Video: managing your risk profile for your small cap portfolio




The point is that Under the Radar Report is constantly looking for small companies (or small caps) on the ASX that are cheap and ignored and hated, misunderstood and yes, sometimes complicated.

We’ve covered some 150 small cap stocks since we first kicked off and some 20 of those small companies have been taken over. That’s a hit rate of over 12%.

Some takeovers don't go ahead like Specialty Fashion (SFH), but the point is that value is being sought by the big end of town. If the stock market won’t do the big valuation then the big corporates will! 


Last December we tipped a little known and unloved New Zealand insurance company Tower (TWR), which was definitely in some trouble owing to its big exposure to the Canterbury earthquakes in 2010 and 2011.

The group had a small capital base which was being eaten away by claims, but had announced an innovative deal to spin off its troubled liability.

The stock traded on a PE of 5 times which it’s safe to say indicates, people weren’t sure this deal was innovative enough to save the company.

Fast forward to today and the company has had a couple of take-over offers and now trades 55% higher at $1.20. We’ll wait to see how this plays out but will be discussing it in our next issue.

We’ll also be discussing Seymour Whyte (SWL), which we first covered in late October and has also made a big return in a short time – about 65% at last count.

Guess what, this road builder was also unloved and is now the recipient of a takeover offer. We’ll also be discussing that one in our next issue. 


US stocks keep hitting new highs despite the US Fed raising rates; at some point this will come home to roost.

People have forgotten the impact rising rates have; but just because they have forgotten it doesn’t mean rising rates don’t have a big effect.

Your best protection is buying stocks as cheap as you can and taking profits.

That is what Under the Radar specialises in because at the Small Cap end these little companies more often than not are unloved and forgotten. 


As an investor you learn the most when you make mistakes; put another way, when you lose money.

One of the strengths of Under the Radar Report is transparency. When you login online, click Stock Research/all stock research and you can download our PERFORMANCE TRACKER. We give subscribers the full list of our 80 plus stock coverage, with metrics and our latest view. This gives you an up to date view on all our universe to help you find the next Tower (TWR).

It also shows very clearly our winners and losers and our overall performance. We have nothing to hide!

We’re also coming out with two new recommendations in the technology segment this week, which we’ve been watching for a long time. Tim Boreham has done his homework on these two. 


Technology related stocks are inherently risky. Even successful tech stocks hold huge amounts of cash – Google, Apple, Microsoft – because some of their bets won’t be successful.

Small Caps are particularly vulnerable in this space, which is why we do so much research on them before we tip them. We’ve had success with Impedimed, Sirtex Medical, Medical Developments, Big Air and Ellex Lasers.

We’ve been careful to ensure that we take profits on the way up, because although these stocks can go up at exponential rates, they also can go the other way.

We’re also had some duds like Mobile Embrace, Alchemia and iCarAsia.

You can’t get them all right, but we’re proud of the fact that we’ve got a lot more right that wrong, which is how you make big returns.

About the Author


Investment analyst and Editor of Under the Radar Report

Under the Radar Report is licensed to give general financial advice only (ASFL: 409518). The author does not own shares in any of the stocks mentioned.

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