Bucket

On November 28, 2011 I read an article entitled, "Micro Cap Stocks with High Institutional Buying".  (The article is old and has been taken down now so the link is dead.)  The article mentioned eight micro cap stocks that hedge funds were buying up and adding to their portfolios.  Micro cap stocks are stocks of small companies that have market capitalization under $250 million.  In Jim Cramer's book, "Real Money:  Sane Investing in an Insane World", Cramer describes speculating by investing in "Buckets" of stocks.  A bucket of stocks is just a bunch of stocks that may be weak and chancy but when bunched together in a bucket they become less risky and the total bucket can become very profitable.  Cramer includes an example of a different bucket he actually traded in this book.  I took the micro cap stocks from the article I read and placed them into a bucket on November 28th 2011.  Since then I have been tracking their performance in a yahoo portfolio simulator, I did not buy any shares of any of the stocks.  Here are the results.

Symbol     11/28/11 Price     1/6/12 Price    =/- %
MNI               1.17                   2.41         +105.98%
ACW             5.90                   7.42          +25.76%
CIS                2.16                   2.80          +29.63%
DEPO            4.42                   5.48          +23.98%
GNOM          3.88                   3.71           -4.38%
MIPS             4.73                   4.92           +4.02%
SIFY              4.23                   4.23             0.00
ZIXI               2.50                   2.96          +18.40%

Overall Performance:  +25.42% 

So far this bucket is looking great.  You would need a literal bucket to catch all of the money made from this trade!  If you invested an even amount of capital into each of these stocks you would be up 25.42% in less than a month and a half.  It looks like the big money guys knew what they were doing with these stocks;  so far at least.  I looked at each of these stocks individually on November 28th and did not find much that I liked about most of them overall individually.  However, the next time I see that the institutional buyers are snapping up a large group of micro cap stocks and the overall market is in an uptrend I will keep this exercise and example in mind.

This kind of speculative stock investment bucket can be profitable.  It is better to form this type of bucket when the stock market is really hot and everything is rising.  ***PLEASE KEEP IN MIND***  This is an example of a SPECULATIVE investment.  I do not own any of the stocks that are listed in this example.  Please do research and understand the risks of investing if you are going to buy stocks.