The Management Team of Micro Cap Companies

The management team of a company of any size plays a central role as a bad management team can be the undoing of a good company and a good management company can be the turnaround of a distressed company. When it comes to the micro cap companies (often traded as penny stocks), the crucial role of the management is amplified manifolds. This is so because often the executive management of a small company comprises the founders themselves and the future of the company is intrinsically tied to their business acumen and character. The management has a direct correlation whether the investors in their small stock will see a ten-fold increase or a total loss of their investment.
It is therefore wise when investing in micro cap or penny stocks to pay special attention to the management of the company. There are indeed many qualitative ways to do that. When presenting the company, for instance on a road show, does the whole management team present a cohesive vision of the company? Are the team members of the CEO as passionate as him or her about the prospective growth of the company or are they merely doing a job (especially beware of the CFO that was simply hired to take the company public and now is looking for the next opportunity)? This method of assessing the management is of course more art than science but it is of utmost importance - good penny stock researchers can pick up on mismatches between company's purported vision and management's lack of confidence.
A quantitative way of measuring the commitment of the management is to examine their insider ownership of the micro cap company. Simply put, do they own a lot of shares in their own company? Knowing that the management owns a lot of the shares assures the investors that the management has skin in the game and is aligned with their goal of realizing high gains. On the other hand, beware of management that is selling a lot of shares ("insider selling").
It is indeed hard to evaluate and follow the management of these micro cap stocks. But this should not dissuade investors from investing in penny stocks and seeking gains of triple digits and higher. There are many resources online which can help you. Especially newsletters which specialize in penny stocks and send their subscribers stock alerts both for buy and sell recommendations. A good place to start at is www.hypergrowthstock.com.