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Beyond The Zulu Principle: Extraordinary Profits from Growth Shares by Jim Slater

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12. Other Investment Criteria

Small market capitalisation

In The Zulu Principle, I coined the expression ‘elephants don’t gallop’. It is obviously far easier for a management team to double the size of a company capitalised at £10m than one worth £1bn. From an investor’s point of view, an attractive range is between £30m and £250m.

Over the last 50 years or so, small companies have outperformed the market by about 3.8%, but they are often out of favour for several years at a stretch. The main disadvantage of small companies is that they lack marketability and therefore do not appeal to many of the institutions. For private investors, with only a few thousand shares to buy in each company, getting in and out is usually not so much of a ...

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