Dean Fergie, portfolio manager with Cyan Investment Management, has been investing in small cap stocks for 20 years. He says he likes investing in small cap stocks because they can have strong growth prospects and are small enough to focus on growing one business line as opposed to being diversified across a number of more mature income streams like many larger companies.
Fergie is backing Skydive the Beach Group Ltd (ASX code: SKB) to do well. Skydive the Beach recently raised $15 million in part to fund the $10 million purchase of Skydive Wanaka, an operator of tandem skydiving at Wanaka in New Zealand, adding to two earlier acquisitions that should also drive revenue growth.
“‘They are basically consolidating a fragmented industry which is adventure tourism,” says Fergie. “It’s a scalable business.” He notes the company has little debt and is very profitable.