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"As noted here, I have been listening to the Focused Compounding podcast (Geoff Gannon). Geoff is big on illiquidity. That is, he prefers illiquid micros to more liquid ones. I also started to listen to NoNameStocks on the Planet Microcap podcast. Similar references to illiquidity, though more generally;

However, I am not sure what guys like Geoff or other micro-cap investors consider illiquid.
I don't recall any particular rule-of-thumb being mentioned (e.g., less than $10K/day; $50K;
$100K). Biosyent certainly does not trade the volume that would allow big investors or capital to take a position. But, as alluded to above, is enough that I should be able to establish a position roughly inline with quoted prices in a reasonable amount of time.

I think it's always interesting when folks talk "illiquidity" because you learn a lot about how they trade, and the implications.

In terms of folks who focus on illiquidity, I see a couple of things that weave their thoughts together:
1) Illiquid in volume relative to market cap or float -- this is a pretty standard way folks think about it.
2) Benefit #1 of illiquidity: Higher returns for lower price (aka, the liquidity discount)
3) Benefit #2 of illiquidity: Belief that "sharpys" aren't the ones you are trading with... but more likely someone who's grandma gifted them 2000 shares of Bob's Burgers, and they are blowing it out through Scottrade.

I think #2 is dangerous, because it's not always true (but usually it is... liquidity excess return is real), and #3 doesn't absolve you of DD, but does perhaps give some comfort to many... but you can always be trading against a smaller set of insiders/employees of course.

My 2 cents. I tend to notice liquidity in the sense of "immediate" liquidity... aka, can i get $20k done *now* at a reasonable price close to last. I think in micro names, you just have to dribble in either limit or marketable limit orders over days/weeks/months and not care about *now* as much. I do note managing separate accounts, this is somewhat of a pain, but not insurmountable.

My two cents.
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