Investing Outside the Box

The manager of Intrepid Small Cap goes wherever he sees the best opportunities.

What's in a name? Not much, apparently, when it comes to Intrepid Small Cap (symbol ICMAX). The $88-million fund holds some decidedly big companies, such as Newmont Mining (market capitalization: $20 billion) and Dutch brewer Heineken ($16 billion). Unable to find stocks that met his criteria, manager Eric Cinnamond also kept as much as 40% of the fund's assets in cash last year. Thanks to that decision in particular, Intrepid was one of only six diversified U.S. stock funds to make money over the past year. "Maybe that proves that the right way to manage assets is not to sit in a style box that a consultant told us we need to be in," says Cinnamond.

To be fair, Intrepid in its current incarnation isn't entirely devoid of small companies. At last report, it had 42% of its assets in small companies and 28% in micro caps (as well as 15% still in cash). Cinnamond, who launched the fund in 2005, looks for stocks that sell for at least 20% below his assessment of the underlying company's value. He prefers high-quality concerns with little to no debt and strong free cash flow (the money left over each year after capital outlays).

Cinnamond is especially drawn to energy stocks (21% of assets). Unit Corp. (UNT), a natural-gas producer, is his biggest holding. With 569 billion cubic feet of natural gas and more than 120 rigs, Unit is worth about $2 billion, or $42 a share, says Cinnamond. The shares, which he first bought last October at less than $30, closed at $35 on May 8.

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Stacy Rapacon
Online Editor,

Rapacon joined Kiplinger in October 2007 as a reporter with Kiplinger's Personal Finance magazine and became an online editor for in June 2010. She previously served as editor of the "Starting Out" column, focusing on personal finance advice for people in their twenties and thirties.

Before joining Kiplinger, Rapacon worked as a senior research associate at b2b publishing house Judy Diamond Associates. She holds a B.A. degree in English from the George Washington University.