Kent - You asked where everyone is - I think we are all waiting for the next big press release by FSII on a new blockbuster order or two <g>. In the meantime, lots of articles have been published recently discussing the potential for small cap stocks like FSII, UTEK, SFLX, and others:
(1) The May 19th Barron's notes that "sixty-two percent of those [money managers]
polled predict the small cap sector will mount a convincing rally before year-end, after
lagging big-cap issues for a year." If nothing else this group has the purchasing power
to impact the market and small cap share prices.
(2) Monday's Wall Street Journal, page C1, notes that "with blue-chip stocks trading at record levels and rich valuations, strategists and fund managers are turning to small
stocks, which . . . look deeply undervalued". The article notes that Abby Cohen of
Goldman Sachs follows a quantitative model of stock returns which indicates "small
stocks could outperform the S&P 500 by about 25% in the coming 12 months."
Charles Clough of Merrill Lynch indicates that three weeks ago "we had the most
oversold readings for small-cap stocks since the third quarter of 1990, which was a
major bottom."
(3) Time magazine has an article on technology investor Roger McNamee, who notes
"to a remarkable degree" the market for technology stocks "allow[s] individual
investors to participate in a level that was never possible in the past." The article
continues "the primary engine fueling the small-investor boom is information, a wealth
of which is now, for the first time, at the private investor's disposal." His advice: "buy
good companies when everyone else is selling, then hold them."
(4) John Tompkins in Money Talk magazine writes on small cap stocks, noting "there
are signs of a shift in the wind: not exactly a full-scale switch away from big names, but
indications that some of them have got too pricey while the small capitalization stocks
look cheap." Further, "The little guys do take a beating periodically, but over time they
tend to win out over the blue chips. Over a 70-year period starting in the late 1920s
the total return of the smallest 10% of companies listed on the New York Stock
Exchange was double the top 10%."
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Many of these articles reinforce the concept that compared to large caps small caps
are the cheapest they have been in years - and small investors now have access to
information necessary to take advantage of these opportunities. In fact, the opportunity
to acquire severely undervalued shares of small cap firms with promising growth
prospects has seldom been so promising IMO.
Best - Joe |
