Ian Cassel – Investing In Tiny Stocks

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_2** (0:59)
Patrick O'Shaughnessy is a principal and portfolio manager at O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (1:21)
My guest this week is Ian Cassel, a microcap investor who is always on the lookout for tiny companies which are run by men and women who are what he calls intelligent fanatics. We discuss what Ian looks for in managers, why investors may want to consider microcap stocks as a category, and the advantages of a frugal approach to life. For show notes on this episode, visit investorfieldguide.com forward slash Ian. And now, please enjoy my conversation with Ian Cassel.
Well, Ian, thank you very much for doing this with me today. We're going to cover some interesting uncharted waters for the podcast, specifically the public microcap investing space, which will be a lot of fun, because obviously it's a part of the market that is probably not even a part of most people's portfolios.
It's a very small, the collective market cap of all microcaps is like one mega cap stock. So it's often the case that these companies are under covered.
But I want to start with this idea that you have, also titled book that you wrote called Intelligent Fanatics.
And maybe a fun way to do it since I just finished the book would be to read a quote from early in the book from one of these Intelligent Fanatics, his name was John Patterson, who some will be familiar with. I had heard the name, but I didn't know the story. And it's really well told in the book. He ran the National Cash Registrar Company. And this is from 1888 So this is a well-seasoned quote. He said, the business that is satisfied with itself, with its product, with its sales, which looks upon itself as having accomplished its purpose, is dead. The actual burial may be postponed, but it is dead because it is not going forward. To my mind, nothing can ever be good enough. I am always dissatisfied. I preach dissatisfaction. I can always see where something might be better, and therefore our business is never at rest. And I never want it to be. The throbbing heart of a business is the intense desire to do better. When that desire ceases, the heart stops beating. So pretty clear mission statement or character type from John Patterson. So maybe building off that, you could tell us how you came to the site, what it is, and how you came to this idea of an intelligent fanatic.

**Ian Cassel** (3:32)
Sure. I'd be happy to. And first, I just want to thank you for having me on the program. I'm a big fan of the podcasts, and it's obvious when you listen to some of your podcasts, the time and effort and energy that you put into making them. You can see it on the quality on the other side, so I appreciate it.
I would say that I first stumbled around the concept of intelligent fanatics when I was talking to my co-author, Sean Eddings. And the term intelligent fanatic was first used by Charlie Munger 10 or 20 years ago to really explain an exceptional entrepreneur, an exceptional founder, somebody that grew a business from something of insignificance to something that is significant. And oftentimes not dominating what they did, the market, the niche, the product category for one or two years, but ended up really being a market leader in what they did for decades, 20, 30, 40, 50 years.
And really it's the idea of going to see how they built these businesses, but really how they were able to sustain that competitive advantage for such a long period of time, which, as you and I both know, it's really hard to be a market leader, let alone sustain it for that period of time. And the reason I got so interested in that concept itself was just because I'm a microcap investor, I primarily am looking at small emerging companies. And the smaller the company, the more it is a bet on that founder and that management team's ability to execute. And so a lot of my time is spent evaluating founders and management teams of these small companies. And I really just wanted to dive in just for my own investment purposes to try to figure out what is there some commonalities that I can at least apply to my investing that will allow me to be able to find these intelligent fanatics that are running microcap companies sooner than other investors.