February is finance month over here at build-a-stock-portfolio. And I’m throwing in another favorite of many investors looking for value: small caps.
Small caps stock, is stock for companies with a small market capitalization. Market capitalization or market cap is the total value of all outstanding shares. Take the number of shares and multiply it by the current value of a share.
I’m looking at smaller companies this month.
Many investors think small caps are the way to go if you want to beat the market. Since many of those smaller companies don’t show up in any indices or aren’t on the radar of large investors, there is truth to this theory.
In fact, the numbers support this. However, if you try to calculate in the extra risk that you are taking, the picture is not so clear. There’s a lot of interesting lecture about the trade-offs on the Internet.
On top of that, the exact definition of small cap is a bit variable.
So everything combined. Only investing in small caps may not be the best idea. But mixing them into a diversified portfolio is not a bad idea at all.
The finance sector is something I’ve largely ignored in my previous portfolios, so it’s time to make a change.
The big financial institutions seem to be struggling with their size and with lawmakers. However, smaller companies tend to have less historical baggage, can more quickly adapt to changing situations, usually are more specialized and have fewer rules to worry about.
Although finance can be a hit and miss and they are under pressure due to the low interest rates, there are still many banks and insurance companies doing just fine. And we haven’t even talked about the fintech companies that are popping up all over the place.
Finance is due for a revival and I expect it to come from the small players.
And now for the real portfolio. As always I’m keeping it simple:
|Symbol||Name||Current Price||Market Cap||Cash|
|SI||Silvergate Capital Corporation||16.23 USD||302.98M USD||1.07B USD|
|INBK||First Internet Bancorp||27.80 USD||277.46M USD||961.14M USD|
|BHB||Bar Harbor Bankshares||23.11 USD||353.22M USD||747.27M USD|
|MCB||Metropolitan Bank Holding Corp.||49.95 USD||417.07M USD||686.11M USD|
|BSRR||Sierra Bancorp||27.73 USD||426.00M USD||680.60M USD|
|SPFI||South Plains Financial, Inc.||21.45 USD||391.13M USD||645.32M USD|
|CCNE||CNB Financial Corporation||29.83 USD||478.89M USD||582.03M USD|
|FRBK||Republic First Bancorp, Inc.||3.29 USD||204.18M USD||581.44M USD|
|ATLO||Ames National Corporation||26.93 USD||246.31M USD||570.41M USD|
|PBIP||Prudential Bancorp, Inc.||17.69 USD||160.00M USD||563.14M USD|
Uncle Stock is promising me a historical return of 12%, but with pretty big highs and lows. So I’m looking forward to figure out if next year is going to be a high or a low one.
My philosophy: If you want to invest and your goal is to try to beat the market, you need a system. You need a system that can decide for you what to buy, when to sell and not to panic when things go down. Everything starts with selecting stock. You should not just select random stock here and there based on whims or things you read. No, create a system that suites your style and follow it. These posts give you example of what such a stock selection could look like.
Disclaimer: Don't believe anything I say or write. Always do your own research before making any investment decisions.