Daily News from New York, New York • 29

HONEYWELL QURLCOMM WAL-MART COMING T0K0S18W Hot Copy IBM MCDONALD'S urn $1.29 $28.67 Paul D. Colford has the latest on books, magazines and other media $1.03 $16.65 $1.60 $38.70 $2.15 $49.35 $1.35 $48.15 $2.15 $113.60 CISCO SYSTEMS .0 HQ ID ULIUU 1 tion, the shop gets quite a few celebrities. Just the other day, Samuel L. Jackson came in to shop for a component for his Mac, and Sal- man Rushdie stopped by for a re software as well. Most of the staffers treat it as a day job; they are artists or actors or opera singers in real life.

"Of course we have to make money," said Lerner, a 48-year-old with a thick ''Si? i 1 set's say they have a flashing question mark instead of a happy face, and they've lost all their data clearly it's not a very happy day." KEN GLICKF1ELD, store manager at TekServe 7'- 'V beard. "But we're not as bottom-line focused as some other places might be," he said, interrupted by an announcement over a crackly intercom: "Cookies and ice cream are now in the kitchen," which generated loud cheers. The afternoon was wearing on and the waiting room was packed: computers that froze randomly, computers that wouldn't wake up, computers with stuck battery compartments, computers blown out by a lightening strike. Incontinent pets and computers are another common problem. While TekServe has very little competition, Apple Computer soon plans to open its own sales and repair shop in lower Manhattan.

But Lerner isn't too worried. "I can't imagine it'll be anything like this," he said. I TekServe, at W. 23rd Street in Manhattan, has been bringing malfunc tioning Macintosh computers back to life for more than 10 years. ff sands eauiig Sarge-aps pair.

Even Carrie Bradshaw, the romantically challenged newspaper columnist played by Sarah Jessica Parker on HBO's "Sex and the City," will go to TekServe when her trusty laptop breaks down later this season. But the populist spirit of Tek-Serve's founders has endured. The shop has stuck solely to Macs They tend to appeal to creative types, so we have more interesting customers," Lerner explained and the shop now sells Macintosh computers and By DAVID ANDELMAN DAILY NEWS BUSINESS WRITER Small is good. Smaller is even better. What that means, at least for investors, is that small companies have been the place to be this year and so-called micro-caps have been an even better place.

With the halfway point of the year less than two weeks away, small-cap stocks have outdistanced the blue-chip big-cap stocks of the Dow by threefold. "These are real companies, the backbone of the economy, they're just small," explained Dan Vera, a money manager at Palisade Capital Management. "They'd been written off as irrelevant, but I've made a fortune off these companies." When it comes to mutual funds this year, performance of small value funds have vastly outdistanced large value funds, according to the research firm Morningstar. Small value funds have risen 11 so far this year, while large value funds have slid 4. i( TKefbppVrforming small-cap SiillilllrG Small-Cap Value Funds 10.5 Mid-Cap Value Funds 3.5 Large-Cap Value Funds 1.4 Small-Cap Growth Funds 7.5 Mid-Cap Growth Funds 15.4 Large-Cap Growth Funds 16.7 SOURCE: Morningstar ROBERT ROSAMIUO DAILY NEWS tlm imsi occupy a narrow niche that they can control more effectively.

Veru pointed to Cooper Companies, with a nearly $700 million stock market value, which makes specialty contact lenses to correct for such problems as astigmatism. "Its earnings per share are growing at 30 a year," said Veru, who said the GE Small Cap fund he manages for Palisade owns a stake in Cooper. "Bausch Lomb just announced it will miss earnings forecasts again. They're a big-cap company on the commodity side of the business." Larsen especially likes small-cap companies in the energy, health care, retailing and media industries. Above all, he said, today's economic climate, with a string of interest rate reductions by the Fed, has historically been the environment where small-caps thrive.

"In the five times in the past that the Fed has cut rates five times or more, looking six to 12 months after these rate cuts, small-caps have outperformed the Nasdaq, the and the "Dow. You cant fight that." cap funds that invest in companies worth up to $1.5 billion. "Smaller has definitely been better this year," said Bradley Sweeney, a fund analyst at Morningstar, though even micro-cap funds typically won't buy stocks under $100 million market capitalization or those with shares selling for less than $1. There are several aspects of smaller companies that make them especially attractive for investors in a rocky economy. First, they're cheaper and historically have outperformed their large competitors.

"The long-term annual return for blue-chip is 9 to 10," said Ed Larsen, chief equity officer at the AIM Funds, "but the return is closer to 12 for small-caps." Second, according to Larsen, they are especially attractive now because most small-cap companies have a domestic focus and aren't subject to the whims of currency fluctuations. A strong dollar is making it much more expensive and difficult for big international companies to sell their products abroad. And most smaller' companies and have a total stock market valuation computed by multiplying a company's stock price by the total number of shares of less than $500 million. While some companies in this crowd were one-time high-flyers that have fallen back to earth such Ask Jeeves, and Silicon Alley's TheStreet.com and Agency.com many are small but growing companies. i The 75 micro-cap funds monitored by Morningstar were up 14 through the end of May, compared with an average' re- 'fuVri W22 value fund RBB Boston Partners Smallcap Value Fund is up 35 this year.

As for the once-hot growth funds, they've all lost money, but small-cap growth funds have lost less than half as much as their large-cap brethren. Indeed, a few, have dramatically outperformed the indexes, like the No. 1 ranked Schroder Ultra Fund, which has risen 29 so far this year. Best of all are the micro-caps, typically the smallest of publicly traded companies. -Their shares "often are less' fhari Sit) a piece.