Top 50 Microcap Manager: Sean Marconi
For this week’s Top 50 Microcap Investor, we present Sean Marconi, Founder of Hurdle6 Capital LLC. Hurdle6 Capital is a private partnership focused on finding and investing in areas within their circle of competence. In 2008, Sean obtained a bachelor’s degree from Oakland University while studying finance and working full-time in order to pay all tuition and fees before launching his career.
The New Slice
As many of you know, Mike Pruitt, CO/Investor Club Founder is also the Chairman/CEO of Amergent Hospitality Group. We are excited to announce that Amergent Hospitality Group Inc has acquired a fast casual restaurant concept called PizzaRev. Amergent through its wholly owned subsidiary Pie Squared Holdings will operate three company owned stores and have nine franchise locations. We are clearly very pleased to announce the acquisition of PizzaRev, especially on the heals of our recent profitable quarter. In addition to strong results on our core business, we expect this acquisition to be immediately accretive and lay the groundwork for additional future like opportunities, some already in process. We continue to focus on assets whose value can be unlocked inside of our public platform, which will result in greater scale and synergies.
For more information see the press release below.
Amergent Hospitality Group Inc. Acquires Pie Squared Holdings D/B/A PizzaRev
Optimism and Overconfidence
Cognitive biases show up frequently in finance. In fact, there is a dedicated industry known as Behavioral Finance focused on the psychology and actions of financial market participants. As an investor, two of the most common biases to be aware of include optimism and overconfidence. Analyzing how these biases arise in your mental framework is critical to improving investment decisions.
Optimism is the hopefulness and confidence that a successful outcome will result. Our brain allows for us to perceive things in a brighter light. Most people view themselves as being “above average” and a bit superior in their decision-making abilities. It is possible this is attributable to the evolution of humans. While hunting, humans were forced to take risks and become optimists in order to survive. Being optimistic is not a bad thing; but as an investor it is important to understand how it plays into our decision-making. The human brain is a magnificent processor of information, but when emotions cloud judgment it can work against us.
Overconfidence is tightly correlated with optimism; but there are some key differences. Overconfidence can be defined as “unwarranted faith in intuition, reasoning, judgement, and abilities.” This bias is what leads investors into chasing returns and not fully considering the risks with which their investments carry. The market is the ultimate game of probability and chance, resulting in a difficult learning environment. The casino and gambling industry is another place where this natural phenomenon occurs. One of the many reasons as to why casinos have an enormous edge over their gambling counterparts results from the superior decision-making ability people believe they possess.
“The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.” —Marcel Proust
Finding an outsider who can offer a fresh perspective on the prospects of an investment opportunity may help eliminate unforced errors. Often, we are just too involved in our own perspectives to be able to see things as they really are when we are wrong. We must remain humble, realizing that as much as we’d like to always be right, mistakes will be made from time-to-time. Humility fosters an open mind, and allows us to become better and better decision makers as we go along. As the saying goes:
“Wisdom flows into the humble man like water flows into a depression”
While looking for an edge as an investor, we are susceptible to confirmation bias as well, where we only seek new information that reinforces our pre-determined thesis. As a result, overconfidence is difficult to identify in real time because the information we collect confirms our desired outcome. Accordingly, Warren Buffett explains that what counts for most people “is not how much they know, but rather how realistically they define what they don't know.”
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Tandy Leather Factory Files 2020 Financial Information
Little Flaws - by Morgan Housel
Jim Hallett, Executive Chairman, KAR Auction Services, Inc. on the Compounders Podcast
The Long View Podcast: Daniel Crosby: ‘If You’re Excited About It, It’s Probably a Bad Idea’
Capital Employed FM Podcast: Stocks In Transformation Mode with Tony Capeloto
The Investor’s Podcast: TIP375: Creating an Investing Checklist w/ Brian Feroldi
AlixAlumni Book Talk: Restructuring the Hold
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