Small Cap Stocks: A Hunting Ground for Opportunities

During their latest episode of the VALUE: After Hours Podcast, Taylor, Carlisle, and Brewster discussed Small Cap Stocks: A Hunting Ground for Opportunities. Here’s an excerpt from the episode:

Bill: Yeah. The other thing your veggies reminded me of a little bit is like– So Peter Mantis is pitching the idea of these life sciences companies. I think some of the smaller ones, if you can get your head around them, like, some of the higher valuations– There might have been a grain of truth in what people saw. And now that small caps have been decimated– I don’t care what the sector is. I just think there’s probably some opportunity still from this grain of truth turning into misery in people’s accounts and people still don’t want touch this stuff. I’m convinced there’s opportunity in small. Convinced.

Jake: Like cheap pipelines, basically?

Bill: Yeah. I’m sure it’s throughout different industries, but I just think that there’s things that ran up and then got decimated. That’s got to be a good hunting ground in general right now, because they have not reflated all the way. I’m certain of that.

Jake: Yeah.

Tobias: Universe of Smalls is quite big at the moment because it includes a whole lot of mid-caps too.

Jake: [laughs]

Bill: Yeah.

Tobias: Former mid-caps.

Jake: Yeah.

Bill: Yeah.

Jake: Soon to be micro caps. [chuckles]

Tobias: Yeah, it seems to be the trend.

Jake: Unless you’re-

Bill: Right before, it’s not though.

Jake: -mega cap.

Bill: It’s the trend until it’s not the trend. And then you have the 1990s to 2007 scenario where it’s like, “Oh, wow, look at all these things that performed really well.” They were left for dead.

Tobias: If you look at small value versus the expected return in large growth, I think large growth is like half small value at the moment. But that’s where small value has no momentum, large growth has a lot of momentum. So, the momentum is a shorter-term thing. It peters out eventually and then probably the underlying– [crosstalk]

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