History

Perritt Capital Management, Inc. has been investing in smaller companies since the firm's inception in 1987. The firm's small company investment strategy was built on the research of Rolf Banz, a University of Chicago doctoral student who discovered the first crack in the foundation of the efficient market theory, dubbed "the small firm effect." The effect is the tendency of common stocks of small companies to outperform the stocks of large companies at equivalent levels of risk.

In 1983 Dr. Gerald W. Perritt formed Investment Information Services, a newsletter publishing business which published several newsletters, including Investment Horizons, an investment advisory newsletter based on analysis of small company stocks. Perritt Capital Management was formed in 1987 as a wholly owned subsidiary of Investment Information Services.

Since Perritt Capital Management, Inc. began investing in portfolios of smaller companies, the small cap segment of the market has undergone substantial changes. Today, small cap companies are defined as those with market capitalizations of under $1.6 billion. Due to market growth, just ten years ago this same category was defined by companies with a market capitalization of $200 million or less.

Perritt Capital Management, Inc. began as a small cap manager based on Banz's small company stock return research. Since that time, we have been consistent in our investment approach, investing in companies that are listed in the bottom two deciles of the major stock exchanges as ranked by market capitalization. Today, the strategy invests in companies that at the time of initial investment have a market capitalization between $50 and $500 million. This range is now how we define the micro-cap sector.

Change in Majority Control of the Advisor to The Perritt Funds
Click here for important information regarding an agreement to transfer majority control of Perritt Capital Management from founder Dr. Gerald Perritt to Portfolio Manager Michael Corbett.