Small Companies

When you buy shares of a well-managed, diversified equity mutual fund, you may hope to enjoy long-term performance exceeding that of the broad stock market, as measured by Standard & Poor's 500 Index.When you buy shares of an equity fund that is invested primarily in small companies' stocks, you do so because history tells you that it could fare a lot better than the large-company-dominated S&P 500 over the long run.But when you're in such a fund and the market for small-company stocks becomes turbulent, as it was again recently, should you be concerned?

Ann Lansinger has been a part of Baltimore's startup scene for three decades. In fact, she was involved in local tech startups before there ever was much of a scene. Lansinger, who has run Baltimore's Emerging Technology Center in Canton since 1999, is to retire April 5. She will leave behind a record of growth — and an energized tech culture in Baltimore. Lansinger has been a shepherd and witness to some of the region's most promising technology firms and their progress over the last few decades.

Where have all the small stocks gone?Small-company stocks long have been the favorite of small investors. The lure of finding the next Apple Computer or MCI before the Wall Street pros latch on to it is tempting.But investors seeking to use lesser-known companies as the road to wealth today will find fewer and fewer traditional "small cap" stocks, as traders call them.A rally in companies with more modest market capitalization -- that is, share price multiplied by number of shares, or the value of all stock outstanding -- has turned many small caps into bigger fry or made them expensive by various market measures.

Ken Malone and the board members of his startup biotech company gathered in a conference room at the University of Southern Mississippi last October to make a gut-wrenching decision. Ablitech Inc.'s funding was slowly drying up, and it couldn't find new sources in Mississippi. If the company stayed, it would wither away. The only option left for Ablitech, they decided, was for the fledgling company to move. "We called our shareholders together and said, 'Look, if we stay here, we're going to die,'" Malone recalled recently.

Monument Bank of Bethesda has received $11.4 million in federal funds to increase lending to small businesses, the U.S. Treasury announced Wednesday. The money comes from the Small Business Lending Fund, which was created by the Obama administration to encourage banks to loan money to companies to expand and create new jobs. Monument Bank is the second Maryland bank to receive money from the fund. Eagle Bancorp of Bethesda received $56.6 million in July. The fund provides capital to community banks that hold less than $10 billion in assets.

When most of us think of corporate gifts to charity, we form a mental image of giants like IBM, which gave more than $150 million to charities last year. After all, such companies have entire departments devoted to boosting the company's community image through charitable donations.But think again. Small- and medium-sized companies, ranging from the mom-and-pop delicatessen to the entrepreneurial high-tech upstart, also donate a significant amount of money each year.Such smaller companies are providing the fuel to keep our economic engine running, economists note.

Ken Malone and the board members of his startup biotech company gathered in a conference room at the University of Southern Mississippi last October to make a gut-wrenching decision. Ablitech Inc.'s funding was slowly drying up, and it couldn't find new sources in Mississippi. If the company stayed, it would wither away. The only option left for Ablitech, they decided, was for the fledgling company to move. "We called our shareholders together and said, 'Look, if we stay here, we're going to die,'" Malone recalled recently.

As the economy continues to struggle and America tries to reclaim its place in the global economic and financial markets, small business once again is left holding the proverbial bag. As attorney and author Steve Strauss asked in his Aug. 8 column in USA Today, how do we pump the entrepreneurial well even deeper in the face of so much legislative, political, and global red tape? With unemployment constantly hovering around 9 percent and fear grasping every American from Main Street to Wall Street, how does the small business owner stand a chance of survival, let alone the ability to grow and prosper?

NEW YORK -- As blue-chip stocks continue to lurch through a disappointing year, small-company stocks are jetting upward, thanks to confidence in the economy and worries about overseas economies.Two indexes that trace small stocks closed yesterday near all-time highs, with the NASDAQ Composite up 4.04 points, to 642.61, just a hair off its record of 644.92, set in February, and the Russell 2000, which follows generally smaller companies, up 1.09 points, to 209.77, also near its record high of 212.61, set in February.

Ann Lansinger has been a part of Baltimore's startup scene for three decades. In fact, she was involved in local tech startups before there ever was much of a scene. Lansinger, who has run Baltimore's Emerging Technology Center in Canton since 1999, is to retire April 5. She will leave behind a record of growth — and an energized tech culture in Baltimore. Lansinger has been a shepherd and witness to some of the region's most promising technology firms and their progress over the last few decades.

As the economy continues to struggle and America tries to reclaim its place in the global economic and financial markets, small business once again is left holding the proverbial bag. As attorney and author Steve Strauss asked in his Aug. 8 column in USA Today, how do we pump the entrepreneurial well even deeper in the face of so much legislative, political, and global red tape? With unemployment constantly hovering around 9 percent and fear grasping every American from Main Street to Wall Street, how does the small business owner stand a chance of survival, let alone the ability to grow and prosper?

Monument Bank of Bethesda has received $11.4 million in federal funds to increase lending to small businesses, the U.S. Treasury announced Wednesday. The money comes from the Small Business Lending Fund, which was created by the Obama administration to encourage banks to loan money to companies to expand and create new jobs. Monument Bank is the second Maryland bank to receive money from the fund. Eagle Bancorp of Bethesda received $56.6 million in July. The fund provides capital to community banks that hold less than $10 billion in assets.

P resident Obama pledged to make job creation a top priority in his State of the Union address, and his appearance at a Highlandtown machine shop last Friday confirmed it. But while his proposed $5,000-per-new-job tax credit for small businesses sounds helpful, it's a relatively paltry incentive and ripe for abuse from firms that are bound to find ways to collect the credit without necessarily expanding their payroll. If voters are angry that so much money went to bail out banks, will they necessarily be excited by the prospect of small businesses getting a one-year $33 billion hand-out and Social Security discount?

President Obama pledged to make job creation a top priority in his State of the Union address, and his appearance at a Highlandtown machine shop last Friday confirmed it. But while his proposed $5,000-per-new-job tax credit for small businesses sounds helpful, it's a relatively paltry incentive and ripe for abuse from firms that are bound to find ways to collect the credit without necessarily expanding their payroll. If voters are angry that so much money went to bail out banks, will they necessarily be excited by the prospect of small businesses getting a one-year $33 billion hand-out and Social Security discount?

For two years, market watchers have been nagging investors to be careful about overdosing on small-company stocks, and to stop shunning large companies. But those who listened regretted it, as the smaller stocks continued to outperform - until recently. Now, small caps are lagging, and some experts say it could get much worse. As fear took hold of investors recently amid signs of a potential credit crunch and worsening housing recession, investors turned away from the most fragile companies, and small-cap mutual funds became fund investors' biggest losers.

Investing in microcaps seems like searching for a needle in a haystack. There's sometimes scant public information. Many don't meet listing standards of major exchanges and trade on the over-the-counter market. They tend to be newer firms with greater risk. If you're bold enough to invest in the stock of one of these companies, you must do your homework. If you put money in a fund specializing in them, you must expect volatility. Lately, overall performance hasn't exactly shot out the lights, either.

For two years, market watchers have been nagging investors to be careful about overdosing on small-company stocks, and to stop shunning large companies. But those who listened regretted it, as the smaller stocks continued to outperform - until recently. Now, small caps are lagging, and some experts say it could get much worse. As fear took hold of investors recently amid signs of a potential credit crunch and worsening housing recession, investors turned away from the most fragile companies, and small-cap mutual funds became fund investors' biggest losers.

While many companies cut employees as sales slowed in the first half of this year, Baltimore-based Under Armour Athletic Apparel added 15 people, increased revenue by nearly 400 percent and moved into a new office building. As they work from the newly renovated, 10,000- square-foot building in the shadows of PSINet football stadium, the executives of Under Armour are planning for more growth. The company, which manufactures moisture-wicking athletic wear, is creating a new women's line and looking to build its customer base, which includes the Baltimore Ravens and 27 other NFL teams.

CHICAGO -- The new head of the Small Business Administration, a former executive at a decidedly big business, says his agency must do a better job of helping minority, rural and inner-city small companies grow. "That's a huge social opportunity for us," said Steven C. Preston, who became the SBA's administrator in June. Preston is taking on a small agency with vocal critics who claim that too many federal contracts are going to giant businesses when they should be allocated to small companies.