How To Pick Small-Cap Stocks

The common understanding about small-cap stocks is that most of them are available at throwaway prices and have huge potential for growth. But that’s not always true. Some of these stocks are indeed available at cheap valuations, and that’s mostly because they are not much in demand, given that they are under-researched. While this opens up the possibility of price discovery and, thereby, an upside in the future, it also exposes the investors to risks, such as liquidity, non-discovery of the stock for a long period, or worse, failure of the company, owing to internal challenges, such as lack of funding or management, and leadership issues. When Safir Anand, a Delhi-based intellectual property lawyer, business strategist, and investor, started his investing journey many years ago, he wanted to buy what was cheap. “The reasons were many. I could not afford the big...