A Barrel of Tasty Small-Caps
When it comes to stocks that garner the most attention from the media and institutional investors, large- and mega-cap names tend to snag the spotlight as smaller-cap stocks fly under the radar. We believe this results in mispricing -- and it turns out that hedge funds are often successful in finding undervalued companies when they look at small-caps. We have estimated that, among hedge funds, the most popular small-cap stocks have an alpha of about 120 basis points per month. We began testing this theory in our August newsletter, listing the stocks that met this criteria, and our mock portfolio proceeded to return about 20% between early September and mid-January.
We can also turn to the picks of individual funds as free suggestions, and take a quick glance at them before we decide whether they're worthy of further research. As an example, in the most recent 13F SEC filing of billionaire Michael Price's MFP Investors, here are five stocks that (at the time of filing) had market capitalization of between $1 billion and $5 billion....409 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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