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TWEEDY, BROWNE COMPANY L.P.
What Has Worked in Investing
 (continued from preceding page)


Small Market Capitalization Low Price to Book Value Companies as Compared to Large Market Capitalization Low Price to Book Value Companies

Eugene L. Fama and Kenneth R. French examined the effects of market capitalization and price as a percentage of book value on investment returns in The Cross-Section of Expected Stock Returns, Working Paper 333, Graduate School of Business, University of Chicago, January 1992. All non-financial New York Stock Exchange, American Stock Exchange and NASDAQ companies included in the Center for Research in Security Prices file for which data was also available in the Compustat database were ranked according to stock price as a percentage of book value and sorted into deciles. Then each price/book value decile was ranked according to market capitalization and sorted into deciles. The study examined investment returns from July 1963 to December 1990. Average aunnal equal-weighted investment returns for each of the ten market capitalization deciles which comprised each of the ten price/book value deciles are presented below in Table 6.

Table 6:
July 1963 through December 1990 Annual Investment Returns for Low versus High Price/Book Value Stocks According to Market Capitalization within each Price/Book Value Category for New York Stock Exchange, American Stock Exchange and NASDAQ Listed Stocks

                                                                      Ratio of Price to Book Value Decile
                                (Highest Price/Book Value)                          (Lowest Price/Book Value)

Market
Capitalization
Decile

1 (Smallest Market
  Capitalization)
2
3
4
5
6
7
8
9
10 (Largest Market   Capitalization)
All Companies in Each
Price/Book Value Decile



1

8.4%
5.2
6.7
4.7
10.6
8.4
11.4
7.9
5.3

11.2
7.7



2

13.7%
12.6
10.6
8.6
7.8
11.8
12.0
13.6
10.7

10.6
  11.8



3

14.4%
11.5
14.8
12.7
13.0
13.7
11.9
10.9
11.0

10.1
12.7

4

17.2%
14.3
11.4
16.3
17.6
14.8
10.0
11.4
12.0

8.5
14.0



5

18.7%
16.0
16.3
13.6
13.6
11.3
11.9
11.9
12.6

9.5
14.9



6

18.1%
14.3
15.6
14.5
17.2
15.2
13.6
12.1
11.2

10.0
15.1



7

20.4%
19.0
15.6
16.1
17.3
14.3
11.9
13.8
9.8

9.7
16.7



8

20.5%
15.4
16.8
19.1
15.1
14.3
13.9
12.6
13.3

11.5
16.8



9

21.8%
17.2
18.5
18.1
18.2
14.9
13.2
15.5
12.5

11.6
18.0



10

23.0%
21.5
19.2
17.6
17.9
18.0
17.6
18.6
14.6

14.2
19.6


Page 8 of 42

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