Idea Brunch #2 with Lee Roach of The Value Road

Welcome to Sunday’s Idea Brunch, your interview series with great off-the-beaten-pathinvestors. We are very excited to interview Lee Roach!

Lee is a private investor who publishes The Value Road, a newsletter focused on finding deep value in microcap stocks. Lee focuses on “stocks so far off the beaten path that almost no one else is talking about them,” often trading for a discount to liquidation value. Lee also shares his ideas @leevalueroach on X and was previously featured on Sunday’s Idea Brunch in March 2025.

Lee, thanks for doing Sunday’s Idea Brunch again! You recently quit your job to pursue investing and writing full-time following the great success of your Substack. How have your writing and investing been going for you since you went full-time? Have your results improved?

Thanks for having me back. I’ve been able to write more and have begun doing a lot more research now that I can dedicate a full uninterrupted day to looking at stocks. When I was working at a factory full-time, I would do all of my research late at night, which I actually enjoyed much more than being on a first shift schedule. This is mostly because it’s very hard to make a hasty decision when the market is closed. Now that I’m on the same schedule as the rest of the world, I can process information in real time. I still try and never act on impulse by making myself wait at least a day before I make an investment decision, but it was honestly nice to not even have the option.

My results have improved. I’m up 56% YTD and 93% on a 1-year basis. I wouldn’t even say this improvement is due to me quitting my job as much as it has to do with me finding some good companies that I’ve sat on that finally took off.

You’ve published on over 100 companies and often find filings and disclosures that others miss. Can you share a little more about your research process and any technology or AI you use to help find hidden alpha?

So I rarely use AI to find companies, but I may use AI to scrape information I might have missed while reading through that company’s financials. I used to go through the OTC stock screener, pop a couple of filters in, and then look through about 36 pages of tickers. The biggest improvement that has changed my life is that now I know a lot of these companies and can put them into a site called CapEdge, which then lets me know when any financial info from these companies drops.

Now that I’ve slowly built up a base of like 80 or so names that I follow, when something interesting happens to one of them I know about it before others do. It’s very unlikely you’re going to find a company right at the cusp of some transformative event. In my experience, it’s a much higher probability that you’re going to find a bunch of cheap companies that you can then wait around on for an inflection point to show up. That’s when you really put your money into something.

In your research, how often do you go beyond reading SEC filings (e.g., talking to management and customers or testing out products yourself)? Or can you generate most of your outperformance solely from reading SEC filings?

Whenever possible, I talk to management. I went to the Planet Microcap conference not too long ago which was a great way to squeeze in a bunch of 101 meetings in one place face to face with management. Now that I am writing full time, I try to contact management as soon as I am done researching a business. After I read through some earnings calls I try and get a couple of questions that I haven’t heard other investors ask the management team. Management calls are great because you can really see how management reacts to tough questions that don’t often get asked at these small earnings calls somehow. That being said, 99% of my investment decisions can be made without talking to another person but talking to management can give you that extra confidence to throw down a decent chunk of change on an idea or in some cases, taper your execution expectations.

The economics of a paid newsletter reward regular output, while disciplined investing often requires doing nothing. How do you keep the publishing incentive from becoming an idea-generation quota lowering your investment bar? And as you’ve grown, has it become more difficult to write about illiquid companies?

This has been the hardest thing to balance as I’ve become a writer on Substack. Substack seems to want you to write two or three articles a week. I’ve got complaints from both ends of the spectrum concerning how much I write. Some people want me to write once a month and only on the biggest knockouts I can find while other people want me to effectively manage a portfolio for them with up to date buy and sell ratings and write ups on any new news from the stocks I research. Others want me to look into every company under the sun.

The way I thread this needle is that I try and write up the best couple of companies that I’ve looked into that week. These may not be buys, but they’re usually companies I’m very interested in and keeping on my radar should a buy in opportunity arise. I then recently offered a premium tier where my readers can have access to all of the research that I don’t publish on The Value Road. This tier can also talk about this research on a discord channel. Even still you can’t make everyone happy.

My goal on The Value Road is to turn over as many rocks that are worth looking at as I possibly can. As time goes by I can keep an eye on the best rocks of the bunch. Eventually when a catalyst comes along, you’ll know where to put your money while everyone else is trying to figure out what’s going on. I’m just writing about what I find along the way.

As far as having a harder time writing up illiquid stocks, I haven’t had any trouble. There’s a market for people who love investing in these tiny companies. A lot of investors with much larger portfolios will have an account where they just trade microcaps because they’ve learned to love this niche in the market even though their wealth has long since outgrown it. It becomes a fun game to them.

One of your best-performing ideas is Entravision Communications (NYSE: EVC), which is up ~5x since your first pitch and is part of your basket of legacy broadcasting stocks. What went right with Entravision? And do you still see value in legacy broadcasting companies?

The most important part of EVC’s story isn’t even what went right; it’s what went wrong. When META dropped EVC as their Spanish advertising partner the market priced EVC as if bankruptcy was inevitable. It wasn’t, in fact it was pretty obvious that SMADEX was growing fast enough to justify a valuation at least double what EVC’s share price was at the time. That’s how I invest. I get nervous when I look at a green stock chart and excited when I see a 1yr wall of red. EVC had a big problem drop in their lap and investors weren’t about to sit around with a pen, a pad of paper, and a calculator to figure out just how bad the problem was. That’s how investment opportunities are born.

I am still invested in a lot of the legacy broadcasting companies (SSP, SBGI, EVC, NXST, and GTN). I see a lot of value in the legacy broadcasting space. This is yet another heated political advertising cycle which should offer a large tailwind for many of these names. The biggest thing I’m still waiting on is a court decision on the 39% station broadcasting cap. If you’re a legacy broadcaster you can only broadcast to 39% of the United States population. The FCC has given exemptions to this rule for M&A activity in the past, but now this rule has caused a legal battle that may end up at the Supreme Court. If this 39% cap is lifted these companies will almost certainly rerate as the current M&A activity gets sorted out and as a new M&A environment opens up. It really been a game of patience. Luckily, it seems like the FCC is about to vote on lifting this station cap on August 6th. This should be a huge development.

All of these companies (SBGI, SSP, NXST, and GTN) have pretty cheap P/E’s, EV/Sales, and some massive hidden assets in the form of spectrum the next time a spectrum auction takes place. All of this combined with an election advertising cycle, The World Cup, and sports gambling driving an increase in sports viewership across legacy broadcasting, I think these companies are set up for a rerating long-term even if the 39% station were to remain in place.

What are some interesting ideas on your radar now?

I have a couple of positions in my portfolio that I still think have a lot of juice in them.