Commentary
3Q2024 - U.S. SMID Company Growth Commentary
U.S. SMID cap stocks ended the third quarter on a solid note, buoyed by interest rate cuts and diminishing recession fears. The period’s volatility, however made the journey through the quarter somewhat akin to a roller coaster ride.
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- Despite a challenging market environment, we are excited about potential opportunities ahead as the rate environment becomes more accommodative and growth across many businesses accelerates going forward.
- Recent volatility has worked for and against us. As it became clear that our thesis for certain stocks was no longer intact, we moved on to other opportunities. In most cases, however, we retain deep conviction and use periods of weakness to add to positions. We view this approach as a significant opportunity.
- The top three contributors to the Portfolio's relative and absolute performance in the quarter were Goosehead Insurance, Revolve Group, and Hamilton Lane.
- The Portfolio's top relative and absolute detractors were Progyny, Five Below, and elf Beauty.
- We initiated new positions in TopBuild, Applied Industrial Technologies, Booz Allen Hamilton, and elf Beauty.
- We exited out of positions in Monolithic Power Systems, SiTime, RH, Doximity, Five Below, and Alight.
- Reflecting our opportunity cost mindset, we added to positions with better risk-reward profiles and stronger Flywheels, and trimmed positions largely for valuation reasons in order to fund new positions and add to existing holdings.