This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Winners Come in All Sizes

Lilliputian Domination

No matter the market cap, investors tend to shovel money at whatever investing style is hot. And in 2003, small-cap funds generated enough heat to spark a fund closing stampede. The average small-cap fund was up 43.94% last year, an impressive return that ultimately caused a slew of fund closings by managers overwhelmed by cash. Out of the 76 mutual funds that have closed to new investors in the past year, 36 were small-caps, according to Morningstar.

One fund that thrived while keeping its doors open was the $207 million (PRCGX) fund. Perritt returned 63.5% in 2003, substantially outperforming both its small-cap peers as well as the S&P 500, which only returned 28.7%. (Micro-cap funds are lumped into the small-cap category for comparison sake at Morningstar.)

Michael Corbett, Perritt's manager since 1999, says he will seal his fund to new investors should it hit $300 million, but not because of "a lack of ideas," a common excuse among fund managers with too much cash and nowhere to spend it.

"We have plenty of ideas, the problem is that we can't buy any of them," says Corbett, referring to the investment act that forbids a fund from owning 5% or more of a company. "If there is a company with a $100 million market-cap, the most we can buy is $5 million."

Corbett could expand the number of companies in his portfolio, but he says the extra names would not be worth the extra effort. He currently holds 146 stocks in his portfolio with an average market cap of $169 million.

Corbett gets his investment ideas both internally and externally by soliciting prospects from over 20 research and regional brokerage houses. His strategy is to find tiny companies with attractive fundamentals and favorable growth prospects. The trick in the micro-cap world, says Corbett, is in getting in and out of thinly traded stocks without telegraphing your moves to the rest of the market.
3 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BP $33.58 0.00%
C $46.28 0.00%
GE $30.75 0.00%
MSFT $49.87 0.00%
PFE $32.71 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs