5 Keys to Smart Small-Cap Investing

Small caps can be fertile ground for finding promising long-term ideas

Todd Wenning 20 November, 2012 | 9:00AM

This article is part of Morningstar.co.uk's Equity Investing Week.

For the individual investor with a long time horizon and a calm demeanor, there's a lot to like about small-cap shares. With so much media attention paid to blue chips and with institutional investors being limited in their ability to purchase meaningful stakes in small companies, individual investors have a better chance of finding undervalued and underappreciated names in the small-cap arena. 

Indeed, a collection of studies by Tweedy, Browne Company entitled "What Has Worked in Investing" found that a small market capitalisation was one of the five characteristics associated with shares that produced exceptional long-term returns.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Aggreko PLC738.60 GBX-4.47
Rotork PLC295.70 GBX-5.25
Tesco PLC248.90 GBX-2.66

About Author

Todd Wenning

Todd Wenning  is an equities analyst with Morningstar.

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