APG - Bernzott Capital Advisors U.S. Small Cap Value Fund Q4 2023 Commentary

2024-01-30 12:05:00 ET

Summary

• Bernzott Capital Advisors is an independent money manager for institutional and private clients. We are 100% owned by employees and an employee-related individual.
• Global financial markets rallied in 4Q, with small cap stocks leading the way.
• Despite the overall rally in small caps, valuations relative to large caps remain very attractive with small caps trading at over a 3-turn discount compared to large caps.
• The combination of weaker oil and natural gas prices coupled with depressed rig counts negatively impacted the stock.

4Q23 Market Overview

Global financial markets rallied in 4Q, with small cap stocks leading the way. Dovish FOMC commentary driven by lessening inflation concerns drove the stock market higher. Interest rates declined and expectations for a soft landing increased as recession fears faded.

The FOMC stayed the course with no changes to interest rates following their 3Q pause. The benchmark 10-year Treasury yield fell from 4.67% to 3.87% marking the lowest levels since earlier in the summer. Oil prices declined despite support from OPEC on fears of declining demand and seasonality....

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