Revisiting Microcaps With 2 New Outperforms

Group 1: Microcap Market Overview - Microcaps have rallied nearly 20% over the last 2 months, contrasting with the flat performance of the S&P 500 [1] - Microcaps are sensitive to interest rates and macroeconomic conditions, with a notable valuation gap compared to large caps attracting investor interest [2] - Microcaps are approximately twice as volatile as large caps, which may deter risk-averse investors [3] Group 2: Interest Rate and Inflation Concerns - The primary risk for microcaps is the uncertainty surrounding interest rates, with concerns that inflation may resurface in 2026, potentially halting rate decreases by the Federal Reserve [4] - Factors such as tariff pass-throughs, tighter labor supply, and fiscal spending contribute to inflationary pressures that could impact rate policies [5] Group 3: Company Highlights - Motorsport Games Inc. (MSGM) is a racing video game developer with significant revenue growth and a high gross margin of 80% last quarter, indicating strong market reception [6][10] - Daily Journal Corporation (DJCO) has transitioned its focus from newspaper publishing to its software business, Journal Technologies, which now accounts for 80% of revenue and grew by 32% in the past fiscal year [11][12] - DJCO holds nearly $500 million in marketable securities, providing potential for acquisitions or further investment in growth [13]