Why Small Cap Value

Underfollowed Market Segment

  • Thousands of small cap stocks (<$3.5B): infrequently covered by Wall Street research or institutional investors
  • Leads to an inefficient market, which can cause mispricing of high quality companies

High Quality, Market Leaders

  • Small cap companies can often dominate a market niche
  • Market leadership can lead to high returns on capital, high free cash flow generation, and high growth rates

Higher Volatility = Greater Opportunities

  • Lower liquidity in small cap stocks leads to higher volatility than large cap stocks
  • Long-term, disciplined investors can capitalize on these short-term swings

Attractive Acquisition Targets

  • Large cap companies are often on the look-out for good businesses that can fill out their portfolio

For informational purposes only. Not to be construed as investment advice. Small-Cap investing involves greater risk not associated with investing in more established companies, such as greater price volatility, business risk, less liquidity and increased competitive threat.