Small cap stocks

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The Economic Times  Sep 25  Comment 
The BSE Small Cap Index and BSE Mid cap Index have outperformed the broader BSE Sensex in the last seven trading sessions.
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MNSquotes.com offers free real-time market quotes and level II access along with breaking news from leading North American stock exchanges. MNS Quotes pre-market alert provides a heads up on top gaining and most alerted small cap stocks from the...
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Canadian issues that are moving on early news
TheStreet.com  Jan 30  Comment 
Mark Otto, vice president at Knight Capital, says China will keep easing monetary policy just not in the way investors were expecting and that those moves will be good for small cap stocks.
TheStreet.com  Nov 17  Comment 
Take note shoppers, because digital labels are the wave of the future, says Ralf Scherschmidt, portfolio manager for the Oberweis International Opportunities Fund . Scherschmidt says the high-tech labels benefit both grocery store chains and...
The Globe and Mail  Jul 27  Comment 
Canadian issues that are moving on early news




 
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Definition

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Considerations

Market cap is, unfortunately, a relatively volatile measure of size and scale. Because a primary component of the metric is the company's share price (significantly based on investor expectations, which can be extremely volatile in certain market conditions), market cap is unlikely to be reflective of the actual value of the company's equity. For example, market cap may increase/decrease pursuant to expectations of a merger or acquisition or industry obsolescence.

These expectations can have a larger impact on small-cap and micro-cap companies, which typically have fewer shares outstanding and fewer shareholders. Significant movement of shares one way or the other can disproportionately impact price, thereby greatly impacting the market capitalization.

Valuation

The methods of valuation are outside the scope of this article, but it has been empirically tested that small-cap stocks are more often mispriced than their large-cap counterparts. This is typically a result of less news, less interest, and more 'risk' in small-cap stocks, but savvy investors can capitalize on this (see [1] for an example)

Resources

  1. http://bigpicture.typepad.com/comments/2005/07/small_cap_value.html
  2. http://www.investopedia.com/terms/s/small-cap.asp?viewed=1
  3. http://en.wikipedia.org/wiki/Market_capitalization
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