How Microcap Value Stocks Can Be a Smart Investment
Many investors avoid microcap stocks, thinking that companies in that category are too small or too risky. However, the term “microcap” is misleading and stocks in that sector can provide a good return on investment, says Denis Amato, CFA, chief investment officer at Ancora Advisers LLC.
“There is a misperception of microcap stocks being this crazy, wild area, so a lot of people shy away because they think this is a terribly risky area,” says Amato. “But by focusing on the value component, you will normally get good results over time, and if you put a microcap mutual fund in your portfolio, as opposed to buying individual companies, your risk is not as great as people’s perception of the area.”
What are microcap stocks?
For what kinds of investors can microcaps be a good investment?
How can an investor get involved in microcaps?
What timeframe should investors in microcaps be looking at?
What criteria should an investor look for in microcap stocks?
What percentage of a portfolio, in your opinion, should be invested in microcap value stocks?