Fund manager Mark Travis discusses his small-cap investing strategy with Gregg Greenberg in this video. Contrary to popular belief, the credit crisis isn't crushing all small caps. Some of the market's minnows are in better shape than the biggest whales on Wall Street. "There are a lot of businesses that make products people use and need every day. A lot of them have no liabilities on their balance sheet," says Mark Travis, President of Intrepid Capital Management. "A lot of the financing risks are in the big-cap arena, because many small-cap companies are run like efficient private businesses." Travis knows how to fish for small-cap winners -- stocks with market capitalizations under $2 billion. His Intrepid Small Cap ( ICMAX) and Intrepid Capital ( ICMBX) mutual funds sport five-star ratings from fund specialist Morningstar ( MORN). The Small Cap fund has lost 14% in the past year, outperforming the 37% drop of the Russell 2000 Index, a measure of small companies. The fund, which started trading in 2005, has gained 2.8% a year, on average, in the past three years compared with the Russell's 14% decline. Intrepid's bet on kitty-litter maker Oil-Dri Corp. of America ( ODC) reflects Travis's stock-picking style. Oil-Dri's market value is only $110 million, but it sells its product to the nation's largest retailer. "They have a private label agreement with Wal-Mart ( WMT), which is a big seller, and they have their own brand as well," Travis says. "From our perspective, if you discount back the free-cash flows at an appropriate rate, or if you value their clay reserves, we get an asset valuation that's a good bit higher than the shares trade for today." Another mighty mite Travis likes is Gencor Industries ( GENC), which has a market cap of $62 million and average trading volume of just 11,000 shares a day during the past three months. The paving-equipment company could hit it big if Obama's $787 billion economic stimulus plan pays for road construction.