DEFINITION of 'Nano Cap'

Small public companies with a market capitalization below $50 million. Investors looking to invest in nano-cap companies should be aware that these small firms are often associated with a very high risk of failure. Conversely, nano-cap stocks are often referred to as "penny stocks," which are quite popular with novice investors who have a large appetite for risk.

BREAKING DOWN 'Nano Cap'

This is as small as you can get. Nano caps are very risky because they are such small companies. Keep in mind that classifications such as "large cap" or "small cap" are only approximations that change over time. Also, the exact definition of the various sizes of market cap can vary between brokerage houses.

RELATED TERMS
  1. Large Cap - Big Cap

    A term used by the investment community to refer to companies ...
  2. Micro Cap

    A publicly traded company in the United States that has a market ...
  3. Small Cap

    Refers to stocks with a relatively small market capitalization. ...
  4. Russell Small Cap Completeness ...

    A capitalization weighted index composed of all of the Russell ...
  5. All-Cap Fund

    A stock mutual fund that invests in equity securities without ...
  6. Capped Rate

    An interest rate that is allowed to fluctuate, but which cannot ...
Related Articles
  1. Investing

    What's a Small Cap Stock?

    The “cap” in small cap stocks refers to a company’s capitalization as determined by the total market value of its publicly traded shares. Small cap stocks are generally defined as the stock of ...
  2. Investing

    1Q Small Cap Earnings Preview: The Tide Has Turned

    Earnings growth for small caps should trail large caps badly in the first quarter.
  3. Trading

    Small Caps Are Just Too Risky At These Levels

    With the rise in the markets over the past few weeks many traders are starting to wonder if now is the time to buy small caps. These 3 charts suggest that it may be best to wait.
  4. Investing

    Small Caps Boast Big Advantages

    Find out why little companies have the greatest potential for growth.
  5. Investing

    Which Mutual Fund Market Cap Suits You?

    Different funds invest in companies with different market caps. Find out which is right for you.
  6. Investing

    Small Caps Are Headed For A Pullback (IWM, VSS)

    The charts of the ETFs that track small-cap stocks look poised for a drop.
  7. Investing

    6 Investment Styles: Which Fits You?

    How you invest is just as important as what you buy. Find out which style is right for you, and how to follow it.
  8. Insights

    Bank of America Turns Bearish on Small-Cap Stocks

    Bank of America dumps small caps as the Russell 2000 can't keep up with the big boys.
  9. Investing

    The Lowdown On Penny Stocks

    Think penny stocks will make you rich? If you don't understand the risks, you could end up penniless.
RELATED FAQS
  1. Are small cap companies a safer investment than large cap companies?

    Learn about the safety of small caps compared to large caps. Find out which key measures they differ on and which to pick ... Read Answer >>
  2. Are small cap companies more risky investments than large cap companies?

    Learn about the risk of small cap companies compared to large cap companies. Compare the volatility of both and learn how ... Read Answer >>
  3. Is there such a thing as a nano cap or micro cap index?

    While there are indexes that track micro cap stocks, there are few indexes tracking nano caps. Although definitions vary, ... Read Answer >>
  4. What are some of the best small cap index funds?

    Learn about the best small-cap index funds, such as the iShares Russell 2000, IWM due to its low costs; liquidity; and diversification. Read Answer >>
  5. Why should I be looking at small cap stocks as a potential investment?

    Discover the role of small-capitalization stocks in an equity portfolio, and learn why investors take on additional risk ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. Backward Integration

    A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it ...
  3. Pari-passu

    A Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors or obligations ...
  4. Interest Rate Swap

    An agreement between two parties (known as counterparties) where one stream of future interest payments is exchanged for ...
  5. Custodian

    A financial institution that holds customers' securities for safekeeping so as to minimize the risk of their theft or loss. ...
  6. Supply Chain

    The network created amongst different companies producing, handling and/or distributing a specific product. Specifically, ...
Trading Center