A Hedgehog Commentary

Penny Stock and Small Cap Resources

2/20/98 - Since we started our new Small Cap and Penny Stock page, we've been getting a lot of questions about where to find info on these issues. To help all those readers, we're devoting this commentary to a discussion of some of the online sources to use for investigating these issues. There are links to all these sites on our Useful Links page under our Small Cap Info section; I'm too lazy to recreate the links here so if you want to check out any of these sites, go to that page.

Let's start though with some warnings. I rarely invest in stocks that can legitimately be considered penny stocks. Only one stock in the Hedgehog Portfolio qualifies, Norton Industries, and it hasn't done that well for us. Therefore, the first two sites to check out are cautionary. The Better Business Bureau site at www.bosbbb.org/lit/0051.htm has a letter discussing penny stock fraud; mosl.sos.state.mo.us/soc-sec/penstk.html provides a penny stock guide for beginners with a discussion of fraud. If you're going to get ripped off in stocks, it will almost certainly be in penny stocks. Check out your choices carefully.

To find lists of what penny stock and small cap issues are out there depends in part on what you're looking for. Stocks on the NASDAQ Small Cap index can be tracked easily in any number of papers, including the Wall Street Journal. For NASDAQ OTC BB issues (which are not actually listed on the NASDAQ and do not meet their requirements) as well as some of the stocks listed on the four Canadian exchanges, you might start with the Investor Research Center. The IRC provides end of day results for a number of these companies.

For analysis, research, and quotes, there are a number of sites available. Smallcapinvestor.com provides quotes, reviews, analysis, and links to a number of small cap companies' home pages. While I was impressed with their site, I did a little followup on an evaluation they did of a company called Tech Electro (TELE). They described it as a Berkshire Hathaway in the making. Frankly, I found that to be ludicrous (to me, TELE looked more like a company that wasn't cutting it in their traditional business so was trying to become a holding company for other businesses); I'd approach their analysis with caution. They have a sister site, Stock Detective, that investigates instances of small cap fraud by individual companies and brokers.

Other sources for small cap analysis include: Internetstockmarket.com, which hosts web sites for a number of penny stock companies; Nextwavestocks, which provides reviews of small caps with a focus on tech stocks; and Westergaard Online, a newsletter for small caps.

A lot of penny stocks are listed on Canadian stock exchanges. Canada Stockwatch provides a bunch of info on Canadian issues, but a lot of it isn't free. Energy On The Net provides analysis of energy related companies with an emphasis on Canadian issues. Stockscape examines mining stocks with an emphasis on Canadian issues; they also provide quotes on Canadian stocks. For foreign penny stocks in general, you may want to check out Pennystock.com.

This is by no means an inclusive list. There are probably a lot of other resources available. If you have any you'd like to share, you can post them on our Critical Mass Discussion Forum, or you can actually link them to our site on our Free For All Links page (go to our Useful Links page and connect from there).

Commercial: If you want to read more about small caps, check out our online bookstore for a selection of books on these topics.