At the end of 2013 I wrote an article featuring the best performing small mutual funds from 2013. These funds delivered massive gains, with all ten rising by 37% or more throughout the year.
Today I want to go under the cover of the best mutual fund in 2013, Bridgeway’s Ultra-Small Company Market (BRSIX).
With a 48% return in 2013, there’s really nothing bad to say about the Bridgeway Ultra-Small Company Fund. It holds the smallest of the small companies in the New York Stock Exchange. With the mutual fund’s average holding having a market cap of just $156 million, this is one of the rare micro-cap funds out there that hasn’t evolved into a small-cap fund.
Accordingly, it’s only for those who want tiny companies in their portfolios.
The mutual fund holds around 600 stocks, and rarely do any make up more than 1% of the fund. It is led by Bridgeway’s founder John Montgomery, who has a background in statistics and mass-transit management. There is a strong quantitative approach to managing the fund. Interestingly, not one manager has left the fund over the past five years.
Given that BRSIX outperformed 85% of its peers and posted another banner year in 2013, this micro-cap mutual fund is worth a look. And for those interested in what’s working within the fund, here are some details on two of BRSIX’s top performing stocks year-to-date.
2 Great Stocks from the Best Mutual Fund of 2013
AtriCure (Nasdaq:ATRC): Up 16% YTD
AtriCure is in the red hot medical device industry. Its specialty is developing devices to help surgeons during open heart surgery. The company’s devices include implants as well as devices that are helping to reduce the global atrial fibrillation epidemic. Like many small medical device companies, AtriCure is not yet profitable. But steady revenue growth and fat gross margins are sending a message to the market that this company is doing a lot of things right.
Revenues in 2013 grew by 17% to $82 million and gross margins came in at 72.7%. In 2014, management expects revenues to grow by 22% – 26% to around $101 million as sales of open heart products continue to meet surgeon needs. The company has a market cap of $416 million.
REX American Resources (NYSE:REX): Up 28% YTD
REX produces ethanol. The company has seven production facilities, which collectively sold 725 million gallons of ethanol in the company’s last 12 month reporting period. As an ethanol producer, the quantity of corn harvested and the price of corn have a large impact on revenues and profits.
It’s also exposed to Environmental Protection Agency (EPA) regulations dictating how much ethanol is blended with oil. Profits have grown by an impressive 136% over the past nine months due to higher ethanol crush spreads.
Investors will want to check out REX’s operations, which use ICM technology by Fagen, one of the largest green energy design-builders in the states. As a final note, the company will report Q4 results next Wednesday, so if you’re interested in this name make sure to tune in to learn more details.
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