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) Perritt Micro Cap Opportunities 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.