Meanwhile, Dedio sees opportunity in two microcap chipmakers: Integrated Silicon Solutions (ISSI) and EZChip Semiconductor (EZCH).
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The Over-The-Counter market is a magnet for microcap fraud, as the SEC itself has repeatedly warned.
GuruFocus also publishes three newsletters: Monthly Ben Graham Net-Net, Buffett-Munger Best Bargains and Microcap Magic Formula Stocks.
Many microcap companies tend to be new and have no proven track record.
He cites the iShares Russell Microcap Index (IWC) as a prime example of a good ETF for the above reasons.
The advisory firm also trades in and out of microcap stocks that Gerber would never touch with the mutual funds' money.
The stock remained a microcap on a massive exchange, and from a region that was not looked upon positively by global investors.
While investors may very well wish to allocate a percentage of their portfolio to microcap stocks there are no viable ETFs available.
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Sometimes microcap stocks fall just because no one is paying attention.
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It would be 15% in early-stage venture capital, 30% in microcap U.S. equities, 25% in junk or other spurned bonds and 30% in emerging markets.
The past year has been sweet vindication for Charles (Chuck) Royce, president of his namesake family of ten mutual funds that invest in small-cap and microcap companies.
In investing it has sometimes meant stashing money in microcap companies with one-shot inventions or, on the other end, putting up with General Electric's lumbering price growth.
Schwab and Fidelity accounts make up large amounts of shares at such well-known names as Turner MicroCap (77%), Janus Mid Cap Value (49%) and Baron Asset (51%).
In investing it has sometimes meant stashing money in microcap companies with one-shot inventions or, on the other end, putting up with General Electric (nyse: GE - news - people )'s lumbering price growth.
The easiest method to take advantage of this effect is to go long a small- or microcap ETF such as iShares Russell Microcap ( IWC) or PowerShares Zacks Micro Cap ( PZI) or mutual fund Bridgway UltraSmall Company. ( BRSIX).
Curtis Akey, director of mergers and acquisitions at Bathgate Capital Partners, a microcap investment banking firm, said vendors are in the most difficult position after a customer merges because the new merged entity will often seek to cut costs swiftly at the vendor level.
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