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Babson Enterprise's Extended Reach Could Be a Concern

Rapid asset growth and a move up the market-cap ladder would concern us.


Babson Enterprise (BABEX), a micro-cap fund, amended its prospectus today to allow the portfolio to buy slightly larger companies.

Whereas previously the fund's prospectus stipulated that the portfolio would predominantly buy companies with market capitalization specifically between $15 million and $300 million, the amendment allows the fund manager to acquire stocks with "market capitalization (share price multiplied by outstanding shares) at time of purchase that is below the dollar-weighted median market capitalization of companies in the Russell 2000 index." The prospectus amendment goes on to say that currently counts stocks in the $15-million to $500-million range as fair game.

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Bridget B. Hughes does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.