Category: Small Cap Core Commentaries

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…

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 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 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…

Small Cap Core – Q1 2021 Commentary

May 7th, 2021
The Market  The small cap rally sustained in Q1 2021, with the Russell 2000® returning 12.7% vs. a 6.2% gain for the S&P 500®.  After significant outperformance of growth stocks vs. value in 2020, trend reversed meaningfully in the first quarter, with the Russell 2000® Value outperforming the Russell 2000® Growth Index.  The solid absolute performance…

Small Cap Core – Q4 2020 Commentary

January 26th, 2021
The Market  This was yet another unusual quarter in an unusual year for small cap stocks.  Vaccine progress, election clarity, and low interest rates all fueled remarkable returns for the equities of smaller companies.  Investors flooded into the small caps that had lagged the pandemic recovery rally, enabling the returns of the Russell 2000® to…

Small Cap Core – Q3 2020 Commentary

October 30th, 2020
The Market  This was an unusual quarter for small cap stocks.  Loss-making, highly levered, low ROIC stocks led the market.  The Russell 2000® Growth rose 7.2% in the third quarter, while the S&P 500® outpaced it again, jumping nearly 9%.  It is eye-opening to see that – in this pandemic-impacted world – the Russell 1000® Growth…

Small Cap Core – Q2 2020 Commentary

July 29th, 2020
Market Review The “too far, too fast” mantra currently being echoed throughout the financial media with regard to the U.S. equity market’s swift recovery from first quarter lows misses the market bifurcations we’ve seen in recent months.  While it’s true that some sectors of the market, particularly in the large-cap growth area, have regained most…

Small Cap Core – Q1 2020 Commentary

May 6th, 2020
While this is intended to be an update on the Small Cap Core composite, it is important to start with a brief firm update:  Kennedy Capital remains in a strong financial position.  We have net cash on our balance sheet, ownership of our office building, and no requirements to upstream cash to a parent or larger…

Small Cap Core – Q4 2019 Commentary

February 6th, 2020
Market Review The fourth quarter of 2019 capped a solid year in the markets.  The quarter and year were headlined by a few important themes, including tariffs, cyclicality, impeachment, and large cap growth.  Tariffs had been driving volatility, but investors’ nervous reflexes seem to be calming.  Earlier in the year, every tweet and counter-tweet felt…

Small Cap Core – Q3 2019 Commentary

November 4th, 2019
Market Review The recently completed third quarter of 2019 helped to reinforce one of the fundamental tenets of our business: “What you pay matters.” Small cap value stocks outperformed growth stocks by a wide margin in the quarter, making up some ground from earlier in the year and in previous years. The Russell 2000® Index…

Small Cap Core – Q2 2019 Commentary

July 27th, 2019
Market Review Needless to say, 2019 has been a whirlwind.  The second quarter was one that was once again buffeted by tweets and [un?]-related Federal Reserve intonations.  Companies with a connection to Mexico or China saw their stock prices tossed about as the media wrestled with interpretations of phrases released by the current US administration. …

Small Cap Core – Q1 2019 Commentary

May 9th, 2019
Market Review The first quarter of 2019 fell under the influence of several major headlines, including the government shutdown, the China trade war, and the yield curve inversion.  As each gained prominence, markets reacted.  The shutdown was an outgrowth of the battles we’ve seen in congress in recent years, and it’s emblematic of the challenges…

Small Cap Core – Q4 2018 Commentary

February 1st, 2019
  Market Review The strong performance of the Russell 2000® Index in the first three quarters of 2018 reversed meaningfully in the fourth quarter, with the benchmark down -20.20%. The shift in investor sentiment was driven by ongoing uncertainty in the US trade backdrop and concerns about an increasingly restrictive monetary policy, which overwhelmed generally…

Small Cap Core – Q3 2018 Commentary

October 29th, 2018
Market Review The strong performance of the Russell 2000® Index in the first half of 2018 continued into the third quarter, with the index returning 3.58%.  Many of the underlying characteristics that were present through the first half of 2018 sustained into Q3: benefits from lower corporate tax rates on earnings and cash flow, solid…

Small Cap Core – Q2 2018 Commentary

September 17th, 2018
Market Review The 7.75% appreciation of the Russell 2000® Index in Q2 2018 was achieved in spite of ongoing political turmoil in the U.S., increasingly aggressive protectionist trade rhetoric, and the implementation of new tariffs on a broad range of goods.  Even with the background of these uncertainties, our conversations with management teams this quarter…

Small Cap Core – Q1 2018 Commentary

September 17th, 2018
Market Review Volatility – a characteristic that has been missing from the US public equity markets for some time – returned in the first quarter of 2018.  A combination of fear of rising interest rates, uncertainty about federal government policy and trade, and questions about the sustainability of a multi-year bull market all combined to…