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By Michael Breen | 10-21-2009 04:49 PM

Micro-Cap Wallflowers Ready to Bloom

Heartland Value Fund's Bill Nasgovitz says there are still bargains among micro-cap stocks and offers two recent picks with a catalyst for growth.

Michael Breen: Greetings. This is Mike Breen from Morningstar. I'm here with Bill Nasgovitz of the Heartland Funds. They've been around for about 30 years as a firm, and the Heartland Value Fund, which Bill runs, has been around for a quarter century just this year, I believe. How are you doing Bill?

Bill Nasgovitz: Good Mike.

Breen: You were one of the pioneers in micro-cap value investing. Maybe you can kind of briefly comment on what you have sort of seen as the trend over time in micro-cap investing. We were discussing a little earlier sort of analyst coverage, ebbs and flows in there, and you are at a certain point in time now. Maybe you can kind of comment on just the entire environment for micro-cap investing.

Nasgovitz: Well, the value fund is a barbell of small and micro-cap stocks. And micro to us is less than $250 million in market value. So if people are looking for capital gains, we believe that's the best place to look. These smaller companies are not covered by Wall Street, generally speaking, but they're one of the fastest-growing sectors in the U.S. economy and therefore, we think, a fertile ground to be hunting for values that can build one's net worth.

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