Category: Commentaries

SMID Cap Value – Q1 2022 Commentary

May 10th, 2022
During the first quarter, equities collectively finished lower as measured by most major equity indices. After a robust fourth quarter and full year in 2021, investors reacted to the prospects of higher inflation, a reduction in fiscal stimulus, an increasingly hawkish Fed position, and a new level of geopolitical risk from Russia’s invasion of Ukraine.…

SMID Cap Growth – Q1 2022 Commentary

May 10th, 2022
Don’t fight the Fed.  Small capitalization growth stocks experienced a rough start to 2022 as market participants internalized higher discount rates and slowing economic growth as it became clear that the Federal Reserve would begin to move more aggressively to combat the continued evidence of persistent inflation. Credit markets saw a rapid move upward in…

Small Cap Value – Q1 2022 Commentary

May 10th, 2022
During the first quarter, equities collectively finished lower as measured by most major equity indices. After a robust fourth quarter and full year in 2021, investors reacted to the prospects of higher inflation, a reduction in fiscal stimulus, an increasingly hawkish Fed position, and a new level of geopolitical risk from Russia’s invasion of Ukraine.…

Small Cap Select SRI – Q1 2022 Commentary

May 10th, 2022
The Market In General: The market experienced a volatile first quarter of 2022.  Investors contended with inflation data that continued to come in ahead of expectations and a US Federal Reserve that finally began to intervene by raising interest rates.  Unfortunately, the Russian invasion of Ukraine has thrown another piece into the economic puzzle.  The…

Small Cap Select – Q1 2022 Commentary

May 10th, 2022
The Market In General: The market experienced a volatile first quarter of 2022.  Investors contended with inflation data that continued to come in ahead of expectations and a US Federal Reserve that finally began to intervene by raising interest rates.  Unfortunately, the Russian invasion of Ukraine has thrown another piece into the economic puzzle.  The…

Small Cap Growth – Q1 2022 Commentary

May 10th, 2022
Don’t fight the Fed.  Small capitalization growth stocks experienced a rough start to 2022 as market participants internalized higher discount rates and slowing economic growth as it became clear that the Federal Reserve would begin to move more aggressively to combat the continued evidence of persistent inflation. Credit markets saw a rapid move upward in…

Small Cap Core – Q1 2022 Commentary

May 10th, 2022
The Market  While we generally expected the economy to bounce back as the pandemic eased, there have been a few surprises.  Housing and other consumer-driven spending have been resilient in our view.  Consumer debt/credit transactions have risen 31% from the same period in 2019, which we view as a remarkable statistic reflecting the unabashed loosening…

Mid Cap Value – Q1 2022 Commentary

May 10th, 2022
During the first quarter, equities collectively finished lower as measured by most major equity indices. After a robust fourth quarter and full year in 2021, investors reacted to the prospects of higher inflation, a reduction in fiscal stimulus, an increasingly hawkish Fed position, and a new level of geopolitical risk from Russia’s invasion of Ukraine.…

Micro Cap – Q1 2022 Commentary

May 10th, 2022
Market Review The Russell Microcap® Index declined 7.60% in the first quarter of 2022, in line with small cap’s (Russell 2000®) decline of 7.53% and lagging the S&P500®’s decline of 4.60%. For the Russell Microcap® Index, the strength in commodity prices resulted in Energy and Materials being the strongest sectors. Within Energy, the impact from the…

Extended Small Cap – Q1 2022 Commentary

May 10th, 2022
The transition from Q421 to Q122 carried with it some elements of déjà vu from last year’s turn of the year.  After strong returns to close out 2021, the first quarter of 2022 saw a return to macro-driven forces and a volatile market, much like the start of 2021.  Likewise, we witnessed a return of…

ESG SMID Cap – Q1 2022 Commentary

May 10th, 2022
The Russell 2500™ index declined 5.82% in the first quarter of 2022, as the uncertainty caused by Russia’s invasion of Ukraine and heightened expectations of a more restrictive U.S. monetary policy weighed on investor sentiment.  Companies continue to grapple with supply chain challenges and labor availability constraints, though the latter appear to be improving as we…

All Cap Value – Q4 2021 Commentary

January 26th, 2022
During the second half of 2021, equity markets continued to move higher at a steady pace allowing the S&P 500® to finish the year up 26.9%.  Equity market appreciation for 2021 fought through numerous headwinds including supply chain disruptions, increasing inflation and disruption from the new COVID-19 pandemic variants of Delta and Omicron. Support for…

Extended Small Cap – Q4 2021 Commentary

January 26th, 2022
We turn most years with a combination review of the past 12 months receding in the mirror and an assessment of the economy and markets as we enter the year ahead, most often with a healthy dose of humility thrown in.  We try to remind ourselves (and our readers!) about the importance of listening to…

Micro Cap – Q4 2021 Commentary

January 26th, 2022
Market Review The Russell Microcap® Index declined 2.66% in the fourth quarter of 2021, resulting in a full year return of +19.34%.  Microcap stocks outperformed their small cap counterparts modestly in 2021 but lagged the S&P 500® for the full year.   The solid absolute performance from US equities in 2021 was achieved in spite of unique…

Mid Cap Value – Q4 2021 Commentary

January 26th, 2022
Equity markets closed out 2021 with generally positive returns for the fourth quarter. For the fourth quarter, the Kennedy Capital Mid Cap Value (MCV) composite returned 8.8% (gross of fees) and 8.6% (net of fees) compared to the Russell Midcap® Value (RMV) Index which returned 8.5%. For the full year, the MCV composite increased 32.2% (gross…

Small Cap Select – Q4 2021 Commentary

January 26th, 2022
The Market In General: US small cap stocks rose slightly in the fourth quarter.  While corporate earnings were generally strong, rising inflation received the bulk of investor attention.  In the face of stronger inflation data, the US Federal Reserve announced an acceleration to the end of their bond buying and forecasted a more aggressive interest…

Small Cap Select SRI – Q4 2021 Commentary

January 26th, 2022
The Market In General: US small cap stocks rose slightly in the fourth quarter.  While corporate earnings were generally strong, rising inflation received the bulk of investor attention.  In the face of stronger inflation data, the US Federal Reserve announced an acceleration to the end of their bond buying and forecasted a more aggressive interest…

Small Cap Core – Q4 2021 Commentary

January 26th, 2022
The Market  Small Cap stocks rose in the quarter, with the Russell 2000® ending the year 14.82% higher than it began.  We certainly view this as a respectable result for small cap stocks, although large caps generally outperformed as evidenced by the 26.5% rise in the Russell 1000®.  A similar dynamic took place in the…

Small Cap Growth – Q4 2021 Commentary

January 26th, 2022
Persistent, not transitory.  In Q4, that descriptor could be applied to several key areas: COVID-19 (and its variants), logistical bottlenecks, lower labor participation . . . and as a result, it also applied to one of the most important variables the market has been monitoring, inflation.  While inflation can, and has been, allowed to run…

Small Cap Value – Q4 2021 Commentary

January 26th, 2022
Equity markets closed out 2021 with generally positive returns for the fourth quarter. For the fourth quarter, the Kennedy Capital Small Cap Value (SCV) composite returned 11.36% (gross of fees) and 11.12% (net of fees) compared to the Russell 2000® Value (R2V) Index which returned 4.36%. For the full year, the SCV composite increased 42.51%…

SMID Cap Value – Q4 2021 Commentary

January 26th, 2022
Equity markets closed out 2021 with generally positive returns for the fourth quarter. For the fourth quarter, the Kennedy SMid Cap Value (SMidV) composite returned 11.8% (gross of fees) and 11.5% (net of fees) compared to the Russell 2500™ Value (R25V) Index which returned 6.4%. For the full year, the SMidV composite increased 40.6% (gross…

SMID Cap Growth – Q4 2021 Commentary

January 26th, 2022
Persistent, not transitory.  In Q4, that descriptor could be applied to several key areas: COVID-19 (and its variants), logistical bottlenecks, lower labor participation . . . and as a result it also applied to one of the most important variables the market has been monitoring, inflation.  While inflation can, and has been, allowed to run…

ESG SMID Cap – Q4 2021 Commentary

January 26th, 2022
The Russell 2500™ index returned 3.82% in the fourth quarter of 2021 and appreciated a robust 18.18% in 2021.  The similar refrains of input cost inflation, parts shortages, logistics challenges, and labor constraints were present throughout the quarter.  Logistics issues were the most frustrating for many management teams, as the disruptions associated with a lack of…

SMID Cap Growth – Q3 2021 Commentary

November 1st, 2021
The third quarter saw equity markets grow increasingly cautious with a shift toward “quality” and away from unprofitable and/or consumer discretionary exposure.  Small capitalization Health Care was the worst performing sector, largely due to the high percentage of non-profitable companies in this area.  This development is not wholly unexpected at this stage of the recovery…

SMID Cap Value – Q3 2021 Commentary

November 1st, 2021
For the three months ended September 2021, the KCM SMID Cap Value Composite experienced a return of -0.73% (gross of fees) and -0.92% (net of fees) as compared to Russell 2500™ Value, which returned -2.07%. For the year-to-date period ended September 2021, the KCM SMID Cap Value Composite experienced a return of 25.79% (gross of…

Small Cap Value – Q3 2021 Commentary

November 1st, 2021
For the three months ended September 2021, the KCM Small Cap Value Composite experienced a return of -0.98% (gross of fees) and -1.20% (net of fees) as compared to Russell 2000® Value, which returned -2.98%. For the year-to-date period ended September 2021, the KCM Small Cap Value Composite experienced a return of 27.97% (gross of…

Small Cap Growth – Q3 2021 Commentary

November 1st, 2021
The third quarter saw equity markets grow increasingly cautious with a shift toward “quality” and away from unprofitable and/or consumer discretionary exposure.  Small capitalization Health Care was the worst performing sector, largely due to the high percentage of non-profitable companies in this area.  This development is not wholly unexpected at this stage of the recovery…

Small Cap Core – Q3 2021 Commentary

November 1st, 2021
The Market  While small cap stocks did come under some pressure during the third quarter, the Russell 2000® has risen 12.41% this year.  Investors are still learning new lessons about the pandemic’s reach this year.  Few had contemplated the logistical complexities that could result as demand for goods and services tilted higher.  We – and the…

Small Cap Select SRI – Q3 2021 Commentary

November 1st, 2021
The Market In General: US small cap stocks declined in the three months ending September 30th, slightly giving back some of the strong performance they posted over the previous five quarters.  This move happened as these past summer months saw an uptick in the Covid-19 Delta variant, mounting pressures on global supply chains, and a…

Small Cap Select – Q3 2021 Commentary

November 1st, 2021
The Market In General: US small cap stocks declined in the three months ending September 30th, slightly giving back some of the strong performance they posted over the previous five quarters.  This move happened as these past summer months saw an uptick in the Covid-19 Delta variant, mounting pressures on global supply chains, and a…

Mid Cap Value – Q3 2021 Commentary

November 1st, 2021
For the three months ended September 2021, the KCM Mid Cap Value Composite experienced a return of 0.42% (gross of fees) and 0.24% (net of fees) as compared to Russell Midcap® Value, which returned -1.01%.  For the year to date ended September 2021, the KCM Mid Cap Value Composite experienced a return of 21.51% (gross…

Micro Cap – Q3 2021 Commentary

November 1st, 2021
Market Review The Russell Microcap® Index returned -4.98% in the third quarter of 2021 and has appreciated 22.59% thus far in 2021.  Microcap continues to be one of the best performing US public equity market indices in 2021, outperforming the Russell 2000® by over 1,000 basis points and the S&P 500® by 700 basis points. The…

Extended Small Cap – Q3 2021 Commentary

October 29th, 2021
We’ve written previously about the unique challenges often present for summer quarters in the equity markets, especially for small cap stocks.  Historically, we’ve observed this primarily due to the market looking for economic or policy direction, many investors being on vacation, and volumes tending to be lighter, which can lead to conflicting or exaggerated signals…

ESG SMID Cap – Q3 2021 Commentary

October 29th, 2021
The Russell 2500™ index declined 2.68% in the third quarter of 2021 and has appreciated 13.83% year-to-date.  Demand remains robust across most sectors of the economy, as the ongoing benefits of government stimulus and the relaxation of COVID-19 restrictions have underpinned growth.  While the absolute performance of small and mid-cap equities has been solidly positive…

SMID Cap Growth – Q2 2021 Commentary

July 31st, 2021
The spring of 2021 in the United States was filled with hope and excitement as both consumers and the markets began to plan for a life beyond COVID-19.  Vaccination rates ramped quickly in urban areas & among the most vulnerable populations, while a second round of stimulus money further shored up consumer balance sheets and…

ESG SMID Cap – Q2 2021 Commentary

July 31st, 2021
The Russell 2500™ returned 5.4% in the second quarter of 2021 and is up 17.0% year-to-date.  Growth stocks moderately outperformed their value counterparts in the quarter, as investors seemed to embrace the premise that inflationary conditions in the near term are unlikely to drive interest rates materially higher.  The impact of government stimulus payments in…

Small Cap Select SRI – Q2 2021 Commentary

July 31st, 2021
The Market In General: US small cap stocks continued their move higher in the second quarter.  This was based on persistent positive macro trends and strong corporate earnings results.  Increasing vaccination rates continued to hasten the economic reopening around the US and additional stimulus checks sustained consumer demand.  While there is evidence of increasing input…

Small Cap Select – Q2 2021 Commentary

July 30th, 2021
The Market In General: US small cap stocks continued their move higher in the second quarter.  This was based on persistent positive macro trends and strong corporate earnings results.  Increasing vaccination rates continued to hasten the economic reopening around the US and additional stimulus checks sustained consumer demand.  While there is evidence of increasing input…

Small Cap Core – Q2 2021 Commentary

July 30th, 2021
The Market  Small cap stocks took a bit of a breather during the second quarter but maintained their year-to-date advantage over the S&P 500®.  Russell 2000® stocks have now risen for 9 consecutive months – a feat unequalled since 1983. This appears to be an evolving recognition that the pandemic impact on earnings, particularly for more…

Micro Cap – Q2 2021 Commentary

July 30th, 2021
Market Review The Russell Microcap® Index returned 4.14% in the second quarter of 2021 and has appreciated 29.02% during the first half of 2021.  Microcap has been the best performing US public equity market index thus far in 2021, outperforming the Russell 2000® and the S&P 500®. The companies we follow frequently highlight increases in…