Magazine article Black Enterprise

It's a Small (Cap) World: Investment Manager Eugene Profit Offers His Favorite Small-Cap Stocks in Healthcare, Technology, and Clothing Retail

Magazine article Black Enterprise

It's a Small (Cap) World: Investment Manager Eugene Profit Offers His Favorite Small-Cap Stocks in Healthcare, Technology, and Clothing Retail

Article excerpt

DURING RECOVERIES, THERE'S A RULE OF thumb in investing: Small-cap shares--stocks of companies with a stock market value of $2 billion to $3 billion or less--often get an early jump on big corporations. For one, given their small size, the effects of a turnaround have greater impact on their results. That's clearly been the case this time around. The Russell 2000 small-cap index gained 25% in 2010 compared to the large company S&P 500's 13% climb. So far, the rally hasn't slowed, with the Russell benchmark hitting an all-time high in May.

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Eugene Profit, CEO of Silver Spring, Maryland-based money management firm Profit Investment Management L.L.C. (No. 15 on the BE ASSET MANAGERS list with $2 billion in assets under management), says small-cap stocks have benefited from several important trends. A round of government stimulus in the form of the Federal Reserve's bond buybacks late last year helped. At the same time, small companies have also worked hard to cut costs and run leaner. And while Profit says small caps' outpacing of the market may slow in the months ahead (as large-cap shares heat up), the right stocks in sectors such as technology and healthcare still have potential to make big gains. At the end of 2010, Profit's firm launched the Profit Opportunity Fund (PROFX), a small-cap portfolio--a version of a product they have offered institutional investors for more than 10 years.

Profit, a former Yale University and NFL football player, founded Profit Investment Management in 1996 with $100,000. The firm now has grown to one of the nation's largest asset managers. In June, Profit received the prestigious Reginald E Lewis Award for his trailblazing success in the world of finance. He spoke to BLACK ENTERPRISE about three of his top picks in the small-cap arena.

1 NUVASIVE INC. …

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