Since its founding in 1986, the Oberweis name has become a mainstay in the small-cap mutual fund world. The high risk, high reward nature of this fund family is definitely intriguing. Oberweis is led by founder Jim D. Oberweis and his son, Jim W. Oberweis. Jim W. is the day-to-day manager of the three funds this firm offers: micro-cap growth (<$250M), emerging growth (<$1B), and mid-cap growth (>$1B>$8B).

Although the three different funds invest in companies of differing sizes, the overall strategy is very similar: invest in companies that, based on their solid business opportunities, have the potential to demonstrate incredible run ups in share price. The most important factors affecting Oberweis’ investments revolve around what has become known as the "Oberweis Octagon." Basically it is a screen that combines both qualitative and quantitative characteristics of companies; here is a brief overview of the criteria the Oberweis Octagon requires of its potential picks:

Due in part to these eight criteria, Oberweis’ flagship emerging growth fund remains in the top quintile for both five- and 15-year returns in its category. Despite this fact, there is no denying the inherently volatile nature of the “make-it-or-break-it” companies that this fund family seeks. Its emerging growth fund lagged behind its peers from 1997-2000, but bounced back with vengeance, posting a 63% gain in 2003, significantly boosting its annualized return average. The advantage this fund possesses is the shrewd stock picking ability of Jim W. Oberweis, who earned a computer science degree at the University of Illinois as well as a CFA. Because many of the companies the fund considers are high-tech companies, Jim is able to apply his knowledge of both finance and the tech industry to get a much better sense of whether the companies he analyzes have the ability to succeed.

Despite this fund's volatile and risky nature, we thought that keeping an eye on it was in Coattail Investor's best interest--as Jim W. Oberweis has noted, it only takes a few ten baggers (a term coined by Peter Lynch denoting a 1000% gain) to really boost a portfolio’s returns.