfolio manager for the Perritt Ultra MicroCap Fund, Matt is actively involved in idea generation and company research. Matt also serves as an equity analyst for the Perritt MicroCap Opportunities Fund. As Director of Trading, Matt is responsible for overseeing the firm’s trading desk, which includes overseeing all trading activity for advisor clients, keeping and maintaining trading records, arranging and managing relationships with sell-side brokerage firms, and serving as the liaison between the advisor and the advisor’s client custodians. Additionally, he is a Registered Investment Advisor and received his B.B.A. in Finance from the University of Iowa in 2004.”
Survival
“In general, survival is the only road to riches. Let me say that again: Survival is the only road to riches.” –Peter L. Bernstein (via a 2004 interview with Jason Zweig)
In the late 1990s, many investors went all-in, often with leverage, on “new economy” technology names. Many of those investors and businesses did not survive financially. In the years that followed, we saw a similar story play in the housing market. Leverage and a bet on higher and higher bubble prices took many people out of the game.
As we wrote over the summer, there are signs that some of this is happening again—in both the housing market and certain areas of the stock market. There are clear signs of speculation, and there are prices being paid for both physical and virtual things that threaten the financial survival of many of those going all-in on a one-way bet that the good times will continue.
Understanding value—even when it’s messy and imprecise—is a key variable to helping one survive market and business cycles. And part of investment survival is knowing how things can go wrong, what happens if they do, and trying to mitigate that risk through due diligence and diversification. As Anthony Deden, Chairman of Edelweiss Holdings, has said: “You don't know what anything is worth until you know what can go wrong.”
There’s the saying that fortune favors the bold. But the bold—through leverage, overconfidence, or bad timing—often get squashed. There is a major difference between betting big when the odds are on your side and betting big when there is little margin for error. It’s always good to remember the first rule of auto racing and think about how to apply it to your investing process: To finish first, you must first finish.
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In Case You Missed It…
How the Greatest Investors Win in Markets and Life | William Green | TEDxBerkshires
The Bebop Partnership’s write-up on Naked Wines
XPEL Acquires U.K. Based invisiFRAME Ltd. [For more on XPEL, see our whitepaper from earlier this year.]
Investing by the Books Podcast: #8 Lawrence Cunningham: Quality Investing
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