Disruptive Forces In Investing - Small Caps, Big Opportunities

2025-01-08 09:30:00 ET

Summary

• US small-cap equities are at a critical juncture. Valuation gap between small and large-cap stocks grown exponentially wide by historical measures but also numerous small-cap macro tailwinds appear to be gathering force.
• A lot of business optimism tends to really be one of the main drivers of small-cap revenue and cash flow.
• The leverage at the index level is about four turns of debt-to-EBITDA and it's all floating rate.

By Gregory G. Spiegel, Portfolio Manager

Anu Rajakumar chats with Greg Spiegel on the opportunities, risks and potential of this asset class

Anu Rajakumar: US small-cap equities are at a critical juncture. Not only has the valuation gap between small and large-cap stocks grown exponentially wide by historical measures but also numerous small-cap macro tailwinds appear to be gathering force. Small caps also span a vast range of characteristics and performance drivers that even seasoned investors may not fully appreciate. So how can experienced managers have the potential to exploit them in the new year?...

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