Often in the investing world, we read the sentence "small is better", coupled with some quotes by Warren Buffett advocating the thesis that investing in Small Caps would provide higher returns in the future. According to your experience, is that true? Do Micro Caps and Small Caps provide an advantage over the more prominent companies?
In my experience (I invest almost exclusively in the software & b2b professional service industry), I see several interesting companies in the microcaps space.
Companies with <50M EUR market cap, good financials, and healthy growth.
They would be a no-brainer investment, but usually, it takes years to see these opportunities discovered (and then appreciated) by institutional investors.
Therefore, I wonder if it makes sense - and if it's not a better strategy - to focus on companies between 100M EUR and 500M EUR as a market cap. Usually, they have been already discovered by the very first institutional investors, which means that stocks are not completely illiquid like the above-mentioned Nano Caps. I also see mispricing in this stage.
What is your opinion on this point?
