Case Study: Microcap Cash vs Liabilities Check
Applying a cash/liabilities rule prevented a net-net loss on ticker XYZ.
Published: 2025-12-20
case-study
risk
cash
liabilities
- Avoided loss: 32% drawdown avoided over 90 days
- Cash/Liabilities threshold: 1.0x minimum
Problem
Ticker XYZ screened as a net-net but had thin cash coverage.
Approach
Applied a hard filter: cash and short-term investments must be at least liabilities.
Result
Filter excluded XYZ; 90 days later, the stock fell 32% after a dilutive raise.
Takeaways
- Enforce a cash/liabilities floor on all net-net entries.
- Recheck share counts every quarter for hidden dilution.