Throughout history, small- and micro-cap equity markets have outperformed the large-cap market - but with greater volatility. In addition, smaller companies normally have fewer analysts tracking and providing research on them. The conjunction of these items provides suitable conditions for convertible arbitrage. Because convertible arbitrage depends on gaps of relative value forming between the convertible security and the underlying equity, whether or not a company is efficiently priced becomes irrelevant. The likelihood of a derivative tracking a faster moving, poorly reported, underlying security is lower than it tracking other types of securities - and this is where we obtain a competitive advantage.