Commentary
2Q2024 - U.S. SMID Company Growth Commentary
Looking ahead to the second half of 2024 and beyond, we are encouraged as we continue to find compelling opportunities. We seek to take advantage of volatility to invest in businesses at attractive values.
Read the full commentary and disclosures here
- Marking a shift from the first quarter’s lower-quality and high price momentum style factors driving performance, the second quarter reflected more of a flight to safety. Concerns around stubbornly high inflation dampened views on interest rate cuts following the exuberance in equities that started in October.
- As the market grappled with ongoing economic uncertainty, stock price movements broadly exhibited above-average volatility relative to recent periods, often despite little fundamental change. Our Portfolio was not immune to this volatility.
- In instances where we viewed stock prices as rising beyond what fundamentals justified, we right-sized positions and sourced funds to add to new and existing ideas with what we see as better risk-return profiles, reinforcing our opportunity cost mindset. This approach aims to ensure capital is allocated to areas with what we think have the highest potential for long-term growth and return.
- We added new positions in the Portfolio including AAON, Kinsale Capital Group, CCC Intelligent Solutions, Repligen, and Tetra Tech. We exited our positions in Wingstop and Endava.
- Despite the weight of a weak SMID cap market and the underperformance of many of our holdings, where we viewed the fundamentals as remaining healthy, we believe there is meaningful latent growth and appreciation potential within the Portfolio.
- Heightened volatility and the resulting market dynamics have reinforced our commitment to maintaining a disciplined, long-term investment strategy, focusing on high-quality companies with compelling fundamentals that we believe will thrive over the long term.
