When it comes to connecting potential investors with micro- and small-cap companies, Accredited Members Holding Corp. has been compared to a dating service.
One of less than a handful of publicly traded companies in Colorado Springs, Accredited Members (OTCBB: ACCM) is far better known outside the region than in it.
“They represent one of those companies in town that’s actively influential throughout the country but almost unknown locally,” said Chris Blees, CEO of BiggsKofford, one of the largest locally owned accounting firms in the city.
Rather than remaining that way, the company decided to relocate one of its conferences from Tucson, Ariz., to Colorado Springs in hopes of attracting local investors, as well as the many investors and around the nation who already attend their conferences.
J.W. Roth, chief executive, and David Lavigne, chief financial officer, founded Accredited in 2002.
For the first nine months of 2010, the company’s reported revenue was $1.75 million.
The holding corporation is the parent company of Accredited Members Inc., which researches micro- and small-cap companies for investors. The annual revenue range for micro-cap businesses is generally defined as between $50 million and $300 million, whereas the small-cap range is $300 million to $2 billion.
Neither of the co-founders is new to the investing world.
In the past two decades, Roth has founded or financed numerous startup companies, including the pharmaceutical firm AspenBio, the livestock verification service IMI Global and Cattlenetwork.com, a media company devoted to beef ranchers.
A research analyst, Lavigne has more than 25 years experience in the securities industry. He founded Edgewater Research Partners, the predecessor company of AMI. His proprietary research of small- and micro-cap companies includes background on the company, an industry overview, supply and pricing for the company’s products or services, a chronology of the company’s milestones, operating model, analysis, risk and caveats, ability to gain financing and more.
Access to such data can help investors make better-informed decisions, say industry insiders.
Not many investors may realize it, but micro-cap companies comprise 40 percent of publicly traded and fully reporting companies, according to Accredited’s website.
While there is an abundance of information for investors on larger companies traded on the New York Stock Exchange and Nasdaq, micro- and small-cap research is much less common. The smaller companies are less liquid than mid- and large-cap equities and therefore their share prices tend to be more volatile. They can trade 20 percent up or down in one day, without any good or bad news from the company driving the fluctuation.
Because of this stigma of volatility, investors often thoroughly research micro- and small-caps before buying these equities.
Therein lies the appeal of Accredited’s conferences. Investors in smaller companies often make investments based on people, Lavigne said.
“These investors tend to be pretty engaged with the people who run these companies,” he said.
Smaller companies, however, usually don’t have name recognition, and investors look to the experts to learn about companies in which they could potentially invest.
“Some of the most important companies in this country didn’t exist 20 years ago,” he said. “There was no Facebook, no Google. In 1984, Microsoft was just getting started.”
Along that same line, Lavigne said, 20 years from now, some of the biggest companies in the United States will be ones that don’t exist today.
“If you want to own the next Microsoft, you have to make that bet before it becomes (that successful),” Lavigne said.
The companies’ founders take their own advice.
In August, Accredited acquired Worldwide Premium Packers Inc., which has a licensing agreement for Pat Boone All-American Meats. The company sells meat products online for home delivery that it says are higher quality than can be purchased in a grocery store.
When the next opportunity arises, Lavigne and Roth intend to continue buying companies to add to their roster.
About 600 people are expected to attend the AMI Investment Research Conference, including accredited, micro-cap investors, buy-side institutions and sell-side industry professionals. The conference will be held March 7-8 at the Antlers Hilton.
About 16 executives will give a half-hour presentation about their companies, and there will also be an exhibition area set up for companies to meet individual investors. Actor, economist and author Ben Stein will be the keynote speaker. Some of the exhibitors include Nascar team Dale Jarrett Racing, the Chinese health care company Medical Care Technologies, the smokeless cigarette maker Vapor Corp., and StockVest, a private company similar to AMI.
Boone will also be on hand to showcase his company and its products.
When David Houle, portfolio manager and partner with the Colorado Springs investment firm of Mars Hill Partners, attends the AMI conference, he will only have to walk two blocks from his office.
Last year, he flew to San Diego to attend.
“The value I’ve gotten out of what they do is not only looking at the investments themselves, but the quality and amount of people I’ve been able to meet at their conferences,” said Houle.
“They put deals and opportunities in front of you wouldn’t otherwise have seen,” he said. “You’re not sure what they’ll put in front of you next, but you have the feeling it will be good.”
Blees of BiggsKofford said the conference he attended in September in San Diego was “the kind of thing you expect to be put to be put together by a New York firm or large investing company — it was very impressive.”
The conference appeals to people who invest in unique deals, he said, not mainstream investments.
“They do a good job of (getting people) an access to deal flow,” Blees said. “They’re really a matchmaking company for a market that’s difficult to make matches in.”
Headquarters: 2 N. Cascade Ave. (1st Bank Building) Suite 1400
Industry: Micro- to small-cap investment research, media
Founders: J.W. Roth, CEO; David Lavigne, chief financial officer
2010 financials *
Gross profit: $1.06 million
Operating expenses: $2.17 million
Net loss: 962,489
Ticker symbol: ACCM (over-the-counter market)
Worth noting: World Wide Premium Packers, a wholly owned subsidiary of AMHC, owns the brand, Pat Boone All-American Meats.
Source: CSBJ staff research, Securities and Exchange Commission * through September