The Acquirers Podcast
Mark Cooper on Global Small Cap Value, AI and Managing Small Cap Long/Short at MAC Alpha | S08 E13
Why It Matters
Small‑cap value offers high upside but heightened risk; integrating AI and disciplined long/short tactics can improve risk‑adjusted returns, influencing fund strategies industry‑wide.
Key Takeaways
- •Small cap value outperforms in emerging markets.
- •AI enhances screening for undervalued micro‑caps.
- •MAC Alpha employs long/short to hedge volatility.
- •Global diversification reduces concentration risk.
- •Investor discipline remains core to success.
Pulse Analysis
Small‑cap value investing has long attracted contrarian investors seeking outsized returns, yet the segment is plagued by limited coverage, liquidity constraints, and heightened volatility. Traditional fundamental analysis often struggles to keep pace with the sheer number of micro‑cap issuers worldwide, leaving many opportunities undiscovered. By focusing on global markets, investors can tap into growth corridors where small enterprises benefit from emerging consumer trends and favorable regulatory environments, but they must also navigate currency risk and fragmented data sources.
Artificial intelligence is reshaping how managers identify undervalued small caps. Machine‑learning models can ingest alternative data—such as satellite imagery, web traffic, and supply‑chain signals—to flag anomalies that precede price movements. AI‑driven screening reduces manual bias, accelerates due‑diligence, and improves the precision of valuation metrics. However, successful deployment requires robust data pipelines, model validation, and safeguards against overfitting, especially when dealing with thinly traded securities where price impact can be significant.
MAC Alpha’s strategy blends AI‑enhanced quantitative screens with deep fundamental research, employing a long/short framework to mitigate market‑wide risk. The long leg targets high‑conviction, AI‑identified undervalued micro‑caps, while the short leg hedges sector or macro exposures that could erode performance. This balanced approach allows the fund to capture asymmetric upside while preserving capital during downturns. As more asset managers adopt similar hybrid models, the competitive landscape for small‑cap value is poised to evolve, rewarding firms that combine technological rigor with disciplined risk management.
Episode Description
Value: After Hours is a podcast about value investing, Fintwit, and all things finance and investment by investors Tobias Carlisle, and Jake Taylor.
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Hi, I'm Tobias Carlisle. I launched The Acquirers Podcast to discuss the process of finding undervalued stocks, deep value investing, hedge funds, activism, buyouts, and special situations.We uncover the tactics and strategies for finding good investments, managing risk, dealing with bad luck, and maximizing success.
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ABOUT TOBIAS CARLISLE
Tobias Carlisle is the founder of The Acquirer’s Multiple®, and Acquirers Funds®. He is best known as the author of the #1 new release in Amazon’s Business and Finance The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market, the Amazon best-sellers Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014) (https://amzn.to/2VwvAGF), Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012) (https://amzn.to/2SDDxrN), and Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors (2016) (https://amzn.to/2SEEjVn). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.Prior to founding the forerunner to Acquirers Funds in 2010, Tobias was an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer. As a lawyer specializing in mergers and acquisitions he has advised on transactions across a variety of industries in the United States, the United Kingdom, China, Australia, Singapore, Bermuda, Papua New Guinea, New Zealand, and Guam. He is a graduate of the University of Queensland in Australia with degrees in Law (2001) and Business (Management) (1999).
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