Small-cap bargain hunter buys stake in vitamin firm. (Wall Street West).

When a private investor plunks down a large wad of cash on a public company, some call it a "PIPE" (Private Investment in Public Equity). But Dan Rubin, of Century City-based Rubin Investment Group investment banking shop, has coined his own word: "SIPO" (Single Investor Public Offering). Whatever the acronym (as if Wall Street needed more), last week Rubin sank a cool $3 million into stock sold to him alone by Century City-based Cetalon Corp., a purveyor of vitamin pills and other health products.

What prompted Rubin's investment was Cetalon's increasing presence within giant retailer Sears, Roebuck & Co. Cetalon bills itself as operating "stores within stores," in which Cetalon retails vitamins and other health supplements to the passing crowd. "They now have outlets in 57 Sears, with plans for another 15 to 25 soon," said Rubin.

A fan of small capitalization stocks and even microcaps, Rubin likes the OTC bulletin board-listed Cetalon for its rapid growth, which he thinks will allow it to post profits next year. The stock, trading last week in the $1.75 range, is off from its 52-week high of $5, another aspect Rubin likes.

"What you see in this market is a lot of companies that were once mid-caps now trading as small caps," he said. "They are not down on the fundamentals. They are down with the market."

Once stocks sink below a certain market capitalization, be it $1 billion or $250 million, they fall under minimum capitalization standards required by many mutual funds. In short, the descent into small-capville becomes a tumble into oblivion.

Rubin, who also runs the RIG Microcap Fund LP (which requires a minimum investment of $1 million), noted that small caps have risen this year, even as larger stocks sagged. And since Sept. 20, small caps have been red hot. Investors are puffing money into small-cap funds now, said Rubin, who predicted that 2002 would thus be a banner year for Lilliputian stocks.

"Some of these small-cap stocks will appreciate enough to where they start to get purchased by the big funds again. Then you get a second run," he said.

Contributing columnist Benjamin Mark Cole writes about the local investment community for the Los Angeles Business Journal. His new book is "The Pied Pipers of Wall Street: How Analysts Sell You Down the River," published by Bloomberg Press. He can be reached at [e-mail].