Corbett likes small, simple companies
Fund manager favors Air Methods, Rentrak, Flanders
By Matt Andrejczak, CBS.MarketWatch.com
Last Update: 12:02 AM ET Sept. 4, 2003
WASHINGTON (CBS.MW) - Michael Corbett operates in the obscure world of micro-cap stocks where he
once took a chance on a stock three years ago that had a market cap of less than $10 million and was
trading for about one dollar.
That company - Central European Distribution (CEDC: news, chart, profile),
the No. 1 distributor of alcohol in Poland - now has a stock market value of $216 million and is trading for over $20
per share.
Those kinds of winners are paving the success of the Perritt MicroCap Opportunities Fund (PRCGX: news, chart,
profile), which is up 38.2 percent year-to-date vs. a 17 percent gain for the S&P 500. The fund has a three-year
annualized gain of 13.8 percent vs. a loss of 11.6 percent for the S&P and a five-year return of 17.7 percent.
The no-load fund has $100 million of assets and an expense ratio of 1.3 percent.
When picking stocks with market caps of less than $400 million, Corbett keeps a nine-item checklist. Companies
with complex balance sheets or too much debt score no points. He favors companies with a specific niche and
reliable revenue.
And he knows its time to go back to the drawing board when a big Wall Street brokerage picks up coverage of a
company he owns. "I start pulling the sell trigger," Corbett lightheartedly jokes.
Air Methods (AIRM: news, chart, profile), the world's top transporter of emergency medical supplies to hospitals
across the world, is slumping lately amid missed flights caused by bad weather. But, Corbett is unfazed because
he thinks Air Methods "services will always be in demand." The stock closed 14 cents higher to $8.34 on
Wednesday.
Another favorite is
Rentrak (RENT: news, chart, profile), the Portland, Ore.-based maker of data tracking software
for movie studios and video store chains. "This company could evolve into something really big," Corbett said. He
calls Rentrak's 20-year database of consumer buying a "hidden asset" that can be leveraged. Rentrak also is
debt-free, he said. The stock finished a penny higher at $6.67 on Wednesday.
Flanders (FLDR: news, chart, profile), the St. Petersburg, Fla.-based air filter maker which sells filters under its
own name and the Arm & Hammer and Lysol brands, is his third pick. He expects Flander's revenue to grow from
military contracts the company is bidding on and an upcoming national ad campaign Lysol is expected to unveil.
The stock closed 7 cents higher at $5.70 on Wednesday.
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