Stocks with a very small market capitalization. Small caps definition varies but generally it is a company with a market capitalization between $300 million and $2 billion.
The biggest advantage of investing in small-cap stocks is the opportunity to beat institutional investors. Most mutual funds have restrictions restricting them from buying stock in a small cap stock. Some mutual funds would not be able to give the small cap a meaningful position in the fund. To overcome these limitations, the fund would usually have to file with the SEC, which means tipping its hand and inflating the previously attractive price.