What is Palm Beach Confidential?
A: Palm Beach Confidential is a subscription service in which we share picks that have the same criteria as other Palm Beach Research Group publications, but focus on smaller companies to generate higher returns. Most of these companies have market caps of less than $1 billion.
For this reason, PBRG Co-founder Tom Dyson and Editor Teeka Tiwari previously reserved these plays for their family and closest friends. But with the creation of Palm Beach Confidential, and thanks to its limited membership, we can now deliver these plays to you. In other words, you can now consider yourself part of our “inner circle” and one of our confidantes.
What are your criteria for picking companies?
A: The companies we recommend in Palm Beach Confidential have all the same characteristics as our regular Palm Beach Letter picks in terms of safety (great value, wide margin of safety, high cash flow, competitive moat, etc.). But these companies are too small to recommend to our entire subscriber base.
When you have more than 100,000 readers (and growing) acting on a stock recommendation, it could impact the trading volume of a stock by millions of shares.
Why do you focus on small caps?
A: Smaller companies are generally overlooked by most analysts. There are several reasons for this: There are more than 20,000 of them listed on the OTC markets alone, so vetting them requires a lot of work.
For big institutional investors, small caps are not worth the time or money. A $50-million company won’t affect the bottom line of multibillion-dollar companies such as Warren Buffett’s Berkshire Hathaway. The same rationale applies to certain funds, such as pensions and educational funds.
Smaller caps are generally more volatile than bigger companies, which scares off many potential investors.
However, at Palm Beach Confidential, we take advantage of the lack of interest in small caps. Meanwhile, we adhere to our safety metrics… which just means we get great assets at great values.
We have no problem venturing where others won’t. We love searching for diamonds in the rough, and there are many out there ready to provide us incredible returns.
What are the target returns of Palm Beach Confidential?
A: With the Palm Beach Confidential Portfolio, our goal is to outperform the market.
What other content may you send out between monthly issues?
A: We also publish market updates. We don’t stick to a set publishing schedule for them, however. If there is any significant action in the markets that affects our portfolio, Editor Teeka Tiwari will update you. He’ll also apprise you of his ongoing research and findings, any upcoming events or conferences he’ll be travelling to, and preview upcoming issues.
What is your typical holding period?
A: We will continue to hold a company until either our thesis of the company changes or the company hits its stop loss.
What is your risk-management strategy?
A: At PBRG, we love safety and hate risk. Our strategy, therefore, relies on picking stocks that have great value. We use stop losses to protect you from losing more money than you are willing to risk. We also use position sizing to minimize the amount of money you have at risk. Finally, we invest only in companies we understand, so we can spot potential problems earlier.
At PBRG, we take risk seriously. So, we’ve created a comprehensive asset allocation model to help you protect your money, as well as a strategy for risk management. Please make sure you are prepared to follow our guidelines.