Nanocaps to Megacaps?

[schin]

Does anyone have examples of nano-caps or micro-caps that have been able to scale and eventually become mega caps?  I know many on here like to invest in nano-caps and micros and wanted to know if there are examples of them scaling?

 

I have a sneaky suspicion that they have limited TAMS (total addressable markets) and as such, might become small cap at best...but, never large or mega caps.  I wanted to know if the CoBF community knows of nanos and micros that have scaled?

[Fly]

MNST might be a possibility, but that seems to be the rare exception. Most mega caps are big tech and they started life as mid to large caps already. 

[schin]

2 hours ago, Fly said:

MNST might be a possibility, but that seems to be the rare exception. Most mega caps are big tech and they started life as mid to large caps already. 

 

@Fly - That's a good example.  I would possibly put National Beverage Corp ($FIZZ) in there too.  They don't all need to turn into mega caps.  But, at market caps of 1-3B, how many of us would put a significant amount of our net worth in them when they were 100M.  Can MNST/FIZZ be invested in now and keep compounding 20% and make it to a Coke or Pepsi size. And MNST/FIZZ are the outliers.

 

I wonder if most early stage companies need to have access to venture capital mentoring and networking to develop leadership meaningfully through Series A/B/C funding to actually make a legit IPO.

 

There's illiquidity and sub-scale on many of these micro/nanos that we, value investors, like..but, they rarely become the Charlie Munger/Coffee Can Investor/Phil Fisher/Nick Sleep/Nomad investments that compound for years.  We can point to See's Candle, but they have limited TAMs/great economics, become a BRK.A plug-in.  See's Candle is a proof of concept for Warren.... not necessarily meaningful in overall revenue then and now... He just needed to see what a good business could do.. but, it never became a Mars, Nestle, or Hersey type of company.  Maybe, nanos/micros are tailor made for spot acquisitions..... and as investors, we would never get enough equity in the acquiring company to get FU money.

 

There's some invisible ceiling that keep them all cigar butts from what I see.

[UK]

On 11/30/2025 at 7:00 AM, schin said:

Does anyone have examples of nano-caps or micro-caps that have been able to scale and eventually become mega caps?  I know many on here like to invest in nano-caps and micros and wanted to know if there are examples of them scaling?

 

I have a sneaky suspicion that they have limited TAMS (total addressable markets) and as such, might become small cap at best...but, never large or mega caps.  I wanted to know if the CoBF community knows of nanos and micros that have scaled?

 

Netflix?

[schin]

@UK - I'll take that... Again, Netflix was offered $50 million by Blockbuster and luckily declined.

 

Again, it takes a lot of faith to go all-in on Netflix back then.  I guess my strategy now for microcaps/nanos are for them to grow to small/mid/low large before I purchase.   It has to go through those stages and analysts coverage to "grow up".

 

I rather miss out on the first 2-5x on a microcap and catch the later 2-10x as they scale/grow.

[Sweet]

Could this really a question about when companies IPO?

 

Most of the biggest companies will have started small, but they probably wouldn’t have been public.

 

Amazon seems to be an exception, IPO’ing at approx. 500 million.  Google IPO’d at mid 20 bn and Facebook at 100 bn I think.

 

So for me, the question is why do so many of the nano caps which become monster caps IPO later?

 

Does that mean the best deals are in the private market?  ChatGPT could be one of those.

[schin]

@Sweet - Back in the 90s, 500 million was a lot of money. We only crossed the 1T mark a few years back. I remember the valuations of Amazon and Google -- they were not nano-caps. They had established management and clout. 

 

ChatGPT and SpaceX have huge valuations... Even fallen angels (stocks that fall below their IPO price) like Nubank, Coupang, and UiPath never become a nano or micro cap market. I think most of these stocks have large TAMs.

 

I don't even see microcap companies for small family businesses like Katz's Deli in NYC. Or Bucee's.... I never see the calibre of those local franchises in the nano/micro market.  If In'N Out or Raising Canes comes out, they will not be micro/nano. Someone will probably say Sweet Greens is a nano/micro (now), but it IPO'd higher... $CAVA and $BROS are not nano/micro cap...

 

Are nano/micros just lands of the misfits that become cigar butts, but maybe once in a blue moon, you get a Netflix.... just lottery ticket odds for investors.

Edited December 1, 2025 by schin

[winjitsu]

I would say if you go through the list of all time highest return stocks, you'll probably end up with the list that started off really small. O'relly Autoparts, Autozone, BRK, Roper, Monster etc etc.

 

Recently read through Santa Monica Partners Fund Letters and don't think any of his OTC stocks made it to mega cap, but there are a few that are mid cap. Great read and highly recommend it. 

 

1. BRK was OTC traded for a while, probably the only true one that made mega cap status
2. In the same vein Leucadia National
3. Bel Fuse BELFA/BELFB was OTC now Mid Cap
4. Balchem was OTC now around $5bn mc
5. Toys R US was trading OTC at one point in the 70s (httphttps://x.com/turtlebay_io/status/1867269217403515251?s=20)
6. International Speedway did pretty well (https://www.joekraymond.com/racing-to-riches/) 
7. Ubiquiti started off as a small cap

Edited December 1, 2025 by winjitsu

[sholland]

You are looking for stocks that went from $200M to $200B or more.  So I Googled 1000 baggers and found this.

[Saluki]

I think the point about nanocaps is that they probably won't stay nanocaps. Some are not great businesses and will eventually go private, go bankrupt or delist because their big idea didn't plan out, and others will now have access to the capital markets to periodically issue new shares to fund their growth. About 5 years ago Kraken Robotics was $0.25 a share and it's now $4. If the demand for seadrones wasn't a thing, they may still be less than a dollar and deserve that price. But the ability to sell shares to fund their expansion (or in other cases to do rollups, offer stock based compensation to talent etc.) works out. 

 

I find that with the nanocap stuff there is a lot of stuff that is "cool tech but no profits" such as HydroGraph or a certain plastics recycling company that a YouTuber promotes constantly. Add to the problem that many Canadian nano caps are paying people, like said YouTuber to promote their stock and they are not disclosing it. 

 

If you make a first cut and don't look at companies that aren't profitable, you will exclude 70% of the stuff out there, then you can spend your time looking at the more promising stuff. Even with $100mm limit you can find some winners eventually like TAYD or IPI which were doubles in a year. If you go smaller, like TBTC it's harder to find good information out there so the deal should be more attractive to make up for the lack of good intelligence and the liquidity. 

 

 

[Fly]

15 hours ago, Sweet said:

Could this really a question about when companies IPO?

 

Most of the biggest companies will have started small, but they probably wouldn’t have been public.

 

Amazon seems to be an exception, IPO’ing at approx. 500 million.  Google IPO’d at mid 20 bn and Facebook at 100 bn I think.

 

So for me, the question is why do so many of the nano caps which become monster caps IPO later?

 

Does that mean the best deals are in the private market?  ChatGPT could be one of those.

 

I think this is an interesting view and agree that private markets could be where the majority of 1000x opportunities lie. I haven't dipped into this realm yet, but maybe that is the future. 

 

[Ver]

Netease returned over 4000x 2002 - 2021, 56% annually. It's not a $200B company yet but in 2001-2002 was valued at 60% of its net cash soon after IPO. 

 

2001-2003 was a once in a several generation opportunity to buy some of the best companies in history at distressed valuations. Netease, Netflix, Amazon, Apple.

 

Walmart in 1974 is also in that category, valued at low to mid single digit earnings, very early on in its growth. It returned 3700x the next 25 years, almost 39% annually. 

 

But then again, who did allocate large quantities into these top companies when their future looked bleak, and stick with it after they've 10x'd or 100x'd? These companies were black sheep at the time; look at all the flak Bill Miller got for holding Amazon. Duan Yongping did put in 100% into Netease near the bottom in 2002 but even he sold in 2009 after 130-160x. It's an intriguing event to study and train for.

 

 

[Sweet]

10 hours ago, Fly said:

 

I think this is an interesting view and agree that private markets could be where the majority of 1000x opportunities lie. I haven't dipped into this realm yet, but maybe that is the future. 

 

 

How do you even go about private market investing, and hearing about these companies?

 

Seems to me you need an informational edge, key contacts, and a good amount of money.

 

Don't think anyone is going to be particularly interested in small sums.