Hot News, News, Reverse Mergers, Small & Mid Cap Markets, Trends, Wall Street

Whither the Small Caps?

I am headed to Vancouver to speak at the American Bar Association’s spring meeting on “hot securities law issues for small companies.” As many of you know, the bulk of my law practice involves representing small and middle market companies, both public and private, in a variety of transactions and matters. I help take companies public through nontraditional means such as reverse mergers, which is the subject of my 2006 book. Thus, I care a great deal about the state of the small and midcap markets, representing many thousands of smaller public companies, any one of which could be the next Microsoft or Google.

Without a lot of data, so far the smallcap stocks have been performing as you might expect in the latest craziness. They tend to drop faster when things are bad and rise faster when things are good compared with the largecap stocks. They did so in the crash this past fall and rose faster than the Dow in the last month or so.

So what does this mean? American investors still believe in the longterm potential rewards to be had in betting on entrepreneurial growth companies. It is also good whenever the market behalves pretty much as expected, which brings less uncertainty.

It also means that financings and other activities for these companies, that had come to a virtual halt, could indeed commence, and have done so a bit already. Anecdotally I can tell you that we are looking at a number of potential projects that did not exist even a month ago.

Signs of hope in a Spring that still frustratingly feels like Winter!