As somebody who spends most of his time looking at micro and small caps, I have to differ with the view that micro caps come in two varieties: a small number of firms that recently went public and a large cohort whose businesses are in decline.

Most of the best micro cap opportunities are companies that have been listed for years and are hitting their strides. IPOs might be great for a stag profit but often run into a range of problems in the first few years of being listed. Often board and management struggle to adapt to public market demands. Sometimes the IPOs are over-hyped. Sometimes pro forma financials used for IPOs are over stated or just plain misleading.