The Motley Fool

3 Founder Led Small Caps I Would Buy Right Now

There’s no shortage of articles about the latest hot stock or sizzling meltdown.

But when it comes to investing, it’s important to find some companies you can trust for the long term. Far too often when investors get burned, management still make the big bucks. That’s why I like to invest in companies that are led by their founders — especially if those founders have a lot of skin in the game.

In fact, I like these three companies so much that I have already bought shares in them, and I currently own each of these stocks.

Without further ado…

MNF Group Ltd (ASX: MNF) — provider of VOIP software and telecommunications

MNF Group is led by Rene Sugo who co-founded the company with Andy Fung. Even though the pair have sold some shares in recent years, they still remain well-aligned with shareholders. Further, the management team has shown an ability to adapt to business conditions and flexibly seek opportunity. For that reason, even though the shares are not conventionally cheap, I still think it’s worth adding a small amount of MNF Group shares to your portfolio for the long term.

Pro Medicus Ltd (ASX: PME) — provider of radiology software

I’ve heard a bear thesis for Pro Medicus — that the company just got lucky with an acquisition, and now it’s massively overvalued.

Well, there’s no doubt that there’s luck involved with any success story, and if you want to buy shares in the unlucky companies, be my guest. However, I’m usually mightily annoyed off when I invest in unlucky companies. As for valuation, Pro Medicus is on a high multiple, but it is also growing revenues quite strongly, and there’s good reason to believe the growth will continue for some time to come. Founders Sam Hupert (the CEO) and Barry Hall both remain as leaders of the company and each hold a large proportion of the shares on issue. Like MNF Group, Pro Medicus is not conventionally cheap, but I definitely think it’s worth dipping your toe in for the long term.

Think Childcare Ltd (ASX: TNK) — owner and acquirer of childcare centres

Relative to the two companies above, Think Childcare is a relative newbie. It has only been listed since 2014, which means it is only just getting to the point where investors have a decent little track record to look at. However, it does seem to be delivering on its promises, generating steady growth in profits, cashflow and dividends. The CEO and founder owns over 30% of the shares on issue, so he has plenty of incentive to treat shareholders well. Think Childcare is the most conventionally cheap of the companies on this list and I may well buy more shares after the upcoming results if the results are pleasing.

While I really like and own each of these companies, it has to be said that small-cap investing is not for the faint hearted. These stocks can be volatile and you should have the stomach to take significant volatility — and that’s even if things go well. For those of you that prefer attractive dividends, I recommend checking out this stock.

I suggest you check out the company named in this this free report since my friend and colleague highly recommends it. Personally, I have recommended a similar company.

You might not know this market leader, but it’s making waves in Asia and already boasts a term-deposit-crushing dividend of almost 5%. A debt free balance sheet and dominant market position at home and abroad mean this company offers investors income and some real-deal growth potential.

Simply click here to grab your free copy of this up-to-the-minute research report right now.

Claude Walker is a Motley Fool investment advisor. He owns shares in MNF Group, Pro Medicus and Think Childcare. You can follow Claude on Twitter @claudedwalker. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691).

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!