Microcaps Look Cheap Versus Large Caps as Discounts Grow Worldwide
Citing Verdad Advisors research, Barron's says microcaps in the US, Europe and Japan trade at wide discounts to large companies.
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what happened
Barron's columnist Alex Rosenberg argues that the smallest listed companies may hold outsized value. Citing research from Verdad Advisors, he notes that the S&P 500 trades at 19.4 times enterprise value to EBITDA, while US microcaps sit at 5.9, European microcaps at 4.2 and Japanese microcaps at just 2.8.
On price-to-book the picture is similar: 8 for the S&P 500, 1.5 for US microcaps and 0.8 for Japanese ones. Microcaps have long traded at a discount, but that gap has widened noticeably within each market in recent years and is now unusually large across several regions.
Rosenberg cautions that Verdad runs funds targeting small global value stocks, so its conclusions deserve skepticism. Larry Swedroe, he says, has put his entire equity allocation into small value. The piece concludes that cheap valuations alone do not make a bullish case, though global microcaps may reward patient stock selection.
why it matters
The message for markets is that valuation gaps between the largest companies and smaller ones may stretch beyond the US, but cheapness alone does not guarantee share price gains.
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sources
- Tiny Stocks Can Produce Big Returns — Barrons.com, 12 November 2026 at 23:10 UTC
prepared by the newsmetry newsroom with ai assistance from the sources listed below. not investment advice.
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