Why International MicroCaps Are a Target-Rich Universe with Ben Finser, Fin Capital Management
Summary
Investment Focus: Ben Finser of Finn Capital Management emphasizes investing in international micro and small caps, highlighting a target-rich universe of approximately 15,000 companies in developed markets outside the US.
Market Inefficiencies: These international micro caps often lack sell-side coverage and have low trading volumes, presenting unique opportunities for investors willing to conduct thorough due diligence.
Due Diligence Process: Ben employs a boots-on-the-ground approach, traveling globally to meet management teams and assess business quality, while navigating cultural nuances to understand long-term growth potential.
Pseudoactivist Engagement: Ben engages with management teams to improve investor relations, expand outreach, and unlock value, often suggesting enhancements like English-language presentations and international roadshows.
Case Study: A Japanese procurement software company exemplifies Ben's strategy, where improved disclosures and strategic engagement led to increased investor interest and recognition of the company's value.
US Outperformance Cyclicality: Ben suggests that US market outperformance is cyclical, advocating for diversified portfolios that include international micro caps to capture potential growth outside the US.
Investment Criteria: Finn Capital targets high-quality businesses with proven models, structural growth potential, and those trading at a discount to fair value, focusing on companies that can sustain growth independently.
Networking and Collaboration: Ben values connecting with like-minded investors to share insights and facilitate introductions between companies and potential investors, enhancing the discovery process for undervalued businesses.
Transcript
This podcast is forformational purposes only and is not an offer or solicitation of an offer to buy or sell securities. SNN network, SNN Inc. and the Plano Microcap podcast and the representatives are not licensed brokers, broker dealers, market makers, investment bankers, investment adviserss, analysts, or underwriters. We do not recommend any companies discussed. We may buy and sell securities in any company mentioned and make profit in the event those securities rise in value. We recommend you consult with a professional investment advisor, broker, or legal counsel before purchasing or selling any securities referenced in this podcast. Welcome to the Planet Microap podcast. I'm your host, Robert Craft. Thank you all so much for the continued support and for tuning in. If you like what you hear on the Planet Microap podcast, please take a moment to rate us five stars on Spotify or Apple Podcast. It really helps folks discover the show and join the Micro Cap investing community. Registration is now open for the Planet of Micro Cap Showcase Toronto in partnership with Micro Cap Club happening October 21 through 23, 2025 at the Arcadian Loft in downtown Toronto. Whether you're a seasoned investor or just getting started, you'll want to be there. Please visit planetmapshowcase.com to register and I'll see you in Toronto. My guest on the show today is Ben Finzer. He's the founder and portfolio manager at Finn Capital Management. In this episode, Ben shares his journey from a decade at Kobuter Management to launching Finn Capital in 2024 and how his entrepreneurial background shaped his passion for analyzing and owning high-quality businesses. We dive into his exclusive focus on international micro and small caps, a target-rich universe of some 15,000 listed companies in developed markets outside the US. That explains why these overlooked businesses, often with no sellside coverage and tiny trading volumes, present compelling opportunities for investors willing to dig deeper. Ben also details his boots on the ground due to diligence process, including traveling globally to meet management teams, comparing companies to global peers, and navigating cultural nuances when assessing business quality and long-term growth. We talk about his quote unquote pseudoactivist engagement approach where he works alongside management to improve disclosures, expand investor outreach, and unlock value. Finally, Ben shares a case study of a Japanese procurement software company he helped bring onto investors radar and offers perspective on why US outperformance may be cyclical and why international micro caps deserve a place in more portfolios. And for full disclosure, uh, we mentioned a few names on the podcast today and I am not a shareholder in any of them. Thank you again for tuning in to the Planet Micro Cap podcast and please enjoy my conversation with Ben Fininszer of Finn Capital Management. Ben, thank you for joining me today. How you doing, man? >> Doing well. Thanks for having me, Robert. >> Absolutely. It's great to have you. So, first off, we have to do a quick shout out to Doug Porter for intro introducing us. So, thank you, Doug. Really do appreciate that. >> And uh, yeah, the Doug's the best. Like I think >> he really is >> universally uh universal approval like probably the nicest person and uh one one of if not the nicest person in our in our industry anyways. >> Absolutely. But um I'm glad he made the introduction because Ben, what obviously we're going to dig into, you know, your passion for investing, you know, your strategy and everything. But what I I thought was super interesting, you know, in doing the deep dives through your fund through your letters and philosophy and everything like that is you're really you're almost almost 100% focused pretty much outside North America. Um, so I I'm really curious about digging into that, your philosophy, your thesis behind that, as well as, you know, not the worst places in the world to do boots on the ground due diligence. Uh, that's that's for sure. So, you know, before we get into all the nitty-gritty, uh, Ben, to start us off, where your passion for investing begin and what how did that journey lead you to where you're currently at today with Finn? >> Yes. I I think my passion for investing really started with an interest in entrepreneurship and and business. So when when I was quite young, I started a number of small hobby businesses like when I was 11 or 12, I really wanted a new mountain bike. And so I um lived close to a bike path that was connected to the to the Golden Gate Bridge essentially. and hundreds of of cyclists would pass by on this bike path every weekend. Um, and so I asked my dad for for a loan and um got a $150 bike stand and some other equipment to clean chains. Um, and so I started off by um just cleaning change for chains for $5 per bike. And then I started doing other things like um changing flat tires, etc. And I was just really interested in um the power of of business and kind of um uh making money to uh to buy myself my my first mountain bike and kind of the power of that going from, you know, not having a bike to having a bike after just a few weekends of of starting this this business. And that transformed into a few other businesses like I started a gardening business. And in high school, I uh I brought um a healthy vending machine to my high school campus. And um and started that um business through the um through a student government group on on campus. And when I when I got to college, I um I started to think more seriously about investing because in large part it was just a great way for me to um to kind of tap into that curiosity about how business works and you know what drives higher quality businesses versus lower lower quality businesses. And so it it really started out as you know just a um kind of intellectual pursuit and just being interested in studying businesses. And so I did a few internships in college and um that actually led me to my first full-time position in Chicago. So I moved from California to Chicago right after graduating college and I stayed at that firm for over a decade and then left in 2023 to start my my own fund and it it was really that experience that exposed me to the opportunity set outside of the US. So this firm was focused on micro and small cap companies exclusively outside of the US. And >> which firm was it? >> Um Kabouter Management. They're based in in Chicago. >> Oh, wait. Which one? >> Kabouter Management. >> Oh, okay. Cool. >> Um yeah, and it was it it was a really amazing experience for me. I I started out as as an intern. I got a grant through my college to cover my living expenses for the summer. And so I was able to use that really as a tool to try to convince companies to hire me as as an intern. So I'd reach out and say, you know, you don't even have to pay me. I have all of my expenses covered. I I promise I won't screw up. Um and so I I started at Kabat first kind of a trial period month and that went into the whole summer and they asked me back for a second summer and then gave me a full-time offer after. And I really had an amazing experience there. Um really starting out as as an intern. I mean they um as an intern they sent me to to Europe to go on a research trip to find companies. I ended up finding a small German software reseller that you know is still in the portfolio today. Um and so yeah it it was really an amazing experience. That firm um grew quite a lot. Um and so it was um I I was able to experience the the growth of the firm and um how the the firm can transform. Um and then ultimately my my goal was always to start my own fund and so I left in 2023 and with the support of my boss and um one of the founders there um started the fund in May 2024. So um he was one of um my first investors in the fund and he's been an amazing mentor and I'm still close to many of my former colleagues and um and my my focus remains on international micro and small cap because I I really believe that that's one of the most exciting um spaces for a fundamental bottoms up investor globally. Um there are just few very few funds that actually stay focused on this space because in many ways it's kind of a self-cleansing asset class because all of the successful small cap fund managers they usually get a lot of capital after posting really good numbers for a number of years and then naturally they grow out of the space and with more capital they're unable to invest in the same micro cap companies. So it creates a lot of room for startup fund managers like myself to come in and take advantage of this small cap anomaly that that exists. Um so yeah it it um I you know started out as someone who was really interested in entrepreneurship and and business and that's still the case today. I mean I'm certainly not a trader. I'm a long-term investor. I like to identify really highquality businesses that I would love to own for a long period of time um and benefit from the pricing mismatch and often the opportunity that exists as a result of larger fund managers being unable to invest in a space >> 100%. So I want to dig into your opportunity set that you really is part of your core strategy with the fund and it's actually quite fascinating that you came from a place where you basically were doing that for 10 years and you're still excited about the same opportunity set. I'm just curious because in US micro caps and in Canadian North American like we've we go through these little cycles right where there's you know risk on risk off and you know you really see the micro cap space very much affected you know by certain you know volatility or especially more so in the last 5 years no no question about it but it it based on and and I'm still a noob when it comes to more international micro caps I've been diving it a bit more on the pod and talking to more folks about it, but it doesn't seem to have that same kind of I maybe it does and I'm just an idiot, but it doesn't see doesn't feel like it has that those same kind of eb and flows, especially gez, you've been doing this 10 plus years looking specifically at the same opportunity set. you know, while I'm sure there's some, you know, fluctuation volatility in amongst that opportunity set, it still still gets you going for 10 going on 10 plus years at this point. So, what about it is still so exciting and in some cases nent, you know, to the rest the you know, US focused investors who maybe have some exposure but are still mostly, you know, North American. >> Yeah, great question. It's it's such a target-rich universe. So my my focus is developed markets outside of the US. So even if you just use that constraint, there's something like 15,000 public listed companies in these markets outside of the US. So it is just such a target-rich environment where I I seem to never run out of um finding really interesting little undiscovered companies that have just been flying under the radar for a few years. And I think in part, you know, that's driven by a few different things. One is in North America, we've seen the number of listed companies decline by more than a half since the late '90s. And outside of the US, we've seen something very different happening. So I think outside of the US and developed markets, the number of listed companies has grown by about a third. But in some specific markets like Japan, the number of listed companies has doubled. And so in Japan alone, there are as many public companies as there are in the US. So I think it's um there are just so many companies to sift through and obviously you know a lot of these companies are not investable. um I you know have um really strict criteria but it creates a really interesting environment where you know I'm not choosing between you know 100 highquality micro caps in the US I'm choosing you know between over a thousand um depending on you know how I'm screening outside of the US um so yeah it's um there I think a number of other kind of structural drivers that create this inefficiency. So I think one is you know in the US we have Wall Street and the US is really a financial capital and you know one way to look at it is in the US the number of um sellside analysts per company is just far greater than outside of the US. Um I often find and I have many companies in the portfolio that have zero sellside analysts covering them and so um you know there uh there just isn't really a culture of capital markets um and you know you can look at various metrics including you know the local population exposure to local equity markets and in Europe you know in Germany a lot of people have their wealth in in cash bonds real estate um and exposure to the equity markets is not what it is here in the US. And so in many ways it was a blessing to grow up here in the US in you know a much more sophisticated capital market culture and then almost export that um analytical knowledge and practice outside of the US because inefficiency doesn't mean that every company is cheap. you know, in inefficiency can mean that a, you know, a little company is way too overvalued in in part because there's not enough cell sellside coverage to really um uh tame the enthus enthusiasm that, you know, could exist in the retail space, etc. But that inefficiency really creates an opportunity for um an investor like me to come in and make that determination, you know, whether a company is cheap and look at the company through the lens of a professional investor. >> Absolutely. I mean it's it's a very interesting opportunity set you know because I mean do for you do you think also I mean obviously you stay more in the developed countries right now but I mean from from the 12 how many what was it 15,000 from the 15,000 plus that you screen for you know then narrowing it what's what's some of your criteria for then narrowing it all down to maybe the few thousand or a couple hundred that you're like all right let's do the deep dive and then plan an amazing trip to go and see the company, you know, operations. >> Yes. I I try not to exclude um companies uh or too too many companies during my initial screens um because often and you know over the last 12 plus years I've just found that there can be companies that screen quite poorly but there's actually something really interesting and they turn out to be a really great investment. There can also be companies that screen incredibly well and I show up and um you know the company is not what I expected and so um I use criteria like market cap. So generally I'm looking for companies that are too small for many of the global funds to look at. So, you know, a lot of these global funds will have certain criteria like they won't look at companies that trade less than a million dollars in, you know, average daily traded value or um companies that are, you know, under uh a billion or under a couple billion in in market cap. And so I try to focus my efforts on smaller companies because those are the ones that these larger professional funds are just um unable to to analyze. Um and then I'll look at things like how the company has performed historically. So I think a misunderstanding um is often that you know these micro cap companies are startup businesses, but that's really not the case. Many of these companies have operated for decades and so and you know many of these companies have been listed for over a decade. So there's a lot of history to look back at reported financials to understand you know do they have a proven business model? How has the company performed during past economic downturns? I um run a really concentrated fund and so I'm looking for um some of the highest quality businesses that I can find and so some of the things that I'm looking for are how the company has performed over time. Um there are also kind of some some red lines like generally I won't invest in companies that have a levered balance sheet. So um you know it depends on the industry but generally I look for companies you know that have less than two times net debt to IBITa. So there are certain screens that um that that I can create there. And in in in large part, I'm I'm looking for companies that can finance their own growth and they're not reliant on, you know, bank financing in order to grow because often when um when things get tough and we face an economic downturn, many of the smaller companies are unable to continue to get this financing. And so I'm looking for companies that really can sustain that growth using their own resources, companies that are cash flow positive, companies that can use those cash flows to fund future growth. And so yeah, there are a number of different screening criteria, but in general, I try to leave a lot of um leeway to take a take a chance on companies and meet with them anyways just to understand, you know, is there something there that could be interesting. >> So what's your thoughts? you know since you do focus internationally like I've talked to a number of investors that you know maybe they're live in that certain country and it has its own you know capital markets infrastructure stock exchange publicly traded companies but they've straight up said like I do not touch them with a 10-ft pole not that they might be you know bad companies or anything like that but you know they just their main market is within country and it's a smaller population so they they don't see you know the the real growth in in those companies from your perspective when you're looking at these companies, do you tend to focus more on the ones that have a more global customer base or do you make exceptions or look also at companies that maybe are just specifically selling in country? >> Yeah, I I look at both. Um, >> it's interesting, by the way. I'm going to preface that by saying it's a uniquely American question because for us, like, you know, you say you're selling in the US, like, okay, yeah, >> even if you're just in the US, that's fine. That's 300 million people, like, you know, richest country in the world. But it's different when you're starting to look at some of these other countries that have smaller population sets, you know, that kind of thing. So, go, I apologize. >> Yeah. Uh I have some companies where the US is their largest um uh revenue source and then other companies that are totally focused on their domestic market. So it really depends. But I I do often find that sometimes the companies, you know, that are what some investors call analytical orphans. So, you know, they might be a software company in a local market that primarily has, you know, oil and gas businesses or mining companies or um or, you know, financials like, you know, Italy historically has had a lot of insurance companies, banks. Um so uh you know if if you're um some specialty industry and um you are growing quite quickly um sometimes the multiples can appear to you know trade at a premium to the local market and as a result the local investors think oh you know that stock is too expensive because it's trading at a premium to the local market not realizing that you know the local market has a really low multiple in part because it has lower quality businesses or businesses with more cyclical exposure or and so there can often be a lot of um I guess advantage that I can derive by being a global investor and comparing these local companies to global peers to try to understand what their fair value might be. And so I I love finding companies that really are global players in some niche industry and they're just not properly understood by the local investors. Um, you know, I've I've even had companies that um many years ago I I had a it's it's not in the portfolio today, but um I had a company that was listed in New Zealand, but 98% of its business was in the US, and local investors just didn't understand this business, and they weren't really able to wrap their head around the value to assign to this business. So I think being a global investor is really a big advantage in assessing what a company is worth and kind of coming up with a target multiple for you know eventually when these companies get discovered what would larger investors pay for a company with these characteristics. >> Absolutely. All right. So let's get into one of the main things I wanted to chat with you about. You know I I actually wasn't planning on it. you know, I was I figured we'd touch on it a little bit, but you know, you truly have a in really diving deep through your letters and everything is you have very much a heavy focus on boots on the ground research >> from your perspective. you know what when once you know you're taking active interest I'm not sure if you take if you take a little you know your process of you know uh your buying process maybe you take a little bit you buy a little bit and then go and do some I'm you can tell me but you know once what then entices you to then say okay it's time to go and check out this company you know meet management see what's going on and then from there once you made the decision you get there what are some of the criteria things that you're also looking for in order to both support the thesis and or break the thesis. >> Yes. Yeah, great question. So, um I start with screens and so I'm I'm doing screens at least quarterly um globally in in all of my markets trying to find potentially interesting companies. And so often what I'll do is I'll I'll do an initial screen. I'll add some um filters to it as like I mentioned before and then individually I'll just go through these companies to try to understand whether they could be interesting for the portfolio and if they if I think that they could I'll add them to a list of these companies and then my travel will be determined by the number of interesting companies in each of the countries that I'm visiting and then you If I'm planning a trip to Japan or to Italy, then I'll do another screen to to make sure that I I haven't missed any other potentially interesting companies. Um, and really what I'm looking for I think can be boiled down to just a few things. So one, I'm looking for companies that have a proven business model that have a highquality business model. So I measure that in a number of different ways like the percentage of the revenues that are recurring or you know the um the churn that a company has or um the um the historical performance of the business how the company's performed during past economic downturns or periods of um of heightened challenges. So quality of the business model is is one. Another one is trying to understand whether this company benefits from more structural growth or cyclical growth. So I'm looking for companies that benefit from a long lived growth theme. So it could be taking advantage of a demographic shift or a business culture change uh like an efficiency driver for example. And I'm trying to craft a story around why this company grew for the last few decades and why that growth will continue into the future. And so I'm really looking for structural growth. Um and then um lastly, I'm looking for companies that are trading at a discount to their fair value. So it could be, you know, a company is a um niche vertical software company and they um have high recurring revenues and um you know they're trading at half the multiple of a global peer set then that would be really attractive. So when I meet with companies, I'm really trying to um fill out that investment thesis during the meeting in real time. So I I always try to meet with the key strategic decision maker. So a lot of investors, I think when they meet with companies, they like to meet with the CFO to ask financial questions. A lot of my questions during the initial meeting are much more focused on the long-term strategy. So, usually when I meet with a management team, I try to understand the history. Um, so, you know, up until today, what were the key milestones and to try to put together the story of how the company was formed? What is their reason for being? Next, I try to understand the business today and their business model. So, you know, why do customers choose them over competitors or um you know, how were they able to continue to grow during the financial crisis while, you know, many companies in their local market saw revenues and profits decline? And then the third kind of um area of discussion is where do they see the business going in the future? So, what are some of the key opportunities that they're looking to exploit and um and uh what does the future look like through through their eyes? Um and usually I come into the meeting with my own idea of what the investment thesis will be. And so I'll often throughout the meeting just try to uh adjust that thesis and to really um relay back to management what I'm thinking and to get their feedback as well to understand yeah you know um maybe your total addressable market is larger than other investors think because you know not only can you expand your market share but you know you can expand your wallet share within existing customers you know let's try to quantify that potential. So um I'm I'm really in real time trying to update and to adjust that investment thesis and so many companies will you know turn out to be far more interesting than I thought but also a lot of these meetings um turn out to be um you know a total disaster and it's nothing um like I expected and so um you know I would say in a typical week if I meet with 20 companies maybe two or three of them are added to my um deep dive due diligence list after that and the rest you know I'm monitoring for something or I just determine that they're they're not interesting and I I won't focus on them anymore >> or wait for new management it sounds like in some respects >> I mean in some of those meetings and I mean I mean I'm sure for quite a few of these English is the second language and you know what's I'm curious as to some of the difficult ulties that you've experienced in some of these meetings where you're just, you know, you're trying to, you know, give your insights, give what you're thinking and it's met with maybe a cultural backlash that, you know, maybe you knew going in but you were like, I just I kind of have to, you know, put it forward like have you ever had that experience with management teams where, you know, it's just there was just a clear cultural difference that and that was why there was a misunderstanding. You don't have to name the name of the company or anything like that, but I I'm sure that's happened multiple times. >> Yeah, absolutely. I mean, each country is a little bit different, and I think that's where um you know, my experience from that first research trip I took when I was an intern in 2011. I think just over time, I've learned a lot about each of these markets. You know, in in Japan, my my first trip there to meet with companies was 2013. And I distinctly remember that a lot of the management team would say yes. Um and I didn't recognize until um after the trip that yes in Japanese doesn't mean yes I agree with you. It means yes I acknowledge what you just said but it's it's very different. And so, you know, use using an interpreter, they will translate, you know, um, yes. And I always need to follow up and, you know, if their answer is just yes, I need to follow up to make sure that they're not just acknowledging my statement or my question, but they're um, are they agreeing with me or not? Um, so there there are many examples like that. I think having a cultural um understanding of, you know, the nuances between different markets is is really helpful. Um in addition to being an American citizen, I'm I'm also a German citizen and um my family is European and I spent a lot of my childhood um in Europe. And so I think that um where that's particularly helpful is not actually as much with the language, but it's much more kind of with the general approach of, you know, understanding uh communication differences. There's a a great book called the culture map. I think that does a a great job kind of describing that, you know, each country has a different culture. And you know some some countries the management teams can be um you know very optimistic and bullish and you kind of need to take their statements with a grain of salt. In other markets you know they can be really understated. Um and so I think understanding each of these cultures and the differences is really important. And so I I think um having that cultural background was quite helpful because I'm I'm not showing up as you know an American assuming that each of these markets will communicate in the same way that other Americans communicate. And I I think I'm more easily able to adapt my communication approach to the local market and I'm more sensitive to some of those those differences. And so I think that's helpful during these initial meetings, but it's probably even more helpful when I'm engaging with these companies to try to help them as as as a partner later on once I'm a shareholder. >> We will definitely get to that and that's I'm really interested in that too. But real quick, I mean, you know, I'm sure you also came across this is, you know, I'm sure some of these companies also had a an impression like all right, who's this American fund manager? like what what you know America you know just a cowboy coming in or you know like I I'm sure that that's also something that you've had to at least have an awareness of that hey some of these companies might have a you know a bias not not necessarily bad or good or bad just you know they have a bias of you know American businessmen coming in to you know talk with them you know for whatever reason so have you come across those and then also part two of this question is how difficult ult has it been also to get some of these meetings. You know, sometimes it's hard to find who the right contact is or they think it might be BS, you know, you know, some American portfolio random portfolio manager coming to want to see us and see the facility. So, love to hear your thoughts on both. >> Yeah, I I think it often plays to my advantage that I'm, you know, based in the US and run a US-based fund that is looking overseas. um for a number of reasons. I I think one many European or Asian business leaders actually admire a lot of the public listed companies here in the US and I think in their eyes they um they view it as you know really positive signal that an American fund manager is even interested in their companies. Many of these companies listed, you know, over a decade ago and the local investment bankers promised them a lot. They said, you know, once you go public, you'll have, you know, access to the capital markets. Your cost of um funding will come down dramatically. You'll get all of this this interest. Um investors will love you. And in many cases, you know, their share price went nowhere or they didn't get the interest that they were promised. And so or >> there's no cultural differences amongst investment banks, you know, in the US or otherwise. That's that's hilarious. >> Totally. Yeah. I and I think many of them, you know, they might get attention from local investors, but I've even heard feedback that a lot of these local investors are sometimes overly focused on the short term or, you know, they might be focused more on the noise because they are there in the local market versus a lot of questions that they receive from foreign investors are much more focused on, you know, the long-term thematic opportunity, for example. Um, and so I actually get a lot of positive responses and I think it's easier for me to schedule meetings. Um, when I'm planning a trip, for example, let's say to Tokyo, um, I am there for a few weeks and I have, you know, that set those set dates and I find I'm able to get a lot of the meetings that I request. But what I hear from local investors is because they're already there in in Tokyo, the management team feels, you know, that they don't have to adjust their schedule in order to meet with those investors. So I often find that um, you know, they're very accommodating in part because I traveled so far to meet with them. And for local investors, I think sometimes it can actually be more challenging to get meetings or, you know, they might have to wait until the analyst meeting that's, you know, taking place in a month or something versus versus me. Um, so yeah, I I think um my experience meeting with these companies has been quite helpful. So, you know, I've met more than a 100 companies a year doing, you know, at least three or four international trips a year for the last 12 years. And so in many of these markets I'm already very familiar with these companies or you know I met an investor relations officer who worked at one company and now you know he or she has moved on to another company and um and so it it is quite a small universe or even amongst the sellside brokers you know they're they'll they'll move around to different different shops and they can also facilitate some of these introductions. I would say another way that I find it really helpful to meet meet with companies or even get introductions is through other investors. So I've built up a network of other local investors that focus in the micro cap space. Um so it might be a local family office or a small fund um a small mutual fund etc that is invested in um this company and um and they can facilitate an introduction. So, um, yeah, I I I actually find that being a foreigner, I think, is especially coming from the US is actually h has been a really big advantage. >> All right, that's awesome. All right, so now I want to get into um well definitely want to get into story time. I'm sure there's you have some great anecdotes of ones but I think even before that like I want to finish off the process and you know uh criteria strategy all that because I think the final leg of your stool is your emphasis on engagement you know you brought it up before I said we're definitely going to get to that here we are you know talking about basically your kind of pseudoactivism suggestivism so can you tell me a little bit more about how you engage these companies where you know it might be a little bit of a different conversation or is it not a different conversation? You know, how how much are these recommendations or suggest how are they meant, you know, versus maybe some of the more US the US-based CEOs that are probably very used to, you know, like, okay, yeah, you know, like they know how to respond to that. Maybe some of these CEOs aren't as, you know, um, used to getting these types of having these types of conversations. So, love to hear the whole philosophy and thought process there. >> Yes. Yeah. I'll um you know by by the time I invest many of these management teams um have really gotten to know me because I've visited their factories. I've met with them a number of times with other members of the management team. Um and often after I build a position I'll talk to the CEO and you know I'll say I have good news and bad news. Good news you know I I love your company. I think, you know, you've built an incredible moat. Um, you uh I I love the fact, you know, that you can continue to grow at, you know, this low double-digit rate. I think, you know, you could even accelerate that growth in the future. There's margin expansion potential, etc. So, you know, I'm I'm giving them my investment thesis. And um and I say, you know, but the bad news is no one else seems to recognize all of these amazing qualities about your business. And so let me help you to accelerate your rerating to fair value. And in many ways the management team is quite receptive to that because many of these CEOs they have a lot of skin in the game. you know, they might own 20% of the company themselves and they've been disappointed since their IPO that, you know, foreign investors have not discovered their companies or they um have been ignored by local investors. And so, um, I I think in many cases I'm one of the first investors to come to them and really to validate their thesis and to say, you know, I'm totally on board and I agree, you know, that you have this amazing business and so, um, let me help you get discovered. I'm not showing up like a traditional activist and, you know, slamming my fist on the table and saying, "Sell all of your real estate and lease it back or get rid of a particular division." Um the premise of my recommendations is is really you know you have this amazing business other investors should see that quality as well and they I think will pay a much higher multiple than your than your current multiple for you know this kind of earnings growth and and this this quality and so um the CEO um is is often really on board. I've I've only had one or two cases over my whole career where a company was not receptive to recommendations. But once I get that initial buyin, then I start with really lowhanging fruit. So I'll say something like, you know, you've built this amazing data business and your customers are global. Um, you know, you might have started out in France, but France is less than 10% of your business today. you know your Germany is your largest market etc but still your earnings calls are only held in in French um your presentation materials are only in French so it just becomes really difficult for German investors or Italian investors or you know American investors to discover your company when all of the materials are in a different language and it it it's really challenging to you know join an earnings call when you don't speak that that language language. And so really simple things like encouraging these companies to start holding quarterly um results calls in English or to start um publishing their presentation materials in English or you know to the extent that a company um uh has not visited investors outside of their local market to help a company plan an international road show. So, a lot of my advice is focused on investor relations and trying to get a company discovered by um by more investors. And so, it's very friendly advice and I think sometimes a management team can be skeptical, but what I've found is over time I am really able to prove myself as a valuable partner to these to these companies. And you know, I've used references before, like um companies in that same market that I've been working with for 10 plus years, and they might know each other. And so I might say, "Yeah, you know, you know, one of your peers that podcast that they went on in the US that, you know, helped them get discovered by Artisan or whatever." um you know I I made that introduction or I could um so I I I think having that experience can be really valuable in convincing companies to take my recommendation but it's it's also free advice. So you know my I I'm coming to them saying you know I'm in the same boat. Our interests are completely aligned. I'm a shareholder and if you follow these recommendations and if you um improve your presentation materials in the ways that I'm suggesting, we'll both win as a result. Um because many of these companies, they've you know traded on a low multiple um for a long time. And if they are able to achieve a market multiple for their company, their cost of capital will come down and they're able to do, you know, more of um uh of their strategy at a at a lower cost. Maybe they can um acquire a competitor using their shares. Maybe they can, you know, expand to a new facility, etc. So, um having a stock price that is aligned with the value of the business, I think, is really critical. And many of these management teams do understand that. I think many of them are just a little lost or they don't know exactly what investors are looking for. They're amazing at selling their product or service. And I always tell them, you know, in in many cases these introductory meetings are just the presentations that they're using are just a repurposed sales presentation. And so sometimes they'll get into the weeds on topics that customers care a lot about, but they won't touch on topics that investors um care a lot about. So, you know, investors would love to see that the customer relationship is quite sticky and that it's very difficult to switch to another supplier. That's not something you would have in your sales presentation or something you would advertise to a potential customer, but investors would love to hear that. And so I I I often really help these companies understand what investors are looking for and how to adapt their presentation to address those concerns or questions that investors have. And many of these companies don't realize that investors have a very short attention span, I think, and many investors have just a large universe of companies to look through. So if you're not spoonfeeding investors like analysts and portfolio managers the information that they need, if you make it too difficult for them to find that information, they'll just move on to another company. And so that's happening in many cases with with these businesses and I think over time they recognize that value and we many of these companies will start asking me questions outside of investor relations like you know they'll ask me um you know sometimes they'll say you know can we wall cross you like can can you become an insider for the next two weeks um you know where um you can advise us on whether to use our shares or debt for a new acquisition that we're planning to make or how do you think the market will perceive, you know, this action or we're thinking about implementing a new long-term incentive plan for our executives. What do you think about, you know, X, Y, and Z? And so, the advice that I provide can become much more strategic over time, especially when I prove myself with investor relations. >> I'll tell you right now, I think you're saving these companies a lot of money on IR and advisory services. That's for sure. Um, but yeah, no, look, you're definitely you're aligned, right? Like, you know, you're a large shareholder in many cases here and you just want to make sure that the company is properly presenting themselves in a universal language that speaks to every quality fund manager. So you know I'd love to hear an example. You know I mean we've been talking through strategy the pro I think now we're at that point where you know I'd love to hear of an example where you know full process you found it from the screen did some of your due diligence hit some of the metrics you went on a site visit were thoroughly impressed but maybe there are some things that you know you could help out with on the IR side and then you know ultimately you know they recognize some more value as a result of everything. Well just give us a full example. Love to hear one. Okay, great. Yeah, I think since um the fund is still small and still adding to positions, maybe I I won't mention it by name um but I I can kind of walk walk through what the company does and and the process. So um yeah, there's a company in Japan that um provides procurement software for large Japanese um customers. So these are, you know, the Toyotas of the world that have lots of sub subsidiaries themselves. And so what this company does is they help the procurement teams within these organizations um purchase products at better prices. So they have cost comparisons between you know Amazon and the local provider Monetaro or um you know many others. It could be directly to the supplier. So to help these companies choose the best price, but then also feed into their ERP system to um to uh purchase and account for all of these expenses. And so in many ways this helps reduce costs. This helps to reduce the number of employees that their customers need. Um and it the um the implementation um can take you know a year to 3 years. And so once these um customers decide to use this company, they they don't replace them. So they become fully embedded within their customers and their churn um you know is close to zero. They haven't lost a customer in the last 5 years. Um and once they embed themselves within one of these large customers, they're able to continue to grow by proving themselves in one subsidiary and then expanding to other subsidiaries. And so this company um was uh trading at a market cap less than $und00 million. And so you know foreign investors had not met with this company. Even a lot of local investors were not paying attention to it. And when I met with them for the first time in 2024, um they were really proud to show me that they had created an English presentation just for my just for our meeting. Um and so we spoke about the business, we spoke about the growth opportunities and I really tried to understand you know why is this company trading on such a low multiple for having you know um such sticky customer relationships to have such growth potential and I found that it was for a number of reasons. I mean one the company didn't have investor relations materials that described the growth opportunity. They didn't have materials that described the business model. And one of the challenges that they had is they had kind of this gross revenue net revenue issue where a lot of these products that were purchased went through revenues even though the you know their margin on those products is relatively low but they were really providing a software. And so um the net revenue was a much better figure to use. And so, you know, when local investors would screen this company, it looked like their their margins were like 2%. But in reality, they were much higher um because uh local investors were just using the wrong revenue figure. So you know there there can be a lot of um issues and I I think management the management was really frustrated that they um had not received the kind of recognition that they deserved. And so I helped them on a number of things including making recommendations to um to improve their um presentation materials to describe that their their business model so that investors could understand um you know the the value that they provide um including you know making certain disclosures around how sticky their customers were, how they hadn't lost a customer in 5 years. um what the growth potential was um translating these materials into English and just recently they they took a re recommendation to come up with a with a midterm plan. though you know um it can be one thing to say you know we have this huge TAM we have ex a potential for margin expansion but I think for a management team to come out and say you know this is our target in 3 years carries a different weight and so um they they they did that as well um and so uh as a result a lot of international investors started to um to discover this company local investors started to discover this company. Um, and so that's kind of a similar progression to many of the companies that I'm looking at where, you know, I find a business that could be potentially interesting. I meet with them and really discover that local investors are not recognizing the quality and the growth that exists in in this business. And if the management team just did a better job disclosing um their growth potential or their um the their business model, then investors would at some point discover the company. It's it's it's why I have such a long holding period because, you know, that discovery process can take a year or it can take, you know, five or six years. And so, um, my my goal is really to find highquality businesses that I would be comfortable owning for, you know, a decade even if they weren't discovered. And in the meantime, they're growing businesses. So, you know, I would continue to get their earnings growth and, you know, the dividend growth and that multiple rerating that could occur in year five, it could occur in year 7. You know, I'm I'm quite confident that at some point that will occur because there are, you know, these are great businesses and I I think at at some point foreign investors will discover that about these companies, but it can just be really difficult to predict when when when that will actually occur. I got a weird random question. Now that I've been doing a lot more interviews with either US focused now looking abroad or you know more international investors that you know are kind of sticking to their knitting you know when do you think because one thing I don't hear about as much I mean we hear about it with Canada where you might have some US competitors going pretty active in M&A it's slowed down a little bit but you know it has its fits and starts and it's always volatile but you really don't hear a lot about you know US or Canadian or North American either strategics or P firms terms or what have you looking at some of the inefficient micro cap international markets for potential acquisition opportunities for M&A. Why do you think that's the case and do you think that will ultimately change in the near term? Yeah, there has been some aversion in some markets to PE activity like in Germany for a long period of time. A lot of these um kind of middle market companies um often referred to as the German mitt. Um these the these companies were hesitant to sell to private equity because there had been a number of cases where private equity had taken over a business and then you know fired a large percentage of the population and you know often the founders um continued to live in the local market and you know they they care a lot about the continuation of their baby the the business that they formed and so they're looking for a responsible buyer. I I think that is starting to change and we are seeing some more PE activity or you know in markets like Japan a lot of the the big funds PE funds in the US have launched um Japan focused funds in the last couple years and so they they are looking at the market and I think there's just a ton of consolidation potential there are so many fragmented industries in Japan you know that have not been consolidated like they have in the US. And so I think the potential both for these foreign funds but also there's been growth in in domestic private equity funds as well. >> Right. Listen, I asked because you know in the main headlines you always see that it's the foreign uh companies coming in and buying up US companies to get you know US exposure but you r you haven't heard so much in the mainstream press about you know US international companies or US companies looking at some of these international whether it's middle market or large cap you know unless it's the for sale of Tik Tok which that's a whole other story. Um, >> yes. >> So, you know, look, we've covered so much here today and I there's a lot more, but I wanted to kind of close out on um kind of a two-parter. One is your kind of your forward outlook. I mean, you're clearly, you know, you're covering all these areas. You know, I don't know how much you're covering on the macro side. I'm not really asking that, but I guess more of like a, you know, what's kind of the economic situations or what areas are kind of becoming more interesting to you just based on your own bottoms up research. Um, and then part two, for those that maybe are kind of wanting to start to dip their toe in international micro caps, you know, what are some of, you know, best practices or things that you would recommend for them to do? Yeah, I I think um that uh maybe there are a number of ways that I can answer this. I I think one is um being a US investor, you know, there's a lot of home bias and if you look at the typical portfolio, you know, for a lot of institutions like, you know, endowments and foundations, a lot of their portfolio is uh concentrated on the US. And so I think that there's potential for more of that capital to um to show up elsewhere in the world because there are amazing companies that are listed all over the world. And I think um these local markets could really benefit from more interest and more capital flowing there. So you know we we saw that a bit with fund flows for in during the first half of this year. Um and I think a lot of institutional investors in the US are looking overseas at at opportunities that exist. Um I think many investors forget that um you know these capital flows are cyclical and um US outperformance that we've experienced since the financial crisis um you know is a cyclical phenomena and I I think you know that won't continue forever. It's, you know, there are fluctuations in the relative attractiveness of different markets. Even currencies um follow cyclical um uh fluctuations. And I so I I think you know we're very long into this US outperformance theme. Um and I think if you look historically the average period of US outperformance has been you know 7 to9 years and you know we're we've far exceeded that and so I think um you know it becomes incredibly difficult to predict um when that will change um but I think a lot of investors you know have done quite well if their portfolios have been focused on the US for the last decade plus. Um but going forward, you know, I think the US trades at um a much higher multiples than what you see in other developed markets outside of the US. And you know, some of that is for really good reason. Um but a lot of that is um you know, maybe just more of a cyclical dynamic. Um, but for for me, I'm I'm really looking bottoms up for great businesses that are undiscovered. And so, you know, I've experienced different cycles throughout my career. And I um I've never really ran out of interesting companies to find in large part because it is such a target-rich um space and there just so many companies to choose from. Um, and you know, I think there are many different ways to to play these markets. For me, I'm really looking for highquality businesses that can do well over a long period of time and have really proven themselves in the past. Um, and so I, you know, I think many of these companies that I'm identifying have already proven that they can do well during economic challenges. So you know um if a new tariff is is announced or you know if um if the local market is facing additional economic pressure. Many of these companies have proven themselves as you know providing a necessary product or service that continues to grow or continues to retain its customers during an economic downturn. So, I'm I'm very focused on quality and trying to find companies that um can withstand challenging periods because um I'm certainly not in a macro investor and I'm not in the business of you know predict predicting interest rate movements or economic growth. Um, and I'm really looking for companies, you know, that have maybe operated in a market where economic growth has been flat for a decade or um, you know, the the market um, in in Japan just you know um has uh has been quite flat for a long period of time. It hasn't been until recently um that, you know, there's been more interest in Japanese companies. But you know, a lot of investors have done very well in Japan by just picking some of these winners. Some of these companies that are under the radar will continue to grow their earnings and can benefit from an additional kicker of of a multiple rerating when other other investors discover them. So um yeah I I I think there are a lot of um you know interesting macro developments or thematic developments like you know I think AI will be very disruptive. I think you know the aging population creates both challenges and opportunities and across Europe and Japan. Um, you know, I I I think there being an investor in these foreign markets is a really um fascinating job because I think there are so many influences that can affect a company's growth opportunities, a company's um business model. And so I I find it really fascinating to be an investor in this space because you know every day I can wake up and you know read the economist or um you know read a blog and often you know what I'm reading relates to one of my companies or a company that I'm looking at and it becomes you know it's it's a it it's a fascinating job to um to try to you know have this curiosity and to try to understand the world and then have a way to you know put that knowledge into action through, you know, buying and selling these these companies. >> Hey, that all comes through clearly on today's pod and conversation. That's for dang sure. So, you know, Ben, with that, where can our audience go and find more information about you and Finn Capital Management? >> Um, yeah. So, I I'm on LinkedIn. Uh, so yeah, maybe that's that's the best place um to find me. Um, and uh, yeah, I I I love to connect with like-minded investors, both because um, when I'm engaging with a company, I like to make introductions between that company and prospective investors, but I also feel that having a network of like-minded investors is is helpful to run ideas past to learn from other investors. So, um, yeah, please feel free to reach out to me on on LinkedIn. Um, and it would be great to to connect. >> Awesome. Well, Ben, thank you so much for joining me today. Really do appreciate it. Good luck. Stay safe and I look forward to our next conversation. >> Likewise. Thank you, Robert. >> Thank you. [Music]
Why International MicroCaps Are a Target-Rich Universe with Ben Finser, Fin Capital Management
Summary
Transcript
This podcast is forformational purposes only and is not an offer or solicitation of an offer to buy or sell securities. SNN network, SNN Inc. and the Plano Microcap podcast and the representatives are not licensed brokers, broker dealers, market makers, investment bankers, investment adviserss, analysts, or underwriters. We do not recommend any companies discussed. We may buy and sell securities in any company mentioned and make profit in the event those securities rise in value. We recommend you consult with a professional investment advisor, broker, or legal counsel before purchasing or selling any securities referenced in this podcast. Welcome to the Planet Microap podcast. I'm your host, Robert Craft. Thank you all so much for the continued support and for tuning in. If you like what you hear on the Planet Microap podcast, please take a moment to rate us five stars on Spotify or Apple Podcast. It really helps folks discover the show and join the Micro Cap investing community. Registration is now open for the Planet of Micro Cap Showcase Toronto in partnership with Micro Cap Club happening October 21 through 23, 2025 at the Arcadian Loft in downtown Toronto. Whether you're a seasoned investor or just getting started, you'll want to be there. Please visit planetmapshowcase.com to register and I'll see you in Toronto. My guest on the show today is Ben Finzer. He's the founder and portfolio manager at Finn Capital Management. In this episode, Ben shares his journey from a decade at Kobuter Management to launching Finn Capital in 2024 and how his entrepreneurial background shaped his passion for analyzing and owning high-quality businesses. We dive into his exclusive focus on international micro and small caps, a target-rich universe of some 15,000 listed companies in developed markets outside the US. That explains why these overlooked businesses, often with no sellside coverage and tiny trading volumes, present compelling opportunities for investors willing to dig deeper. Ben also details his boots on the ground due to diligence process, including traveling globally to meet management teams, comparing companies to global peers, and navigating cultural nuances when assessing business quality and long-term growth. We talk about his quote unquote pseudoactivist engagement approach where he works alongside management to improve disclosures, expand investor outreach, and unlock value. Finally, Ben shares a case study of a Japanese procurement software company he helped bring onto investors radar and offers perspective on why US outperformance may be cyclical and why international micro caps deserve a place in more portfolios. And for full disclosure, uh, we mentioned a few names on the podcast today and I am not a shareholder in any of them. Thank you again for tuning in to the Planet Micro Cap podcast and please enjoy my conversation with Ben Fininszer of Finn Capital Management. Ben, thank you for joining me today. How you doing, man? >> Doing well. Thanks for having me, Robert. >> Absolutely. It's great to have you. So, first off, we have to do a quick shout out to Doug Porter for intro introducing us. So, thank you, Doug. Really do appreciate that. >> And uh, yeah, the Doug's the best. Like I think >> he really is >> universally uh universal approval like probably the nicest person and uh one one of if not the nicest person in our in our industry anyways. >> Absolutely. But um I'm glad he made the introduction because Ben, what obviously we're going to dig into, you know, your passion for investing, you know, your strategy and everything. But what I I thought was super interesting, you know, in doing the deep dives through your fund through your letters and philosophy and everything like that is you're really you're almost almost 100% focused pretty much outside North America. Um, so I I'm really curious about digging into that, your philosophy, your thesis behind that, as well as, you know, not the worst places in the world to do boots on the ground due diligence. Uh, that's that's for sure. So, you know, before we get into all the nitty-gritty, uh, Ben, to start us off, where your passion for investing begin and what how did that journey lead you to where you're currently at today with Finn? >> Yes. I I think my passion for investing really started with an interest in entrepreneurship and and business. So when when I was quite young, I started a number of small hobby businesses like when I was 11 or 12, I really wanted a new mountain bike. And so I um lived close to a bike path that was connected to the to the Golden Gate Bridge essentially. and hundreds of of cyclists would pass by on this bike path every weekend. Um, and so I asked my dad for for a loan and um got a $150 bike stand and some other equipment to clean chains. Um, and so I started off by um just cleaning change for chains for $5 per bike. And then I started doing other things like um changing flat tires, etc. And I was just really interested in um the power of of business and kind of um uh making money to uh to buy myself my my first mountain bike and kind of the power of that going from, you know, not having a bike to having a bike after just a few weekends of of starting this this business. And that transformed into a few other businesses like I started a gardening business. And in high school, I uh I brought um a healthy vending machine to my high school campus. And um and started that um business through the um through a student government group on on campus. And when I when I got to college, I um I started to think more seriously about investing because in large part it was just a great way for me to um to kind of tap into that curiosity about how business works and you know what drives higher quality businesses versus lower lower quality businesses. And so it it really started out as you know just a um kind of intellectual pursuit and just being interested in studying businesses. And so I did a few internships in college and um that actually led me to my first full-time position in Chicago. So I moved from California to Chicago right after graduating college and I stayed at that firm for over a decade and then left in 2023 to start my my own fund and it it was really that experience that exposed me to the opportunity set outside of the US. So this firm was focused on micro and small cap companies exclusively outside of the US. And >> which firm was it? >> Um Kabouter Management. They're based in in Chicago. >> Oh, wait. Which one? >> Kabouter Management. >> Oh, okay. Cool. >> Um yeah, and it was it it was a really amazing experience for me. I I started out as as an intern. I got a grant through my college to cover my living expenses for the summer. And so I was able to use that really as a tool to try to convince companies to hire me as as an intern. So I'd reach out and say, you know, you don't even have to pay me. I have all of my expenses covered. I I promise I won't screw up. Um and so I I started at Kabat first kind of a trial period month and that went into the whole summer and they asked me back for a second summer and then gave me a full-time offer after. And I really had an amazing experience there. Um really starting out as as an intern. I mean they um as an intern they sent me to to Europe to go on a research trip to find companies. I ended up finding a small German software reseller that you know is still in the portfolio today. Um and so yeah it it was really an amazing experience. That firm um grew quite a lot. Um and so it was um I I was able to experience the the growth of the firm and um how the the firm can transform. Um and then ultimately my my goal was always to start my own fund and so I left in 2023 and with the support of my boss and um one of the founders there um started the fund in May 2024. So um he was one of um my first investors in the fund and he's been an amazing mentor and I'm still close to many of my former colleagues and um and my my focus remains on international micro and small cap because I I really believe that that's one of the most exciting um spaces for a fundamental bottoms up investor globally. Um there are just few very few funds that actually stay focused on this space because in many ways it's kind of a self-cleansing asset class because all of the successful small cap fund managers they usually get a lot of capital after posting really good numbers for a number of years and then naturally they grow out of the space and with more capital they're unable to invest in the same micro cap companies. So it creates a lot of room for startup fund managers like myself to come in and take advantage of this small cap anomaly that that exists. Um so yeah it it um I you know started out as someone who was really interested in entrepreneurship and and business and that's still the case today. I mean I'm certainly not a trader. I'm a long-term investor. I like to identify really highquality businesses that I would love to own for a long period of time um and benefit from the pricing mismatch and often the opportunity that exists as a result of larger fund managers being unable to invest in a space >> 100%. So I want to dig into your opportunity set that you really is part of your core strategy with the fund and it's actually quite fascinating that you came from a place where you basically were doing that for 10 years and you're still excited about the same opportunity set. I'm just curious because in US micro caps and in Canadian North American like we've we go through these little cycles right where there's you know risk on risk off and you know you really see the micro cap space very much affected you know by certain you know volatility or especially more so in the last 5 years no no question about it but it it based on and and I'm still a noob when it comes to more international micro caps I've been diving it a bit more on the pod and talking to more folks about it, but it doesn't seem to have that same kind of I maybe it does and I'm just an idiot, but it doesn't see doesn't feel like it has that those same kind of eb and flows, especially gez, you've been doing this 10 plus years looking specifically at the same opportunity set. you know, while I'm sure there's some, you know, fluctuation volatility in amongst that opportunity set, it still still gets you going for 10 going on 10 plus years at this point. So, what about it is still so exciting and in some cases nent, you know, to the rest the you know, US focused investors who maybe have some exposure but are still mostly, you know, North American. >> Yeah, great question. It's it's such a target-rich universe. So my my focus is developed markets outside of the US. So even if you just use that constraint, there's something like 15,000 public listed companies in these markets outside of the US. So it is just such a target-rich environment where I I seem to never run out of um finding really interesting little undiscovered companies that have just been flying under the radar for a few years. And I think in part, you know, that's driven by a few different things. One is in North America, we've seen the number of listed companies decline by more than a half since the late '90s. And outside of the US, we've seen something very different happening. So I think outside of the US and developed markets, the number of listed companies has grown by about a third. But in some specific markets like Japan, the number of listed companies has doubled. And so in Japan alone, there are as many public companies as there are in the US. So I think it's um there are just so many companies to sift through and obviously you know a lot of these companies are not investable. um I you know have um really strict criteria but it creates a really interesting environment where you know I'm not choosing between you know 100 highquality micro caps in the US I'm choosing you know between over a thousand um depending on you know how I'm screening outside of the US um so yeah it's um there I think a number of other kind of structural drivers that create this inefficiency. So I think one is you know in the US we have Wall Street and the US is really a financial capital and you know one way to look at it is in the US the number of um sellside analysts per company is just far greater than outside of the US. Um I often find and I have many companies in the portfolio that have zero sellside analysts covering them and so um you know there uh there just isn't really a culture of capital markets um and you know you can look at various metrics including you know the local population exposure to local equity markets and in Europe you know in Germany a lot of people have their wealth in in cash bonds real estate um and exposure to the equity markets is not what it is here in the US. And so in many ways it was a blessing to grow up here in the US in you know a much more sophisticated capital market culture and then almost export that um analytical knowledge and practice outside of the US because inefficiency doesn't mean that every company is cheap. you know, in inefficiency can mean that a, you know, a little company is way too overvalued in in part because there's not enough cell sellside coverage to really um uh tame the enthus enthusiasm that, you know, could exist in the retail space, etc. But that inefficiency really creates an opportunity for um an investor like me to come in and make that determination, you know, whether a company is cheap and look at the company through the lens of a professional investor. >> Absolutely. I mean it's it's a very interesting opportunity set you know because I mean do for you do you think also I mean obviously you stay more in the developed countries right now but I mean from from the 12 how many what was it 15,000 from the 15,000 plus that you screen for you know then narrowing it what's what's some of your criteria for then narrowing it all down to maybe the few thousand or a couple hundred that you're like all right let's do the deep dive and then plan an amazing trip to go and see the company, you know, operations. >> Yes. I I try not to exclude um companies uh or too too many companies during my initial screens um because often and you know over the last 12 plus years I've just found that there can be companies that screen quite poorly but there's actually something really interesting and they turn out to be a really great investment. There can also be companies that screen incredibly well and I show up and um you know the company is not what I expected and so um I use criteria like market cap. So generally I'm looking for companies that are too small for many of the global funds to look at. So, you know, a lot of these global funds will have certain criteria like they won't look at companies that trade less than a million dollars in, you know, average daily traded value or um companies that are, you know, under uh a billion or under a couple billion in in market cap. And so I try to focus my efforts on smaller companies because those are the ones that these larger professional funds are just um unable to to analyze. Um and then I'll look at things like how the company has performed historically. So I think a misunderstanding um is often that you know these micro cap companies are startup businesses, but that's really not the case. Many of these companies have operated for decades and so and you know many of these companies have been listed for over a decade. So there's a lot of history to look back at reported financials to understand you know do they have a proven business model? How has the company performed during past economic downturns? I um run a really concentrated fund and so I'm looking for um some of the highest quality businesses that I can find and so some of the things that I'm looking for are how the company has performed over time. Um there are also kind of some some red lines like generally I won't invest in companies that have a levered balance sheet. So um you know it depends on the industry but generally I look for companies you know that have less than two times net debt to IBITa. So there are certain screens that um that that I can create there. And in in in large part, I'm I'm looking for companies that can finance their own growth and they're not reliant on, you know, bank financing in order to grow because often when um when things get tough and we face an economic downturn, many of the smaller companies are unable to continue to get this financing. And so I'm looking for companies that really can sustain that growth using their own resources, companies that are cash flow positive, companies that can use those cash flows to fund future growth. And so yeah, there are a number of different screening criteria, but in general, I try to leave a lot of um leeway to take a take a chance on companies and meet with them anyways just to understand, you know, is there something there that could be interesting. >> So what's your thoughts? you know since you do focus internationally like I've talked to a number of investors that you know maybe they're live in that certain country and it has its own you know capital markets infrastructure stock exchange publicly traded companies but they've straight up said like I do not touch them with a 10-ft pole not that they might be you know bad companies or anything like that but you know they just their main market is within country and it's a smaller population so they they don't see you know the the real growth in in those companies from your perspective when you're looking at these companies, do you tend to focus more on the ones that have a more global customer base or do you make exceptions or look also at companies that maybe are just specifically selling in country? >> Yeah, I I look at both. Um, >> it's interesting, by the way. I'm going to preface that by saying it's a uniquely American question because for us, like, you know, you say you're selling in the US, like, okay, yeah, >> even if you're just in the US, that's fine. That's 300 million people, like, you know, richest country in the world. But it's different when you're starting to look at some of these other countries that have smaller population sets, you know, that kind of thing. So, go, I apologize. >> Yeah. Uh I have some companies where the US is their largest um uh revenue source and then other companies that are totally focused on their domestic market. So it really depends. But I I do often find that sometimes the companies, you know, that are what some investors call analytical orphans. So, you know, they might be a software company in a local market that primarily has, you know, oil and gas businesses or mining companies or um or, you know, financials like, you know, Italy historically has had a lot of insurance companies, banks. Um so uh you know if if you're um some specialty industry and um you are growing quite quickly um sometimes the multiples can appear to you know trade at a premium to the local market and as a result the local investors think oh you know that stock is too expensive because it's trading at a premium to the local market not realizing that you know the local market has a really low multiple in part because it has lower quality businesses or businesses with more cyclical exposure or and so there can often be a lot of um I guess advantage that I can derive by being a global investor and comparing these local companies to global peers to try to understand what their fair value might be. And so I I love finding companies that really are global players in some niche industry and they're just not properly understood by the local investors. Um, you know, I've I've even had companies that um many years ago I I had a it's it's not in the portfolio today, but um I had a company that was listed in New Zealand, but 98% of its business was in the US, and local investors just didn't understand this business, and they weren't really able to wrap their head around the value to assign to this business. So I think being a global investor is really a big advantage in assessing what a company is worth and kind of coming up with a target multiple for you know eventually when these companies get discovered what would larger investors pay for a company with these characteristics. >> Absolutely. All right. So let's get into one of the main things I wanted to chat with you about. You know I I actually wasn't planning on it. you know, I was I figured we'd touch on it a little bit, but you know, you truly have a in really diving deep through your letters and everything is you have very much a heavy focus on boots on the ground research >> from your perspective. you know what when once you know you're taking active interest I'm not sure if you take if you take a little you know your process of you know uh your buying process maybe you take a little bit you buy a little bit and then go and do some I'm you can tell me but you know once what then entices you to then say okay it's time to go and check out this company you know meet management see what's going on and then from there once you made the decision you get there what are some of the criteria things that you're also looking for in order to both support the thesis and or break the thesis. >> Yes. Yeah, great question. So, um I start with screens and so I'm I'm doing screens at least quarterly um globally in in all of my markets trying to find potentially interesting companies. And so often what I'll do is I'll I'll do an initial screen. I'll add some um filters to it as like I mentioned before and then individually I'll just go through these companies to try to understand whether they could be interesting for the portfolio and if they if I think that they could I'll add them to a list of these companies and then my travel will be determined by the number of interesting companies in each of the countries that I'm visiting and then you If I'm planning a trip to Japan or to Italy, then I'll do another screen to to make sure that I I haven't missed any other potentially interesting companies. Um, and really what I'm looking for I think can be boiled down to just a few things. So one, I'm looking for companies that have a proven business model that have a highquality business model. So I measure that in a number of different ways like the percentage of the revenues that are recurring or you know the um the churn that a company has or um the um the historical performance of the business how the company's performed during past economic downturns or periods of um of heightened challenges. So quality of the business model is is one. Another one is trying to understand whether this company benefits from more structural growth or cyclical growth. So I'm looking for companies that benefit from a long lived growth theme. So it could be taking advantage of a demographic shift or a business culture change uh like an efficiency driver for example. And I'm trying to craft a story around why this company grew for the last few decades and why that growth will continue into the future. And so I'm really looking for structural growth. Um and then um lastly, I'm looking for companies that are trading at a discount to their fair value. So it could be, you know, a company is a um niche vertical software company and they um have high recurring revenues and um you know they're trading at half the multiple of a global peer set then that would be really attractive. So when I meet with companies, I'm really trying to um fill out that investment thesis during the meeting in real time. So I I always try to meet with the key strategic decision maker. So a lot of investors, I think when they meet with companies, they like to meet with the CFO to ask financial questions. A lot of my questions during the initial meeting are much more focused on the long-term strategy. So, usually when I meet with a management team, I try to understand the history. Um, so, you know, up until today, what were the key milestones and to try to put together the story of how the company was formed? What is their reason for being? Next, I try to understand the business today and their business model. So, you know, why do customers choose them over competitors or um you know, how were they able to continue to grow during the financial crisis while, you know, many companies in their local market saw revenues and profits decline? And then the third kind of um area of discussion is where do they see the business going in the future? So, what are some of the key opportunities that they're looking to exploit and um and uh what does the future look like through through their eyes? Um and usually I come into the meeting with my own idea of what the investment thesis will be. And so I'll often throughout the meeting just try to uh adjust that thesis and to really um relay back to management what I'm thinking and to get their feedback as well to understand yeah you know um maybe your total addressable market is larger than other investors think because you know not only can you expand your market share but you know you can expand your wallet share within existing customers you know let's try to quantify that potential. So um I'm I'm really in real time trying to update and to adjust that investment thesis and so many companies will you know turn out to be far more interesting than I thought but also a lot of these meetings um turn out to be um you know a total disaster and it's nothing um like I expected and so um you know I would say in a typical week if I meet with 20 companies maybe two or three of them are added to my um deep dive due diligence list after that and the rest you know I'm monitoring for something or I just determine that they're they're not interesting and I I won't focus on them anymore >> or wait for new management it sounds like in some respects >> I mean in some of those meetings and I mean I mean I'm sure for quite a few of these English is the second language and you know what's I'm curious as to some of the difficult ulties that you've experienced in some of these meetings where you're just, you know, you're trying to, you know, give your insights, give what you're thinking and it's met with maybe a cultural backlash that, you know, maybe you knew going in but you were like, I just I kind of have to, you know, put it forward like have you ever had that experience with management teams where, you know, it's just there was just a clear cultural difference that and that was why there was a misunderstanding. You don't have to name the name of the company or anything like that, but I I'm sure that's happened multiple times. >> Yeah, absolutely. I mean, each country is a little bit different, and I think that's where um you know, my experience from that first research trip I took when I was an intern in 2011. I think just over time, I've learned a lot about each of these markets. You know, in in Japan, my my first trip there to meet with companies was 2013. And I distinctly remember that a lot of the management team would say yes. Um and I didn't recognize until um after the trip that yes in Japanese doesn't mean yes I agree with you. It means yes I acknowledge what you just said but it's it's very different. And so, you know, use using an interpreter, they will translate, you know, um, yes. And I always need to follow up and, you know, if their answer is just yes, I need to follow up to make sure that they're not just acknowledging my statement or my question, but they're um, are they agreeing with me or not? Um, so there there are many examples like that. I think having a cultural um understanding of, you know, the nuances between different markets is is really helpful. Um in addition to being an American citizen, I'm I'm also a German citizen and um my family is European and I spent a lot of my childhood um in Europe. And so I think that um where that's particularly helpful is not actually as much with the language, but it's much more kind of with the general approach of, you know, understanding uh communication differences. There's a a great book called the culture map. I think that does a a great job kind of describing that, you know, each country has a different culture. And you know some some countries the management teams can be um you know very optimistic and bullish and you kind of need to take their statements with a grain of salt. In other markets you know they can be really understated. Um and so I think understanding each of these cultures and the differences is really important. And so I I think um having that cultural background was quite helpful because I'm I'm not showing up as you know an American assuming that each of these markets will communicate in the same way that other Americans communicate. And I I think I'm more easily able to adapt my communication approach to the local market and I'm more sensitive to some of those those differences. And so I think that's helpful during these initial meetings, but it's probably even more helpful when I'm engaging with these companies to try to help them as as as a partner later on once I'm a shareholder. >> We will definitely get to that and that's I'm really interested in that too. But real quick, I mean, you know, I'm sure you also came across this is, you know, I'm sure some of these companies also had a an impression like all right, who's this American fund manager? like what what you know America you know just a cowboy coming in or you know like I I'm sure that that's also something that you've had to at least have an awareness of that hey some of these companies might have a you know a bias not not necessarily bad or good or bad just you know they have a bias of you know American businessmen coming in to you know talk with them you know for whatever reason so have you come across those and then also part two of this question is how difficult ult has it been also to get some of these meetings. You know, sometimes it's hard to find who the right contact is or they think it might be BS, you know, you know, some American portfolio random portfolio manager coming to want to see us and see the facility. So, love to hear your thoughts on both. >> Yeah, I I think it often plays to my advantage that I'm, you know, based in the US and run a US-based fund that is looking overseas. um for a number of reasons. I I think one many European or Asian business leaders actually admire a lot of the public listed companies here in the US and I think in their eyes they um they view it as you know really positive signal that an American fund manager is even interested in their companies. Many of these companies listed, you know, over a decade ago and the local investment bankers promised them a lot. They said, you know, once you go public, you'll have, you know, access to the capital markets. Your cost of um funding will come down dramatically. You'll get all of this this interest. Um investors will love you. And in many cases, you know, their share price went nowhere or they didn't get the interest that they were promised. And so or >> there's no cultural differences amongst investment banks, you know, in the US or otherwise. That's that's hilarious. >> Totally. Yeah. I and I think many of them, you know, they might get attention from local investors, but I've even heard feedback that a lot of these local investors are sometimes overly focused on the short term or, you know, they might be focused more on the noise because they are there in the local market versus a lot of questions that they receive from foreign investors are much more focused on, you know, the long-term thematic opportunity, for example. Um, and so I actually get a lot of positive responses and I think it's easier for me to schedule meetings. Um, when I'm planning a trip, for example, let's say to Tokyo, um, I am there for a few weeks and I have, you know, that set those set dates and I find I'm able to get a lot of the meetings that I request. But what I hear from local investors is because they're already there in in Tokyo, the management team feels, you know, that they don't have to adjust their schedule in order to meet with those investors. So I often find that um, you know, they're very accommodating in part because I traveled so far to meet with them. And for local investors, I think sometimes it can actually be more challenging to get meetings or, you know, they might have to wait until the analyst meeting that's, you know, taking place in a month or something versus versus me. Um, so yeah, I I think um my experience meeting with these companies has been quite helpful. So, you know, I've met more than a 100 companies a year doing, you know, at least three or four international trips a year for the last 12 years. And so in many of these markets I'm already very familiar with these companies or you know I met an investor relations officer who worked at one company and now you know he or she has moved on to another company and um and so it it is quite a small universe or even amongst the sellside brokers you know they're they'll they'll move around to different different shops and they can also facilitate some of these introductions. I would say another way that I find it really helpful to meet meet with companies or even get introductions is through other investors. So I've built up a network of other local investors that focus in the micro cap space. Um so it might be a local family office or a small fund um a small mutual fund etc that is invested in um this company and um and they can facilitate an introduction. So, um, yeah, I I I actually find that being a foreigner, I think, is especially coming from the US is actually h has been a really big advantage. >> All right, that's awesome. All right, so now I want to get into um well definitely want to get into story time. I'm sure there's you have some great anecdotes of ones but I think even before that like I want to finish off the process and you know uh criteria strategy all that because I think the final leg of your stool is your emphasis on engagement you know you brought it up before I said we're definitely going to get to that here we are you know talking about basically your kind of pseudoactivism suggestivism so can you tell me a little bit more about how you engage these companies where you know it might be a little bit of a different conversation or is it not a different conversation? You know, how how much are these recommendations or suggest how are they meant, you know, versus maybe some of the more US the US-based CEOs that are probably very used to, you know, like, okay, yeah, you know, like they know how to respond to that. Maybe some of these CEOs aren't as, you know, um, used to getting these types of having these types of conversations. So, love to hear the whole philosophy and thought process there. >> Yes. Yeah. I'll um you know by by the time I invest many of these management teams um have really gotten to know me because I've visited their factories. I've met with them a number of times with other members of the management team. Um and often after I build a position I'll talk to the CEO and you know I'll say I have good news and bad news. Good news you know I I love your company. I think, you know, you've built an incredible moat. Um, you uh I I love the fact, you know, that you can continue to grow at, you know, this low double-digit rate. I think, you know, you could even accelerate that growth in the future. There's margin expansion potential, etc. So, you know, I'm I'm giving them my investment thesis. And um and I say, you know, but the bad news is no one else seems to recognize all of these amazing qualities about your business. And so let me help you to accelerate your rerating to fair value. And in many ways the management team is quite receptive to that because many of these CEOs they have a lot of skin in the game. you know, they might own 20% of the company themselves and they've been disappointed since their IPO that, you know, foreign investors have not discovered their companies or they um have been ignored by local investors. And so, um, I I think in many cases I'm one of the first investors to come to them and really to validate their thesis and to say, you know, I'm totally on board and I agree, you know, that you have this amazing business and so, um, let me help you get discovered. I'm not showing up like a traditional activist and, you know, slamming my fist on the table and saying, "Sell all of your real estate and lease it back or get rid of a particular division." Um the premise of my recommendations is is really you know you have this amazing business other investors should see that quality as well and they I think will pay a much higher multiple than your than your current multiple for you know this kind of earnings growth and and this this quality and so um the CEO um is is often really on board. I've I've only had one or two cases over my whole career where a company was not receptive to recommendations. But once I get that initial buyin, then I start with really lowhanging fruit. So I'll say something like, you know, you've built this amazing data business and your customers are global. Um, you know, you might have started out in France, but France is less than 10% of your business today. you know your Germany is your largest market etc but still your earnings calls are only held in in French um your presentation materials are only in French so it just becomes really difficult for German investors or Italian investors or you know American investors to discover your company when all of the materials are in a different language and it it it's really challenging to you know join an earnings call when you don't speak that that language language. And so really simple things like encouraging these companies to start holding quarterly um results calls in English or to start um publishing their presentation materials in English or you know to the extent that a company um uh has not visited investors outside of their local market to help a company plan an international road show. So, a lot of my advice is focused on investor relations and trying to get a company discovered by um by more investors. And so, it's very friendly advice and I think sometimes a management team can be skeptical, but what I've found is over time I am really able to prove myself as a valuable partner to these to these companies. And you know, I've used references before, like um companies in that same market that I've been working with for 10 plus years, and they might know each other. And so I might say, "Yeah, you know, you know, one of your peers that podcast that they went on in the US that, you know, helped them get discovered by Artisan or whatever." um you know I I made that introduction or I could um so I I I think having that experience can be really valuable in convincing companies to take my recommendation but it's it's also free advice. So you know my I I'm coming to them saying you know I'm in the same boat. Our interests are completely aligned. I'm a shareholder and if you follow these recommendations and if you um improve your presentation materials in the ways that I'm suggesting, we'll both win as a result. Um because many of these companies, they've you know traded on a low multiple um for a long time. And if they are able to achieve a market multiple for their company, their cost of capital will come down and they're able to do, you know, more of um uh of their strategy at a at a lower cost. Maybe they can um acquire a competitor using their shares. Maybe they can, you know, expand to a new facility, etc. So, um having a stock price that is aligned with the value of the business, I think, is really critical. And many of these management teams do understand that. I think many of them are just a little lost or they don't know exactly what investors are looking for. They're amazing at selling their product or service. And I always tell them, you know, in in many cases these introductory meetings are just the presentations that they're using are just a repurposed sales presentation. And so sometimes they'll get into the weeds on topics that customers care a lot about, but they won't touch on topics that investors um care a lot about. So, you know, investors would love to see that the customer relationship is quite sticky and that it's very difficult to switch to another supplier. That's not something you would have in your sales presentation or something you would advertise to a potential customer, but investors would love to hear that. And so I I I often really help these companies understand what investors are looking for and how to adapt their presentation to address those concerns or questions that investors have. And many of these companies don't realize that investors have a very short attention span, I think, and many investors have just a large universe of companies to look through. So if you're not spoonfeeding investors like analysts and portfolio managers the information that they need, if you make it too difficult for them to find that information, they'll just move on to another company. And so that's happening in many cases with with these businesses and I think over time they recognize that value and we many of these companies will start asking me questions outside of investor relations like you know they'll ask me um you know sometimes they'll say you know can we wall cross you like can can you become an insider for the next two weeks um you know where um you can advise us on whether to use our shares or debt for a new acquisition that we're planning to make or how do you think the market will perceive, you know, this action or we're thinking about implementing a new long-term incentive plan for our executives. What do you think about, you know, X, Y, and Z? And so, the advice that I provide can become much more strategic over time, especially when I prove myself with investor relations. >> I'll tell you right now, I think you're saving these companies a lot of money on IR and advisory services. That's for sure. Um, but yeah, no, look, you're definitely you're aligned, right? Like, you know, you're a large shareholder in many cases here and you just want to make sure that the company is properly presenting themselves in a universal language that speaks to every quality fund manager. So you know I'd love to hear an example. You know I mean we've been talking through strategy the pro I think now we're at that point where you know I'd love to hear of an example where you know full process you found it from the screen did some of your due diligence hit some of the metrics you went on a site visit were thoroughly impressed but maybe there are some things that you know you could help out with on the IR side and then you know ultimately you know they recognize some more value as a result of everything. Well just give us a full example. Love to hear one. Okay, great. Yeah, I think since um the fund is still small and still adding to positions, maybe I I won't mention it by name um but I I can kind of walk walk through what the company does and and the process. So um yeah, there's a company in Japan that um provides procurement software for large Japanese um customers. So these are, you know, the Toyotas of the world that have lots of sub subsidiaries themselves. And so what this company does is they help the procurement teams within these organizations um purchase products at better prices. So they have cost comparisons between you know Amazon and the local provider Monetaro or um you know many others. It could be directly to the supplier. So to help these companies choose the best price, but then also feed into their ERP system to um to uh purchase and account for all of these expenses. And so in many ways this helps reduce costs. This helps to reduce the number of employees that their customers need. Um and it the um the implementation um can take you know a year to 3 years. And so once these um customers decide to use this company, they they don't replace them. So they become fully embedded within their customers and their churn um you know is close to zero. They haven't lost a customer in the last 5 years. Um and once they embed themselves within one of these large customers, they're able to continue to grow by proving themselves in one subsidiary and then expanding to other subsidiaries. And so this company um was uh trading at a market cap less than $und00 million. And so you know foreign investors had not met with this company. Even a lot of local investors were not paying attention to it. And when I met with them for the first time in 2024, um they were really proud to show me that they had created an English presentation just for my just for our meeting. Um and so we spoke about the business, we spoke about the growth opportunities and I really tried to understand you know why is this company trading on such a low multiple for having you know um such sticky customer relationships to have such growth potential and I found that it was for a number of reasons. I mean one the company didn't have investor relations materials that described the growth opportunity. They didn't have materials that described the business model. And one of the challenges that they had is they had kind of this gross revenue net revenue issue where a lot of these products that were purchased went through revenues even though the you know their margin on those products is relatively low but they were really providing a software. And so um the net revenue was a much better figure to use. And so, you know, when local investors would screen this company, it looked like their their margins were like 2%. But in reality, they were much higher um because uh local investors were just using the wrong revenue figure. So you know there there can be a lot of um issues and I I think management the management was really frustrated that they um had not received the kind of recognition that they deserved. And so I helped them on a number of things including making recommendations to um to improve their um presentation materials to describe that their their business model so that investors could understand um you know the the value that they provide um including you know making certain disclosures around how sticky their customers were, how they hadn't lost a customer in 5 years. um what the growth potential was um translating these materials into English and just recently they they took a re recommendation to come up with a with a midterm plan. though you know um it can be one thing to say you know we have this huge TAM we have ex a potential for margin expansion but I think for a management team to come out and say you know this is our target in 3 years carries a different weight and so um they they they did that as well um and so uh as a result a lot of international investors started to um to discover this company local investors started to discover this company. Um, and so that's kind of a similar progression to many of the companies that I'm looking at where, you know, I find a business that could be potentially interesting. I meet with them and really discover that local investors are not recognizing the quality and the growth that exists in in this business. And if the management team just did a better job disclosing um their growth potential or their um the their business model, then investors would at some point discover the company. It's it's it's why I have such a long holding period because, you know, that discovery process can take a year or it can take, you know, five or six years. And so, um, my my goal is really to find highquality businesses that I would be comfortable owning for, you know, a decade even if they weren't discovered. And in the meantime, they're growing businesses. So, you know, I would continue to get their earnings growth and, you know, the dividend growth and that multiple rerating that could occur in year five, it could occur in year 7. You know, I'm I'm quite confident that at some point that will occur because there are, you know, these are great businesses and I I think at at some point foreign investors will discover that about these companies, but it can just be really difficult to predict when when when that will actually occur. I got a weird random question. Now that I've been doing a lot more interviews with either US focused now looking abroad or you know more international investors that you know are kind of sticking to their knitting you know when do you think because one thing I don't hear about as much I mean we hear about it with Canada where you might have some US competitors going pretty active in M&A it's slowed down a little bit but you know it has its fits and starts and it's always volatile but you really don't hear a lot about you know US or Canadian or North American either strategics or P firms terms or what have you looking at some of the inefficient micro cap international markets for potential acquisition opportunities for M&A. Why do you think that's the case and do you think that will ultimately change in the near term? Yeah, there has been some aversion in some markets to PE activity like in Germany for a long period of time. A lot of these um kind of middle market companies um often referred to as the German mitt. Um these the these companies were hesitant to sell to private equity because there had been a number of cases where private equity had taken over a business and then you know fired a large percentage of the population and you know often the founders um continued to live in the local market and you know they they care a lot about the continuation of their baby the the business that they formed and so they're looking for a responsible buyer. I I think that is starting to change and we are seeing some more PE activity or you know in markets like Japan a lot of the the big funds PE funds in the US have launched um Japan focused funds in the last couple years and so they they are looking at the market and I think there's just a ton of consolidation potential there are so many fragmented industries in Japan you know that have not been consolidated like they have in the US. And so I think the potential both for these foreign funds but also there's been growth in in domestic private equity funds as well. >> Right. Listen, I asked because you know in the main headlines you always see that it's the foreign uh companies coming in and buying up US companies to get you know US exposure but you r you haven't heard so much in the mainstream press about you know US international companies or US companies looking at some of these international whether it's middle market or large cap you know unless it's the for sale of Tik Tok which that's a whole other story. Um, >> yes. >> So, you know, look, we've covered so much here today and I there's a lot more, but I wanted to kind of close out on um kind of a two-parter. One is your kind of your forward outlook. I mean, you're clearly, you know, you're covering all these areas. You know, I don't know how much you're covering on the macro side. I'm not really asking that, but I guess more of like a, you know, what's kind of the economic situations or what areas are kind of becoming more interesting to you just based on your own bottoms up research. Um, and then part two, for those that maybe are kind of wanting to start to dip their toe in international micro caps, you know, what are some of, you know, best practices or things that you would recommend for them to do? Yeah, I I think um that uh maybe there are a number of ways that I can answer this. I I think one is um being a US investor, you know, there's a lot of home bias and if you look at the typical portfolio, you know, for a lot of institutions like, you know, endowments and foundations, a lot of their portfolio is uh concentrated on the US. And so I think that there's potential for more of that capital to um to show up elsewhere in the world because there are amazing companies that are listed all over the world. And I think um these local markets could really benefit from more interest and more capital flowing there. So you know we we saw that a bit with fund flows for in during the first half of this year. Um and I think a lot of institutional investors in the US are looking overseas at at opportunities that exist. Um I think many investors forget that um you know these capital flows are cyclical and um US outperformance that we've experienced since the financial crisis um you know is a cyclical phenomena and I I think you know that won't continue forever. It's, you know, there are fluctuations in the relative attractiveness of different markets. Even currencies um follow cyclical um uh fluctuations. And I so I I think you know we're very long into this US outperformance theme. Um and I think if you look historically the average period of US outperformance has been you know 7 to9 years and you know we're we've far exceeded that and so I think um you know it becomes incredibly difficult to predict um when that will change um but I think a lot of investors you know have done quite well if their portfolios have been focused on the US for the last decade plus. Um but going forward, you know, I think the US trades at um a much higher multiples than what you see in other developed markets outside of the US. And you know, some of that is for really good reason. Um but a lot of that is um you know, maybe just more of a cyclical dynamic. Um, but for for me, I'm I'm really looking bottoms up for great businesses that are undiscovered. And so, you know, I've experienced different cycles throughout my career. And I um I've never really ran out of interesting companies to find in large part because it is such a target-rich um space and there just so many companies to choose from. Um, and you know, I think there are many different ways to to play these markets. For me, I'm really looking for highquality businesses that can do well over a long period of time and have really proven themselves in the past. Um, and so I, you know, I think many of these companies that I'm identifying have already proven that they can do well during economic challenges. So you know um if a new tariff is is announced or you know if um if the local market is facing additional economic pressure. Many of these companies have proven themselves as you know providing a necessary product or service that continues to grow or continues to retain its customers during an economic downturn. So, I'm I'm very focused on quality and trying to find companies that um can withstand challenging periods because um I'm certainly not in a macro investor and I'm not in the business of you know predict predicting interest rate movements or economic growth. Um, and I'm really looking for companies, you know, that have maybe operated in a market where economic growth has been flat for a decade or um, you know, the the market um, in in Japan just you know um has uh has been quite flat for a long period of time. It hasn't been until recently um that, you know, there's been more interest in Japanese companies. But you know, a lot of investors have done very well in Japan by just picking some of these winners. Some of these companies that are under the radar will continue to grow their earnings and can benefit from an additional kicker of of a multiple rerating when other other investors discover them. So um yeah I I I think there are a lot of um you know interesting macro developments or thematic developments like you know I think AI will be very disruptive. I think you know the aging population creates both challenges and opportunities and across Europe and Japan. Um, you know, I I I think there being an investor in these foreign markets is a really um fascinating job because I think there are so many influences that can affect a company's growth opportunities, a company's um business model. And so I I find it really fascinating to be an investor in this space because you know every day I can wake up and you know read the economist or um you know read a blog and often you know what I'm reading relates to one of my companies or a company that I'm looking at and it becomes you know it's it's a it it's a fascinating job to um to try to you know have this curiosity and to try to understand the world and then have a way to you know put that knowledge into action through, you know, buying and selling these these companies. >> Hey, that all comes through clearly on today's pod and conversation. That's for dang sure. So, you know, Ben, with that, where can our audience go and find more information about you and Finn Capital Management? >> Um, yeah. So, I I'm on LinkedIn. Uh, so yeah, maybe that's that's the best place um to find me. Um, and uh, yeah, I I I love to connect with like-minded investors, both because um, when I'm engaging with a company, I like to make introductions between that company and prospective investors, but I also feel that having a network of like-minded investors is is helpful to run ideas past to learn from other investors. So, um, yeah, please feel free to reach out to me on on LinkedIn. Um, and it would be great to to connect. >> Awesome. Well, Ben, thank you so much for joining me today. Really do appreciate it. Good luck. Stay safe and I look forward to our next conversation. >> Likewise. Thank you, Robert. >> Thank you. [Music]