Robert Maltbie Jr. – MicroCap Investing: Art of Finding the Uncovereds

In this Wall Street View, our host spoke with Robert Maltbie Jr., CFA, Managing Partner at Millennium Asset Management at Singular Research’s 9th Annual “Best of the Uncovereds” Conference 2014 in Bel Air, CA.

Robert M Maltbie, Jr, is a Managing Director of Millennium Asset Management and holds a controlling interest in the General Partnership. Robert began his career as an investment adviser with Morgan Stanley Dean Witter in 1988 and later joined Spear Financial in 1992 where he created and managed its equity research department. In 1994 Robert joined Salomon Smith Barney in Beverly Hills, California where he managed growth portfolios for private and institutional clients . He later founded Millennium Asset Management in 1999 and started its flagship fund Argonaut 2000 Partners, L.P. for accredited investors and institutions. Robert graduated from UCLA with a Bachelor of Arts degree in Political Science in 1981. He has also earned the Chartered Financial Analyst designation and is a member of the Association for Investment Management and Research. In this Wall Street View, our host spoke with Robert Maltbie, CFA, Managing Partner at Millennium Asset Management at Singular Research’s 9th Annual “Best of the Uncovereds” Conference 2014 in Bel Air, CA. Mr. Maltbie begins by explaining what types of investments Millennium Asset Management focuses on, “We invest in small and microcaps long, and we’re a hedge fund, and we short mid to large caps. We leverage a lot of the Singular Research research for our fund and we are long-term investors looking for the superior growth characteristics of companies that lack coverage as well, they are mispriced, misunderstood. So that’s what we do and we want to go along what we call the ‘lacker coverage anomaly companies’, companies that lack coverage, trade at 20-25% discount to those who do. We want to short those over-hyped, over researched, over coveraged stocks which is exactly the inverse of what we do on the long side.” Much like the lack of coverage on under-valued domestic companies, analysts might start to set their eyes overseas. Mr. Maltbie believes that the positive impact from IPO stocks such as Alibaba on, “small caps is other high-quality Chinese based companies that look very interesting. They’re cheap and under-followed as well with lack of research and so we’re looking at that. Now we think that will shine a light on the fact that China is legit this time and the accounting is much better and institutions will have more of an appetite.” He concludes with some comments for 2015 and beyond, “Over the long term, that’s how we really invest Shelly, is we’re always finding companies that are misunderstood for whatever reason, maybe they’ve had a problem and they fixed it – that’s usually a big reason and we try to get there early, the analysts have deserted it and it’s starting to work.” At the same time, he cautions investors in the near-term, “I’d be careful, the market has come up a long way. It looks like interest rates finally might rise a little bit and the economy is finally – here’s the confusion… the economy is getting better, why are stocks going down? And what a lot of people may not be aware of except for us in the smallcap/microcap space, it hasn’t been that great of a year.”