Small Caps In the United States
We have known Mary Lisanti for a pretty long time and
consider her
to be one of the best small cap growth portfolio managers
around.
She does have a lot of beta in her portfolio because she
invests in
small caps that are growing by 30% per year or more. I have
owned
her fund for over a decade because I believe over the
long-cycle
Mary is going to make me money. We rang her up the other
week
and asked if she might be able to do a conference call with
us for our
financial advisors and she said “yes.” The reason for the
call is that
small caps came down
less in the January/February Flop and felt to
us like they are set
to outperform. The call is scheduled for next
Thursday (4-12-18) at 4:15 p.m. with dial in number of 877.375.7934
(no passcode). In talking with Mary she made the following
points:
I also think one of the interesting things I want to mention
on
the call is the impact of Tax Reform on small caps. I look
at it
this way: most of the smaller companies are going to get a
“pot
of money” due to the lowering of their tax rates. Most of
them,
based on our conversations with them, will invest part of it
to
accelerate growth. The success of this effort will probably
follow the typical “bell curve” that most groups of human
beings fall into: most will succeed to some extent; some
will
fail, and some will succeed spectacularly. That meant two
things to me: dispersion among individual issues within
small
caps will only increase, and active managers might actually
be
useful in identifying those companies that can succeed
spectacularly. Most importantly, this scenario will go on
not
just for one year, but for probably 5-10 years.
Of course her “active management” is music to our ears
because we
have been advocating active over passive management for
about a
year. We asked Mary to share with us some of her stock ideas
that
are covered by Raymond James’ fundamental analysts with
favorable ratings. The names she mentioned were: XPO
Logistics
(XPO/$98.64/Outperform), Insulet (PODD/$86.08/Outperform),
and
New Relic (NEWR/$75.54/Outperform).
From ‘Morning Tack’ written by Jeffrey Saut, Published by
Raymond James
& Associates
