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I invest in micro cap stocks (<$300 million market cap) for a living, which is part of the reason I formed Micro Cap Club last year. Micro Cap Club is an exclusive venue for experienced micro cap investors to share ideas. We now have over 150 members discussing some of the best micro caps on the planet. The interesting thing is even though most people broad-brush micro cap as "NOT investable", some of the greatest money managers of all time like Peter Lynch and Warren Buffet started in the micro cap - small cap arenas. As their success grew so did their assets under management, which forced them to look at larger companies. The reason these gurus started in the micro cap is because they could actually gain access to management and find that diamond in the rough before someone else did. I like to pay close attention to where some of today's best micro cap fund managers are investing and how they are performing.

A micro cap fund's performance is normally judged against both the Russell Micro Cap Index and Russell 2000 index. Here are ten micro cap funds with their 5 and 10 year performance against the indices.


(Click to enlarge)

Here is a little more information on each fund including their inception date, assets under management, fund manager, and top five holdings as of YE 2011.

GAMCO Westwood Mighty Mites Fund (WEMMX), Inception Date: 1998: The fund manages $600 million in assets, invested in over 450 companies with market caps of less then $500 million. Mario Gabelli has managed the fund since inception. As of YE 2011, the top five holdings were Ascent Media Corp (NASDAQ:ASCMA), Schiff Nutrition International (WNI), Epoch Holding Corp (NASDAQ:EPHC), Steel Excel (OTCQB:SXCL), and Sonesta International Hotels. The fund has produced 5 year and 10 year annualized returns of 4.69% and 9.13%. Fund Fact Sheet.

Royce Micro Cap Fund (RYOTX), Inception Date: 1991: The fund manages $1.25 billion in assets, investing in companies with an average market cap of $342 million. Jennifer Taylor is the lead portfolio manager of the fund and has been at Royce for 11 years. As of YE 2011, the funds top five holdings were Rudolph Technologies (NYSE:RTEC), Graham Corporation (NYSE:GHM), GP Strategies (NYSE:GPX), Total Energy Services (OTC:TOTZF), and Marten Transport (NASDAQ:MRTN). The fund has produced 5 year and 10 year annualized returns of 2.39% and 8.91%. Fund Fact Sheet.

Perritt Micro Cap Opportunities Fund (PRCGX), Inception Date: 1988: The fund manages close to $350 million in assets, investing in companies with a median market cap of $187 million. Michael Corbett has been managing the fund since 1999. As of YE 2011, the funds top five holdings were Mitcham Industries (NASDAQ:MIND), GP Strategies Corp , Newpark Resources (NYSE:NR), Global Cash Access (NYSE:GCA), and Bioscrip Inc (NASDAQ:BIOS). The fund has produced 5 year and 10 year annualized returns of -1.64% and 8.71%. Fund Fact Sheet.

Heartland Value Fund (HRTVX), Inception Date: 1984: The fund manages $1.2 billion in assets, invested in 130 companies with a median market cap of $211 million. Will Nasgovitz, Bill Nasgovitz, and Brad Evans manage the fund. As of YE 2011, the funds top five holdings were AuRico Gold (NYSE:AUQ), Newpark Resources , Analogic Corp (NASDAQ:ALOG), Unit Corp (NYSE:UNT), and Omnicare (NYSE:OCR). The fund has produced 5 year and 10 year annualized returns of -1.40% and 7.17%. Fund Fact Sheet.

Schneider Small Cap Value Fund (SCMVX), Inception Date: 1998: The fund manages $70 million under management with 80% of it's assets invested in micro-small cap companies. Arnold C. Schneider III has managed the fund since inception. As of YE 2011, the funds top five holdings were Cloud Peak Energy (NYSE:CLD), Meritage Homes Corp (NYSE:MTH), Regions Financial Corp (NYSE:RF), Arch Coal (NYSE:ACI), and First Horizon National Corp (NYSE:FHN). The fund has produced 5 year and 10 year annualized returns of -7.25% and 7.38%. Fund Fact Sheet.

Wasatch Micro Cap Fund (WMICX), Inception Date: 1995: The fund manages $300 million in assets, investing in companies with a median market cap of $436 million. Daniel Chace has been managing the fund since 2004. As of YE 2011, the funds top five holdings were CorVel Corp (NASDAQ:CRVL), Hibbett Sports (NASDAQ:HIBB), Power Integrations (NASDAQ:POWI), DealerTrack Holdings (NASDAQ:TRAK), and DFC Global Corp (NASDAQ:DLLR). The fund has produced 5 year and 10 year annualized returns of -1.89% and 5.53%. Fund Fact Sheet.

Oberweis Micro Cap Fund (OBMCX), Inception Date: 1996: The fund manages $22 million under management with 80% of its assets invested in micro cap (<400 million market cap) companies. James Oberweis, Kenneth Farsalas, and David Covas manage the fund. As of YE 2011, the funds top five holdings were Acacia (NASDAQ:ACTG), Amerigon (ARGN), Twin Disc (NASDAQ:TWIN), Body Central Corp (OTCQB:BODY), and Hi-Tech Pharmacal. The fund has produced 5 year and 10 year annualized returns of -3.55% and 5.37%. Fund Fact Sheet.

Managers Micro Cap (MMCFX), Inception Date: 1994: The fund manages $150 million in assets, invested in approximately 150 companies with market caps between $40-400 million. The fund is managed or advised by Lord Abbett, Next Century Growth Advisors, WEDGE Capital Management, and RBC Global Asset Management. As of 10/31/2011, the funds top five holdings were NIC Inc (NASDAQ:EGOV), Faro Technologies (NASDAQ:FARO), Universal Stainless & Alloy Products (NASDAQ:USAP), Acacia , and AZZ Inc (NYSE:AZZ). The fund has produced 5 year and 10 year annualized returns of 1.63% and 3.16%. Fund Fact Sheet.

Catalyst Value Fund (CTVAX), Inception Date: 2006: The fund manages $70 million in assets, invested in approximately 40 companies with an average market cap of $600 million and a median market cap of $158 million. David Miller manages the fund. As of YE 2011 2011, the funds top five holdings were USA Mobility (NASDAQ:USMO), PDL BioPharma (NASDAQ:PDLI), Two Harbors Investment Corp (NYSE:TWO), Providence Service Corp (NASDAQ:PRSC), and Bofi Holding (NASDAQ:BOFI). The fund has produced a 5 year annualized return of -1.15%. Fund Fact Sheet.

RBC Micro Cap Value Fund (TMVAX), Inception Date: 2004: The fund manages $125 million in assets, invested in companies with an average market cap of $320 million. Lance James manages the fund. As of YE 2011, the funds top five holdings were Cantel Medical Corp (NYSE:CMN), Insight Enterprises (NASDAQ:NSIT), Rush Enterprises (NASDAQ:RUSHA), Rex American Resources (NYSE:REX), and Newport Corp (NASDAQ:NEWP). The fund has produced a 5 year annualized return of -4.26%. Fund Fact Sheet.

One the most overused clichés is "this is a stock pickers market" which always leads to the next question. When isn't it a stock pickers market? Maybe for 2-3 years in the late 1990's but that was more than a decade ago. The one thing that will never change is that micro cap will always be for stock pickers. The smaller the market cap the pickier you need to be.

Source: The Best Micro Cap Funds