META - Royce Investment Partners 2023 Annual Letter

2024-02-16 09:50:00 ET

Summary

• Royce Investment Partners are pioneers in small-cap investing who’ve been actively managing portfolios since 1972. Small-cap investing is  our primary business and this distinguishes us from most other asset managers.
• 2023 held particular interest for equity investors—specifically those of us who focus on small-cap stocks.
• The most consistently predicted and regularly anticipated recession—said to be imminent since 2021—once again failed to materialize in 2023.
• For all of the encouraging developments, the U.S. economy is at this writing in something of a schizoid condition, with high levels of consumer spending on one hand and a manufacturing and industrial slowdown on the other.
• Closer to our zone of expertise, earnings growth for small-cap companies is currently expected to be higher than for larger-cap businesses in 2024.

2023: The Dog That Didn't Bark

While every year is eventful and interesting in its own right, we think 2023 held particular interest for equity investors-specifically those of us who focus on small-cap stocks. There was no shortage of consequential geopolitical developments. Some, like the war in Ukraine, showed no evidence of ending or abating, while others, like the terrorist attack on Israel and consequent bombings in Gaza, were new events, as were the well-publicized implosions of Silicon Valley ( SIVBQ ), Signature ( SBNY ), and First Republic Banks ( FRCB )....

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