To celebrate 10 years since the launch of the Planet MicroCap Podcast, I’m going back through our archives to share with you episodes of the podcast that either: garnered the most downloads/views in our history, stood out to me for the subject matter, the first appearances of regulars and/or that I think you’d really appreciate either re-visiting or for some of you, hearing/watching for the first time.
First up, I’m sharing my first conversation with Connor Haley from Alta Fox Capital Management. I believe this was around the time that he launched Alta Fox, and it was great timing to showcase his investing strategy and introduce the fund to our community. Connor has since gone on to have massive success with Alta Fox. This episode, both the audio and video versions, is one of the most watched/downloaded episodes we’ve put out there. We recorded this back in May of 2018, so I’m sure some aspects of Connor’s investing strategy and process has changed - keep that in mind.
Watch on YouTube:
Summary below:
I. Overview
This podcast episode features an interview with Connor Haley, founder and managing partner of Alta Fox Capital Management. Haley, who is also the number one ranked investor on microcapclub.com, shares his background, the reasons behind starting Alta Fox, and his detailed microcap investing philosophy. A key differentiator of Haley's approach is his significant focus on understanding and limiting downside risk while identifying high-quality businesses within the often low-quality microcap universe. He outlines a four-part investment process: search, valuation, sizing, and monitoring.
II. Key Themes and Ideas
Finding Edge in Microcaps
Haley was drawn to microcaps from a young age due to the inherent disadvantage faced by individual investors when competing with large funds in large-cap stocks. He recognized that microcaps often have limited research coverage and are restricted for larger funds, creating a potential edge for diligent investors. He cites successful investors like Joel Greenblatt, David Einhorn, and Warren Buffett who achieved their best returns in smaller-cap investments.
Focus on Quality Within a Low-Quality Universe
Haley's core belief is that while most microcap businesses and management teams are low-quality, a minority of very high-quality businesses can generate exceptional returns. His process is designed to find these exceptions and avoid the rest.
Prioritizing Downside Protection
A central tenet of Haley’s philosophy is focusing on downside protection. He believes that in microcaps, “there’s almost always an exciting growth story,” making it critical to prioritize the downside. Understanding and limiting downside risk allows for higher conviction and larger position sizing. He emphasizes that it is “really hard to come back from losses.”
The Importance of a Robust Search Process
Haley believes superior returns in microcaps come from a better search process. The market is relatively efficient at valuing companies with stable conditions, but less so where there’s uncertainty or complexity. He actively seeks companies that are hard for the market to value accurately.
Identifying Companies with Misunderstood Meaningful Change
He focuses on businesses undergoing significant, rapid change—such as new management, new business lines, or spin-offs—where the market has not yet understood the implications. These are often mispriced and represent opportunity.
Beyond Traditional Valuation
Haley prefers simple, intuitive valuations over complex models. He seeks businesses that are “fairly obviously undervalued” using a “back of the napkin” approach, focusing on three or four key drivers and applying bear, base, and bull case scenarios.
Emphasis on Management Quality and Incentives
He prioritizes management teams with strong capital allocation skills and proper incentives. Ideally, managers should own at least 5% of the company. He assesses both ownership and compensation structures to evaluate alignment with shareholder interests.
Continuous Monitoring
Haley emphasizes the importance of post-purchase monitoring. This includes not just speaking with management, but also gathering external data—such as customer reviews, interviews with former employees, and competitor analysis.
Discipline in Sizing
Position sizing is guided by rules to avoid overconcentration. Haley caps position size at 15–20% at cost. Sizing reflects conviction and is updated based on fundamentals, not emotions.
Patience with High-Quality Businesses
He aims to “find high-quality companies early and hold longer than anyone else.” His biggest mistakes, he notes, stem from selling great businesses too soon. He is more likely to sell cyclical companies than quality compounders that continue to perform.
Learning from Others (but Thinking Independently)
Haley values studying investment pitches from others (e.g., Value Investors Club) to develop pattern recognition. However, he stresses independent thinking and personal due diligence.
III. Important Facts and Quotes
Connor Haley is the founder and managing partner of Alta Fox Capital Management, a long/short hedge fund based in Fort Worth, Texas.
He was the #1 ranked investor on microcapclub.com at the time of the podcast.
Background includes internships at TheStreet.com and The Motley Fool, and roles at Goldman Sachs and a long/short hedge fund.
Previously ran a blog called thevariantview.com, profiling small and microcap investments.
Key Quotes
"Most small and microcap investments... are low-quality businesses."
"If you can limit the downside for a small cap company that's a high-quality business, there's always a good upside story to be told."
"The majority of superior returns… come from having a better search process."
He looks for companies "undergoing significant and rapid change" that the market has not yet fully analyzed.
High gross profits to tangible assets can signal scalable high-quality microcap businesses.
"50% of a stock’s move will be stock-specific; roughly 50% will be industry-specific."
Prefers management teams with at least 5% ownership (general guideline) and sound capital allocation skills.
Uses simple valuation models with three or four key drivers and scenario-based analysis (bear/base/bull).
Describes “misunderstood meaningful change” as a fertile ground for in-depth research.
Caps maximum position size at 15–20% at cost.
Holds typically 8–12 long positions in the fund.
Monitoring involves creative data-gathering techniques to be the first to detect change.
Buy criteria include:
High-quality business with sustainable competitive advantage and high returns on tangible capital.
Multi-year growth runway.
Incentivized management.
Downside protection (strong balance sheet or stable cash flow).
Cyclical companies at a trough.
"Masking effect" (hidden value).
A clear catalyst for price-value convergence.
Sell trigger: When a company stops executing.
Recommends Value Investors Club for building pattern recognition.
Encourages being an independent thinker.
Suggests new investors explore local companies for original research.
IV. Alta Fox Capital Management
Founded by: Connor Haley
Headquarters: Fort Worth, Texas
Focus: Small and microcap companies
Website: altafoxcap.com
Twitter: @AltafoxCapital
V. Advice for New Microcap Investors
Read widely (e.g., You Can Be a Stock Market Genius by Joel Greenblatt).
Study successful and unsuccessful investment ideas (e.g., on Value Investors Club).
Be an independent thinker; do your own due diligence.
Learn from your own investing experience.
Join communities, follow experienced investors—but always critique ideas.
Explore local companies for unique research opportunities.
Build simple models and understand key business drivers.
Planet MicroCap Podcast is on YouTube! All archived episodes and each new episode will be posted on the Planet MicroCap YouTube channel. I’ve provided the link in the description if you’d like to subscribe. You’ll also get the chance to watch all our Video Interviews with management teams, educational panels from the conference, as well as expert commentary from some familiar guests on the podcast.
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