It's no secret that all of the market's best stocks come from the world of small caps. Every single one of the top 10 performers each year start with a market cap below $3 billion.

But great reward comes with great risk, like horses and oats, peanut butter and jelly, lawyers and ambulances ... you can't have one without the other.

One way to help mitigate the chances of your small caps crashing to earth is to choose companies with great management. I think the best way to do that is to consider the Fool's OATS framework: [O]wnership, [A]llocation, [T]enure, and [S]tewardship. I explain the concept in detail here, but in short, an ideal CEO:

  1. Owns a significant chunk of the company
  2. Has proven his capital allocation skills through high return on equity
  3. Has long tenure with the company
  4. Has proven he's a responsible steward by running a transparent operation and keeping salaries and bonuses at reasonable levels

In order to come up with a list of promising stock ideas, I ran a screen for small companies with CEO ownership greater than 5%, return on equity better than 15%, and well-seasoned managers. Here are 10 interesting names.

Company

CEO Ownership

Return on Equity

CEO Tenure

China MediaExpress (Nasdaq: CCME)

40%

71%

Zheng Cheng, 8 years

Fuqi International (Nasdaq: FUQI)

40%

23%

Yu Kwai Chong, 9 years

China Green Agriculture

31%

27%

Li Tao, 10 years

L&L Energy (Nasdaq: LLEN)

26%

54%

Dickson Lee, 15 years

Perfect World

24%

51%

Yufeng Chi, 6 years

STEC (Nasdaq: STEC)

21%

27%

Manouch Moshayedi, 20 years

Jinpan International

15%

21%

Zhiyuan Li, 13 years

TeleCommunication Systems (Nasdaq: TSYS)

12%

18%

Maurice Tose, 23 years

Fuel Systems Solutions (Nasdaq: FSYS)

10%

34%

Mariano Costamagna, 5 years

Trina Solar (NYSE: TSL)

6%

23%

Jifan Gao, 12 years

Data provided by Capital IQ.

These 10 names are good places to start your research. You'll want to pay careful attention to the "stewardship" part of the OATS framework, which screening software cannot handle.

Do you have other well-managed small caps we should know about? Let us know in the comments box below!

Fool analyst Rex Moore will be in attendance for Stephen Strasburg's first major league start. Rex owns no companies mentioned in this article. Perfect World is a Motley Fool Rule Breakers pick. Jinpan International is a Motley Fool Hidden Gems selection. The Fool owns shares of China Green Agriculture, which is a Motley Fool Global Gains recommendation. The Motley Fool has a disclosure policy.