RICHARD IMPERIALE is President and founder of Forward Uniplan Advisors, a Milwaukee,Wisconsin–based investment advisory holding company. Forward Uniplan and its affiliates manage and advise over $300 million in client accounts. Forward Uniplan specializes in providing clients with consistently superior risk-adjusted returns managing equity, REIT, and micro cap specialty portfolios.

• Preface ixAcknowledgments xiChapter 1 Characteristics of Micro Cap 1The Nebulous Micro Cap (What Is a Micro Cap Stock?) 1The Micro Cap Dilemma (Why Do They Exist?) 5Chapter 2 The Information Advantage 13Understanding the Information Advantage:Efficient Market Theory 13Weak-Form Efficient Market Theory 15Semi-Strong-Form Efficient Market Theory 16Strong-Form Efficient Market Theory 16The Random Walk Theory 17The Practical Answer 19Venture Capital Theory 21The Public-Private Bridge 22Conclusion 24Chapter 3 Micro Cap Stocks as an Asset Class 25Investment Performance: Small versus Large Stocks 25A Survey of Modern Portfolio Theory 26Asset Allocation and Modern Portfolio Theory 33Asset Allocation and Micro Caps 34Economic Linkage 39Venture Capital and Private Equity 39Micro Cap versus Venture Capital 41Chapter 4 The Micro Cap Asset Class and Portfolio Construction 45Micro Caps in the Portfolio Asset Allocation 46The Portfolio Contribution of Micro Caps 47Conclusion 50CHAPTER 5 Using the Information Advantage 51Methods to Evaluate Principal Agent Actions 51Management, Management, Management 52Who’s Doing What: Insider Information 53Management Style 59Strategy and Planning Systems 59Management Changes 61Management Reputation 62How the Company Develops and Promotes Employees 62Conclusion 63Chapter 6 Corporate Governance 65The Company’s Social Relationships 67Information Resources 68The Company 69Competitors 70Customers 70Suppliers 70Trade Associations 71Industry Professionals 71Legal Documents 71Public Company Federal Filings 72SEC Reports 73Annual Report Form 10-K 74Quarterly Report Form 10-Q 77Material Current Events Form 8-K 77Not All Reporting Is Equal 78CHAPTER 7 Micro Cap Stocks and the U.S. Domestic Economy 81Why Micro Cap Stocks Appear Cheap Relative to Large Stocks 82Fundamental Valuation Techniques for Micro Cap Stocks 89Basic Financial Analysis of Micro Cap Companies 90Price-to-Book Ratio 91Price–to–Free Cash Flow Ratio 92Low Price-to-Earnings Ratio 93Conclusion 93Chapter 8 Micro Cap Case Study: A Company with All the Indicators 95Smart-Money Owners 96Cheap Valuation 96Skin in the Game 98The Transaction 101Chapter 9 Consolidating Industry Case Study 107Case Study of Suiza Foods 108Other Opportunities 116Chapter 10 Gehl Company Case Study 133Chapter 11 Pozen Company Case Study 147Chapter 12 Private Investments in Public Equities (PIPEs) 155Tracking PIPE Transactions 159A Brief Case Study of a PIPE Transaction: Ptek Holdings 161Chapter 13 A Framework for Investor Action 167Chapter 14 Micro Cap Fund Investing 173Index 181