Planet MicroCap · Sep 26, 2026 · 1h 4m · 44m saved
With Sean Westropp, Founder and Portfolio Manager at Deep Sail Capital
Sean Westropp bought Precipio at about $6.50 a share in 2024 and sold at around $22 to $23, roughly three and a half times his money in a year and a half.
Most short sellers start by looking for overvalued stocks. Westropp said overvaluation is the red flag that has produced the most false positives on his short list, because an overvalued stock can keep rising for years.
"What I've found over the years is that shorting is almost entirely a timing game, not a valuation exercise."
Sean Westropp, founder and portfolio manager of Deep Sail Capital, on Planet MicroCap. A chemical engineer who spent years at BP, he has run the same long-short growth strategy since a predecessor fund he started around 2013, and left BP this year to run Deep Sail full-time.
The full interview is covered here so you can skip it. 64 minutes of audio, 20 minutes of reading.
Here are the 17 principles that matter.
Key Takeaways
Every holding is graded on four pillars: business quality, management, long-term growth and valuation
He said he has never given a company an A-plus on all four
Valuation is the pillar he bends on; management is the one he won't
Precipio returned about 3.5 times in 18 months after it turned profitable and stopped raising dilutive capital
He screens every holding for slowing growth, a lesson from the 2022 drawdown
A company that changes its story, business model or name every few years is a short candidate
A pivot only makes sense with a new management team
Overvaluation alone is a poor reason to short; he keeps a list of about 100 overvalued names and waits for a peak or a stock sale
Medtech has been his worst sector because reimbursement cuts can halve a stock
Defense has been his best sector, as cheap drones and fixed-price contractors open the market to small companies
Trimming and adding to existing positions is alpha most investors ignore, he said
1. From BP to Full-Time Fund
For years Westropp posted anonymously on Twitter as "LS Value." He ran a predecessor fund from about 2013 or 2014 until he launched Deep Sail Capital in 2022.
His father helped him open a brokerage account at about 15, in the 1990s. He trained as a chemical engineer, spent many years at BP, and earned an MBA at the University of Chicago around the time he started the predecessor fund.
He switched from value to growth in 2017
The fund began as a value strategy built on a Fama-French style model. He said value investing kept him hunting for the next re-rating, while growth let him buy and hold for a long time.
"So I pivoted to growth in 2017 and haven't looked back since, running basically the same style, slightly different process than in 2017 — hopefully I've improved it along the way." — Sean Westropp
He left BP this year
"I launched to outside capital in 2022 while still working at BP, and I've just recently left BP to focus on this full-time this year, which is probably why you've seen my name attached to Deep Sail a lot more lately." — Sean Westropp
