The Small-Cap Advantage

A world-renowned money manager shares winning strategies for small-stock investing.

Since forming Bares Capital Management, Inc. in 2000, Brian Bares has shown that above average returns can be generated through the careful selection of small company common stocks. Additionally, he's demonstrated how concentrating capital in a handful of ideas improves the potential for outperformance by increasing the depth of knowledge of each position and allowing each security to have a more meaningful impact on the portfolio.

In The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks Into Big Returns, Bares describes how endowment-model investors and aspiring managers can gain meaningful exposure to small stocks, while sidestepping many of the obstacles that have historically prevented institutional investment in the asset class.

• Details the historical outperformance of small-cap stocks
• Contrasts the various strategies employed by managers in the space
• Explains how aspiring managers can structure a firm to boost performance and attract institutional capital
• Describes how endowment-model institutions can evaluate and engage outside managers for their small-cap allocations
• Summarises important topics such as liquidity and the research process

Bigger is not better. The Small-Cap Advantage reveals that small stocks have historically performed better than large ones, and that lack of competition in small-cap stocks provides diligent managers with a singular opportunity to outperform.