Picking the best microcap stocks involves more about really understanding the underlying operations of the business, not about hype or what the mob thinks. I admire analysts’ work but it gets pretty boring for me looking at blue chip stock analyst reports that follow a certain template. You can approach looking at a microcap stock in any number of different ways and there is no right or wrong. It’s a more qualitative process more than anything else.
This is one of the reasons I truly enjoy analyzing and investing in microcap stocks. More important in my experience of microcap companies are looking at the capability of Management, the idea/product – can it scale and is it innovative, and is the business’s operation robust or are they amateurs without a proper system in place? The business might not be breaking even yet but have been working on an innovative idea that could disrupt the industry. The company might be at the cusp of an explosive growth. How I Analyzed the BusinessĪs a microcap analyst, analyzing the financials of the business is not as important. Since 2007 when they started lending to real estate investors, the company has closed ~620 loans and *knock on wood* there has not been one default on the loans. Currently they have ~120 loans outstanding. The loans are currently charged at 11% – 14% interest rate. Small/New Construction Projects single and multi-units.The loan-to-value is a conservative 75% and 80% for construction costs. The company apparently has as rigorous due diligence as the big banks but the approval of the loan is much much quicker at 3 to 10 business days. Manhattan Bridge Capital lends typically in the range of $300,000 – $600,000 for 12 months (often with extensions) to real estate investors developing residential or commercial buildings in the New York metropolitan area.Įvery loan is secured with a first lien on the building and a personal guarantee from the borrower, which may or may not include the borrower’s equity interest in the real estate project. When the Jewish yellowpages business wasn’t performing as well as it used to, Ran started lending to businesses, and when he saw that this was a more profitable business, Ran pivoted the company completely to lending in the niche of short-term lending to real estate investors in metropolitan New York. And so the story really begins in 2008, ironically, a great year to really launch a lending business.ĭespite many challenges MBC went through over the years, I appreciate that Ran is a scrappy entrepreneur who wouldn’t let his business fall by the wayside. In 2008, the company reported that its lending operation was the most profitable, so Ran changed the name from DAG Media to Manhattan Bridge Capital and listed on NASDAQ under the symbol LOAN. In 2007, the company started a lending operation, allocating $5 million lending to businesses. Ran started a Jewish yellow pages publication company known as DAG Media. The company was founded by Assaf Ran in his basement in Queens in 1989. So, is Manhattan Bridge Capital stock worth it? First, The Business There aren’t layers of complex operations but rather, what you see is what you get which is good because there are only few factors that could go wrong to drive the business into the ground, but on the same token, there isn’t blue sky upside. short-term lending to real estate development investors with real estate as collateral) in the New York metropolitan area. The business is lean and very simple – a hard money lender (i.e. It’s a small group, really a one-man band.
But it passed my initial sniff test, so I decided to look past the unprofessional looking website.įrom learning more about the company, the aesthetics match my analysis of the company. I have to say that at first glance of their website, I was completely put off. The first company I am adding to the official portfolio is Manhattan Bridge Capital (NASDAQ:LOAN).
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