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It's easy to see why investors pile into a company's stock on the heels of highly successful products, technologies, or services.
Investors rewarded Apple shares after their steady flow of innovative product launches, while Google shares have been on an almost uninterrupted rise since its 2004 IPO.
Even Facebook has recovered nicely after its initial IPO debacle.
In each of those examples it's tempting to focus on the products the company offers, to draw a direct line to their success. iPhones and the introduction of stylish touchscreen interfaces in the case of Apple, the aggregation and accessibility of all things data-related in the case of Google, or just mere self-indulgence in the case of Facebook.
What's important to notice, though, is that in each case we likely wouldn't be talking about them had it not been for shrewd leadership at the top.
For small caps, finding the right leader can prove a more critical "spark" to major profits…
These Leaders' Decisions Are Critical, and Can Ramp Up or Kill Profits
Some current or former big-cap company leaders we're all familiar with: the late Steve Jobs of Apple, Jeff Bezos of Amazon, Warren Buffett of Berkshire Hathaway, and Bill Gates of Microsoft. They're all synonymous with outsized corporate success.
Would Apple have ever set the world on its ear without Jobs? Would Amazon even still be in business (after years of almost zero profit margins) if it weren't for Bezos? Would investors fill arenas for Berkshire Hathaway meetings without Buffett? And would Tesla be dominating the headlines without Elon Musk behind the wheel?
While those are all well-known examples, the small-cap space has its share of equally visionary (but less famous) CEOs leading some of the most exciting companies in the some of the most in-demand industries. In fact, I think quality CEOs are vastly more important in small-cap companies because they don't have the luxury of surrounding themselves with cherry-picked superstars from competitors.
Sometimes, though, a company can have all the right products and services in place and ready to go to market but the CEO bungles critical parts of the company's strategy, such as marketing, production, forecasting demand or managing leverage, just to name a few.
Fortunately, if the company has a competent board, directors (along with institutional investors) won't stand by idly while the company fritters away opportunity.
That means a new CEO – and the chance to profit hugely from one of my favorite catalysts…one that's already proven successful for us…well ahead of the crowd.
The Path to This Catalyst and Profits
My catalyst is the Management Change Spark, and here's what makes it so powerful…
The majority of huge stock appreciation is driven by institutional investors – not by you and me. So it only makes sense that we want to establish our positions ahead of the big boys. If we can get in before a wave of institutional money we can simply sit back and let them do all our heavy lifting by driving up the price.
Many institutional investors, especially mutual funds, are limited (by way of the fund's prospectus) in what they can and cannot invest in. Often times they are limited by factors including price, market cap, liquidity, or profitability. In some cases fund managers simply cannot, by law, invest in exciting companies (no matter how much they want to do so) until the stock, or the company, achieves certain benchmarks.
We're not hamstrung by these same limitations.
When a board of directors gives an inept CEO the boot we can quickly take action, long before the company achieves benchmarks such as profitability, price, or market cap. That is our upper hand over the big players.
If you're like me, I love having even a small edge against the big boys, especially in the era of dark pools and high frequency trading, where they clearly have the edge.
Here's our way to take advantage of a Management Change Spark and set the stage for our move ahead of the crowd…
About the Author
Sid is the investment community's best-kept secret. Since 2009, he's served at Money Map Press as Director of Research, analyzing thousands of securities and profit opportunities for subscribers. He's an expert in identifying "alpha" potential in a wide variety of industries, but especially the small-cap sector, where he's discovered a pattern of profits that's almost foolproof. In Small-Cap Rocket Alert, Sid uses a single precise trigger - the "Launch Alarm" - that consistently forecasts when small-cap stocks are on the verge of propelling to new highs, making investors potentially life-changing gains in the process.