Thesis Drift with Sebastian Krog, Founder & Editor of Treasure Hunting Newsletter on Substack

In this episode of the Planet Microcap Podcast, host Robert Kraft sits down with Sebastian Krogh, founder and editor of the Treasure Hunting Newsletter on Substack, to explore the evolution of his investment process from stock picker to portfolio manager. Krogh reflects on a pivotal experience with IVFH (Innovative Food Holdings), where a successful initial thesis led to a massive run-up in the stock, only to collapse when operational progress stalled and new initiatives deviated from the original turnaround plan. He shares how emotional attachment to a winning thesis can blind investors to deteriorating fundamentals, emphasizing the critical importance of revisiting and adjusting positions based on real-world performance rather than past success. Krogh also discusses his shift toward more predictable, profitable businesses over speculative turnarounds, the growing role of AI in identifying industry-level supply-demand imbalances, and the necessity of managing behavioral biases—especially when stocks run ahead of themselves. He advocates for letting winners run until new information emerges, rather than trying to time tops, and stresses that post-purchase management is often more important than the initial buy decision. Key takeaways include: 1) Thesis drift is a silent killer—always validate your original thesis against current performance; 2) Portfolio construction is as important as stock selection; 3) Use AI to identify favorable industry dynamics, not just individual companies; 4) Let winners run until new data emerges, not based on emotion or fear; 5) The best microcap opportunities often lie in Canada, especially in companies with international exposure but listed on the Toronto exchange. Krogh’s journey underscores that disciplined process, emotional detachment, and continuous adaptation are the true differentiators in microcap investing.