California Resources Corp CRC

Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.

Over the past six months, California Resources’s stock price fell to $53.17. Shareholders have lost 18.6% of their capital, which is disappointing considering the S&P 500 has climbed by 18.4%. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.

Value investing has produced some of the world’s most famous investing billionaires, including Warren Buffett, David Einhorn, and Seth Klarman, who built their fortunes by purchasing wonderful businesses at reasonable prices. But these hidden gems are few and far between - many stocks that appear cheap often stay that way because they face structural issues.