Ultra-Small Company Market

Objective

In managing ultra-small company portfolios, we seek to provide long-term capital appreciation through a passive approach to investing in the smallest publicly-traded stocks.

Investment Process

Investment Universe
Bridgeway defines ultra-small companies as those with market capitalizations in the smallest 10% of companies listed on the New York Stock Exchange, as reflected in the roughly 1800-2000 companies included in Chicago’s Center for Research in Security Prices Cap-Based Portfolio 10 Index (“CRSP 10”).

Security Selection and Weighting
Security selection is passive, and is designed to produce a portfolio that roughly matches the sector and industry makeup of the CRSP 10 Index. Stocks are weighted roughly equally at time of purchase, with initial position weights generally less than 0.5%. A company may be excluded from the portfolio if Bridgeway believes it is on its way to bankruptcy. Bridgeway focuses strongly on trading efficiency and managing bid/ask spreads to the advantage of shareholders.

Sell Decisions

Bridgeway employs a buy and hold approach to investing under this style. Factors which may result in the sale of some or all shares of a particular security include:

• Rebalancing of the portfolio to follow the sector and industry representation of the CRSP 10 Index
• Tax loss harvesting
• Liquidity considerations
• Market capitalization guidelines

Available Investment Vehicles