1 September 1994Financial Analysts JournalVolume 50, Issue 5
The Free Cash Flow/Small-Cap Anomaly
Kenneth S. Hackel
Among small-capitalization firms, defined as those having market values below $2 billion, some are consistent free cash flow generators, have low financial leverage, and sell at low free cash flow multiples. Presented herein is an investment strategy that selects such securities into a "long" portfolio with returns that outperform the market index, returns of similar-sized securities, returns of firms with similar book-to-market-value ratios, and returns of similar-risk (beta) securities.
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Financial Analysts Journal
CFA Institute Member ContentPublisher Information
Association for Investment Management and Research
10 pages doi.org/10.2469/faj.v50.n5.33ISSN/ISBN: 0015-198X
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