Bull runs in small caps are usually fast and furious, and the cycle repeats itself every 3-4 years. Every time, retail is sold stories of business turnaround and stock charts look fantastic for meteoric wealth creation. For the class of 2020-21, here's a couple of past stars.

@sohamdas Depends on your style, of course, but absolutely correct.

@Dinesh_Sairam @a_basumallick @ashwinidamani Questions that are only answered with time haha.

@a_basumallick @ashwinidamani Just to add - sustainable FCF is a faraway concept for most till (if) they gain scale or innovate/add value. Till then, it's generally always a struggle to manage WC and capacity addition. Wouldn't expect that to change for a while.

Insolvency resolutions suck for creditors, but this one takes the cake.

Listed company gave loan to related party, defaulted along with other dues. Related party creditor acquired the listed entity via insolvency.

Only losers are operational creditors w/ 88% haircut.

Company name is Covidh Technologies Ltd - really old bankrupt company. Not a significant event, just an observation.

Correction: Listed company *took* a loan from related party (in first tweet)

Paying 50-100x earnings for 'blue ocean' sectors has become normalized with promise of changing trends and immense future opportunity. Stock markets look forward, if the future opportunity is great, in most cases that 100x valuation already factors a 30x valuation in 3 years.

For investors, the question of where the buck stops is difficult to answer, because the goal post keeps changing. 30x is reasonable for one business, for another 70x is acceptable. So why not everything in between too?

Not every business captures the opportunity available. There is many a slip between the cup and the lip, as my English teacher used to say. When investors have seen valuations creep from 20x to 100x in a matter of a year or two, it is easy to to keep dancing to the same music.

But like we used to play musical chairs in childhood, someone will be left standing too. And here the rules aren't that 1 person gets eliminated at a time, hundreds get crushed at the same time. In childhood, we had a 1/X chance of being caught standing when the music stopped.

The margin of safety was high till you got down to the last 3-4 people playing the game. Similarly, your margin of safety reduces dramatically when valuation becomes irrelevant. A few months of underperformance and suddenly things don't look so rosy any more.

Every annual report tells a story.

In small companies, you can read between the lines to get a feel of the management style and business economics.

I take Fredun Pharmaceuticals Ltd (FPL) to illustrate how to go about this (it's not pretty).

Let's go 👇 (1/n)

Please note that the main objective of this review is to get a preliminary understanding without doing a thesis.

It is oriented towards a "quick and dirty" review to decide if you want to dig deeper.

Review financials on a screener website before reading further. (2/n)

Now, you can already guess Fredun Pharmaceuticals is named after Fredun Medhora. His mother, Dr Daulat Medhora and his father, Nariman Medhora, are the original promoters of the company. Interestingly, Nariman Medhora has stepped down from active involvement in June 2021. (3/n)

Then we have Dr Daulat Medhora, who seems to have the qualifications and a decent background in the pharma industry. However, she is 76 years old and unlikely to be actively involved for much longer. (4/n)

That leaves Fredun Medhora, who does not have a technical or scientific background and his primary qualification is an MBA.

The biography provided in the AR describes the CV of an MBA student, nothing on the contribution or role in the company. (5/n)

So, @elonmusk, you do know that the proposed tax on UNREALIZED capital gains on billionaires is just that, a proposal, right? Why would you burden yourself with an enormous tax until the proposal becomes tax law, which is highly unlikely? A couple questions for you. 1/

You note that as you earn no salary or bonus the only way to personally pay taxes is to sell stock. What became of the $22 million you received on the sale of Zip2, which you founded with your brother? After paying taxes on the realized gain, did you invest the net proceeds? 2/

After being fired by the PayPal board and replaced by Peter Thiel, PayPal was sold to eBay. You received over $165 million in eBay shares from the sale. Do you still own them? Did you pay taxes on any realized gain and invest the net proceeds? Surely you have non-Tesla assets? 3/

You have committed to owning all of your shares in Tesla for the duration. Why would you break your word simply on a tax proposal until it becomes law? I understand you invested $6.5 million in Tesla when you joined the company in 2004, the year following its founding. 4/

Since joining Tesla, have you made any additional investments in the company or is the majority of ownership derived from share grants? I presume you will ultimately sell shares to finance exercises of expiring stock options instead of continued borrowing and pledging shares? 5/

Always read the oldest 10-K you can find on a company

Reading the oldest 10-K will give you added perspective on the business and it'll get you thinking about how the business has changed over time/how it will change in the future

Revenue growth over the last year (TTM)...
AMC: -40%
Zoom: +100%

Net Income over the last year (TTM)...
AMC: -$2.08 billion
Zoom: +$1.14 billion

Stock price over the last year...
$AMC: +1,131%
$ZM: -45%

Data via @ycharts

Lot of startups who are yet to make profits are filing for IPOs globally. I'm reading the filings and the language is terrible. A few tips on how to do it right.

Here are the right terms to use instead of the current antiquated language.

We are making losses.

"We've been consistently making negative profits and growing year on year."

We don't yet have a business model.

"We're innovation leaders in several fast growing market segments"

Losses will increase for the foreseeable future.

"Blockchain"

EBITDA is negative

"Our future adjusted EBITDA margin is consistently positive"

We Work got it right with their Community adjusted EBITDA

@soicfinance @ishmohit1 Learning and taking inspiration from you sir..🙏🏼🙏🏼