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MicroCapClub – December, 2013

Thirty years ago a microcap was defined as a public company with market cap under $50 million. Today, many investors define micro-cap as less than $300 million, while some leading firms increase that threshold to $750 million. Is Micro-cap Getting Too Big takes an in-depth look at this transformation and what it means for microcap investors. Micro-cap funds (and their definition of micro-cap) are getting bigger, but not surprisingly the most pricing-inefficiencies are shown to be found in the smallest companies. The Ultra MicroCap Fund is highlighted as remaining true to the space, confirmed by it having the smallest market capitalization of all domestic equity funds according to Morningstar as of 12/31/13

To View “Is Micro-cap Getting to Big?” Visit the MicroCapClub.

The MicroCapClub is an exclusive forum for experienced microcap investors focused on microcap companies (sub $300m market cap). MicroCapClub was created to be a platform for experienced micro-cap investors to share and discuss stock ideas.

Please click here for standardized performance.

Performance data quoted represents past performance; past performance does not guarantee future results.  The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.  Current performance of the fund may be lower or higher than their original cost.  Performance data current to the most recent month end may be obtained by calling 1-800-331-8936.  The funds impose a 2% redemption fee for shares held less than 90 days.  Performance data quoted does not reflect the redemption fee.  If reflected, total return would be reduced.

References to other mutual funds should not to be interpreted as an offer of these securities.

Diversification does not assure a profit nor protect against loss in a declining market.

By clicking on the article/video links you will leave the Perritt Capital Management website and enter a third-party website. Perritt is not responsible for, nor can it guarantee the accuracy of any information contained on a third-party website.

Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security. For PRCGX holdings click here. For PREOX holdings click here.

Mutual fund investing involves risk. Principal loss is possible. The Funds invest in smaller companies, which involve additional risks such as limited liquidity and greater volatility. The Funds invest in micro cap companies which tend to perform poorly during times of economic stress. The Ultra MicroCap Fund may invest in early stage companies which tend to be more volatile and somewhat more speculative than investments in more established companies.

The Russell Microcap index is a capitalization weighted index of 2,000 small cap and micro cap stocks that captures the smallest 1,000 companies in the Russell 2000, plus 1,000 smaller U.S.- based listed stocks. It is not possible to invest directly in an index.

Price to earnings, last twelve months (PE LTM) is calculated by dividing current price of the stock by the company’s trailing 12 months’ earnings per share. Over-The-Counter Bulletin Board – OTCBB) is a regulated electronic trading service offered by the National Association of Securities Dealers (NASD). The Over-The-Counter Market (OTCM) is a decentralized market, without a central physical location, where market participants trade with one another through various communication modes such as the telephone, email and proprietary electronic trading systems.

The “Liquidity vs. Size illustration” is further documented in Ibbotson Finds Liquidity Rules, a Financial Advisor Magazine feature of a working paper by Roger Ibbotson and Zhiwu Chen.  The author studied 3,500 U.S. stocks by quartile and rebalanced annually from 1972 to 2009. He defined liquidity as total annual trading volume divided by total shares outstanding.

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