Qualitative analysis, according to Investopedia, is securities analysis that uses subjective judgement based on nonquantifiable information, such as management expertise, industry cycles, strength of research and development, and labor relations. In every episode we mention this term specifically, or cover aspects of this concept, and its importance to your due diligence process. The topic for this episode, however, is one element that has been discussed the most.
In theory, it seems simple: do you quantitative analysis, find some questions that you want to ask management, call them up or meet them at a conference, get your answers, make your decision, but in my experience, its a lot more complicated. I recently read an article on MicroCapClub.com by Chip Maloney titled, "The Art of Interviewing Management." It made me realize that speaking with management is skill that can be crafted to be used to your advantage.
For this topic, I spoke with Chris Lahiji, Founder and Host of LD Micro research newsletter and events because who better to discuss talking with management than with the person who organizes one of the biggest MicroCap conferences in the business - providing a platform for investors to meet with MicroCap management teams.
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In this Episode, Chris Lahiji and I, discuss the following topics:
Chris' background in MicroCap
Why is it important to speak with management when investing in MicroCap Stocks
Why talking with management is a key part of qualitative due diligence
His approach to meeting with management
Do's and Don'ts when interviewing management
Talking on the phone vs. in-person at a conference: Advantages and Disadvantages
What types of questions should we be asking; are they sector dependent?