Seeking Alpha

Small cap stumble not luring fund managers yet

  • "It's hard to find a bargain out there," says Fidelity fund manager John Roth, as - even with two sharp small-cap selloffs this year - the Russell 2000 (IWM) is down only 3.5%, and still trades at a lofty 19.1x earnings. At the start of 2013, the index's P/E was 15.1, and the average since 1994 is 16.9. After trimming positions in Q1, Roth's New Millenium Fund holds just 12% of assets in small caps vs. an average of 19% from 2008-2013.
  • Manager of the $240M Wasatch Small Cap Value Fund, Jim Larkings is keeping cash towards the higher end of his typical 2-8% of AUM. He's finding some value in those small caps reeling due to the broader selloff in high-growth tech, but "The real darlings aren't even close to value territory."
  • Individual investors, however, continue to be believers, pouring $3.1B into small cap mutual funds to add to $16.4B in inflows last year.
  • ETFs: IWM, IJS, TZA, TNA, UWM, VB, IJR, SLY, EES, VBR, RWJ, VBK, URTY, SCHA, TWM, IWO, IWN, IJT, RWM, SRTY, DWAS, SAA, JKL, VTWO, RZV, SLYG, SLYV, VIOO, SDD, RZG, SBB, RSCO, JKJ, UKK, VTWG, FYX, TILT, VIOG, FNDA, XSLV, VIOV, FYT, SKK, JKK, EWRS, TWOK, PXSV, VTWV, UVT, SMLV, SJH, IESM, VLU, PXSC, FYC, PXSG
Comments (1)
  • Philip Marlowe
    , contributor
    Comments (1105) | Send Message
     
    There are so many bargains in small caps. You just have to do the work and research a lot of small obscure companies. It is much easier to glance at the statistics for the whole sector and say "it is overvalued" than to actually sift through hundreds of stocks.

     

    But considering small caps can grow very fast, there are a lot of bargains out there. Some examples are AFOP, SMCI, SILC.
    28 Apr 2014, 02:17 PM Reply Like
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